Some random thoughts

 West Asia crisis

In June 2026, the US and Iran signed an agreement to extend their ceasefire by 60 days. This gave both sides time to negotiate a lasting solution to a long conflict. Most West Asian countries seemed to support this process. But Israel, the most important player in the region, kept its distance and did not fully sign on to the terms.

This week, Iran held the funeral of Ayatollah Ali Khamenei, its Supreme Leader, who was killed in joint US-Israel air strikes in February 2026. Leaders from several countries attended the long-delayed funeral, and millions of Iranians came out on the streets of Tehran to mourn him. His son, Mojtaba Khamenei, has since taken over as Iran's new Supreme Leader.

Even as the funeral was underway, the fragile ceasefire came apart. In the past two days, Iran attacked commercial ships passing through the Strait of Hormuz. The US responded on 7 July with what it called “powerful strikes,” hitting more than 80 targets inside Iran, and reimposed the oil sanctions it had lifted as part of the ceasefire deal. Iran, in turn, said it would deliver a “crushing response” and struck US bases in Kuwait and Bahrain on 8 July. On the same day, speaking at the NATO summit in Ankara, President Trump said he now considers the ceasefire “over” and a “waste of time.” Oil prices jumped sharply on the news.

Looking at the mood of the Iranian people, the stance of Iran's leadership on its right to enrich uranium and control the Strait of Hormuz, and Israel's position on Iran's rights, it seems to me that this conflict is far from over. This week's exchange of fire, coming barely three weeks after the ceasefire was signed, confirms that hoping for a lasting solution within the 60-day window was always more wishful thinking than realistic expectation.

A more likely path over the next couple of years could involve four things. First, Iran may push ahead with building a nuclear deterrent against Israel and prepare to avenge the killing of its former Supreme Leader. Second, GCC countries may continue to keep an equal distance from Iran, Israel and the US, even as some of them, like Kuwait and Bahrain, get drawn into the crossfire. Third, Israel may keep trying to weaken Iran's ability to strike it. And fourth, the US may keep swinging between war and peace, as it has done again this week.

Ethanol blending

The government's policy of blending ethanol with petrol has drawn sharp criticism from citizens. There have been complaints of vehicle damage and lower mileage due to blended fuel. Several environmental groups have also opposed the E20 policy, saying it uses too much water to produce ethanol.

The government has strongly defended the E20 policy, pointing to its environmental, agricultural and economic benefits. Automobile companies have also said that E20 fuel does not damage modern, compatible vehicles. A review of thousands of service records suggests there is no widespread evidence of engine damage, wear and tear, or corrosion caused by E20 fuel.

Even so, opposition parties and civil society groups have turned E20 into a popular campaign against the government. They allege that the blending policy mainly benefits the family of a minister who is in the ethanol production business.

This could well become a major election issue. It is not clear how the government will restore public trust in blended fuel and put this controversy to rest. If I were asked for a suggestion, I would say the government should make blended fuel optional rather than mandatory, and offer incentives such as a lower price for blended fuel or a subsidy on insurance premiums.

Infra construction quality

Poor quality of infrastructure, especially roads, along with allegations of large-scale corruption in awarding and executing key infrastructure projects, has become a common topic on social media.

While corruption cannot be ruled out, a more likely reason for the poor condition of newly built roads is rushed construction to meet deadlines, which are often set for political reasons. Poor design and inadequate safety audits are also major concerns for road quality in India.

Whatever the reason, the fact remains that India spends much more than the global average to build its highways, yet the quality of these highways remains poor in terms of design, durability and comfort.

It would help to open up infrastructure construction to global competition and make it mandatory for all projects above Rs 50 million to be awarded through global tenders.

It would also be worthwhile to set up a dedicated highway police force to ensure the safety and security of highway travelers and to quickly address complaints of damage and accidents.

 

Is India staring at 2013, all over again?

History does not repeat itself but it often rhymes. Anyone who lived through the 2011-2013 period in India, and is watching the country in 2026, will find the rhyme hard to ignore. The characters have changed, the specific allegations are different, but the underlying script — a government fatigued by its own longevity, an economy under external stress, and a restless youth looking for a new savior — feels strikingly familiar.

The Making of 2014

India came out of the Global Financial Crisis of 2008-2010 in far better shape than most of its global peers. But the relief was short-lived. The years 2011 to 2013 turned out to be among the most turbulent in India’s recent economic and political history.

The government of the day was under siege from a string of scam allegations — coal mine allocations, 2G spectrum, and Commonwealth Games spending were the most prominent among them. Charges of misgovernance and corruption piled up. The Supreme Court’s description of the CBI as a “caged parrot” of the government became a defining image of that period, capturing how deeply institutional credibility had eroded.

On the economic front, the taper tantrum in the West triggered a full-blown current account crisis in India. The government was simultaneously accused of policy paralysis, with key infrastructure projects stuck and important economic reforms deferred indefinitely.

The youth of the country, disillusioned with the establishment, took to the streets. An avowedly ‘idealist’ new party emerged out of that discontent and swept to power in Delhi. Even the allies within the ruling UPA coalition began quietly distancing themselves from the Congress party at its center.

Sensing the opportunity, the BJP in 2013 named Gujarat’s Chief Minister, Narendra Modi, as its prime ministerial candidate — projecting him as the leader who would rescue the country from the mess and carry it to new heights. In 2014, the regime changed.

Twelve Years Later, 2026

Fast forward to today, and the parallels are hard to miss.

India has just come through a war with Pakistan in 2025 and a major crisis in West Asia, emerging from both with relatively limited economic damage — not unlike how it navigated the Global Financial Crisis a decade and a half earlier.

But once again, the government is fending off a string of allegations — misappropriation of temple funds, repeated examination paper leaks, a lack of transparency around the use of the PM CARES Fund, poor quality of public infrastructure construction, and a controversial ethanol-blending policy. A Bombay High Court judge has strongly criticized the government and the Mumbai Police for suppressing dissent — an echo, however faint, of the institutional friction of 2013.

An ‘idealist’ party has captured power in Tamil Nadu. In Delhi, the youth is protesting again, this time under the banner of an unorganized, loosely structured group calling itself the Cockroach Janta Party. And on the economic side, the country has just been through a balance of payments scare, with the RBI and the government having to take strong, visible measures to arrest the decline of the rupee.

None of this means 2026 is a photocopy of 2013. The specific issues differ, the political actors are not identical, and the economy today is structurally stronger in several respects. But the pattern of a long-serving government facing corruption charges, an external account under stress, and a young population looking for a new political alternative is a pattern investors would do well to recognize.

Three questions to watch over the next year

With key state assembly elections scheduled for 2027, the next twelve months will be an important test. Investors should watch closely for three things:

·         Will the government turn more populist ahead of the 2027 state elections, at the cost of fiscal correction?

·         Will India witness a repeat of policy paralysis, where key economic and other reforms are once again deferred?

·         Will the government lean on tax concessions to pacify an agitated middle class, financing this by cutting back on capital expenditure?

If these fears materialize, financial markets are unlikely to take it kindly. A slippage on fiscal discipline, a pause in reforms, and a shift away from capex-led growth toward consumption sops would be read by markets as a repeat of exactly the mistakes that cost the previous regime its mandate. Valuations, already under pressure, would have little cushion left to absorb such a shift.

An investor’s takeaway

For investors, the lesson from 2013 is not that history guarantees a particular election outcome in 2029. It is that markets punish drift — drift on fiscal discipline, drift on reforms, drift on institutional credibility — well before the ballot box does. Portfolios built on the assumption that the current growth and capex cycle will simply continue uninterrupted may need to build in some room for disappointment over the next year. Quality businesses with strong balance sheets, and sectors less dependent on continued government capex or populist largesse, are better placed to absorb this uncertainty than those that are not.

Twelve years is long enough for a country to forget its own history, and short enough for that history to return wearing a slightly different costume. Whether 2026 turns out to be 2013 in disguise is a question only the next twelve months can answer. Until then, watch the fiscal arithmetic, watch the reform calendar, and watch the streets — they have a way of telling the story before the results do. 

Is the Empire collapsing?

Empires end. History offers no exceptions to this rule, only variations in mechanism. Climate stress, in particular, has a well-documented record as a driver of civilizational collapse, and it is worth revisiting that record before asking whether Europe is now entering its own version of the same cycle.

Climate and the fall of empires

The Late Antique Little Ice Age coincided with the Western Roman Empire’s final unravelling in the 3rd-5th centuries AD, compounding the pressures of plague, fiscal exhaustion and military overextension that were already stretching the empire past its limits. Tree-ring and sediment records from Central America show that a sequence of severe droughts in the 8th-9th centuries AD placed unsustainable stress on Mayan agricultural systems, contributing materially to the classic Maya collapse. The fall of Angkor and the Khmer Empire in the 15th century is now strongly linked by dendrochronological evidence to decades of monsoon failure alternating with catastrophic flooding, which overwhelmed the empire’s elaborate hydraulic infrastructure. And the decline of the Indus Valley Civilization is tied by most current scholarship to a weakening of the monsoon system and the shifting of the Ghaggar-Hakra river network, compounded by the breakdown of long-distance trade routes that had sustained its cities. Across each of these civilizations, climate stress did not act alone -- it layered onto existing political, fiscal or military fragility and turned manageable strain into terminal decline.

The colonial-industrial inversion

The modern era tells a more familiar story. From the 18th century onward, European powers -- and subsequently North America -- built a two-century lead through colonial extraction, first-mover industrialization, and control of the financial architecture that governed global trade and capital flows. Asia, Africa and Latin America spent much of this period as suppliers of raw material and labour rather than as originators of capital or technology, absorbing the costs of an order they had little hand in designing. That order defined the last two hundred years. The question worth asking now is whether it still holds.

The tide turning

Over the past two decades, the balance has visibly shifted. China, India and the Gulf oil economies have re-rated on the global stage -- in GDP share, manufacturing capacity, technological catch-up, and for the Gulf states, in sovereign capital accumulation that now rivals the balance sheets of Western institutions. Europe, over the same period, has stagnated. Growth has been anemic, productivity gains have flattened, and the continent that once led the industrialization of the world now lags in the technologies that will define the next several decades -- semiconductors, artificial intelligence, batteries and electric mobility among them.

Europe’s native demographics have deteriorated materially. Fertility rates across the continent’s largest economies sit well below replacement level, the working-age population is shrinking, and dependency ratios are rising in ways that structurally weigh on both consumption and long-term investment. Alongside this, Europe has faced large-scale immigration from poorer regions of Asia and Africa, driven by conflict, economic disparity and demographic pressure in the sending countries. The scale and pace of this migration have strained housing, public services and labour-market integration in ways that have become a defining feature of European politics over the past decade, feeding directly into the fiscal and social pressures the continent now carries.

Climate change has compounded these strains rather than acted as a separate force. Europe has experienced a sequence of severe summer heatwaves in recent years, part of a broader warming trend that has strained energy grids, agricultural output and public health systems built for a cooler climate. The loss of cheap Russian energy has added a further structural cost, raising input prices for European industry at precisely the moment competitiveness with Asian and American manufacturers matters most.

Political responses have leaned toward expanding social spending and protecting existing entitlements rather than funding the scale of investment needed to close the innovation gap. The result is visible in the data: European equity markets have structurally underperformed global peers over a two-year stretch of valuation derating, sovereign fiscal positions have weakened as debt-servicing costs have risen alongside social outlays, and private investment in research, technology and new industrial capacity has lagged both the United States and China. Europe’s genuine and substantial trade deficit with China -- concentrated in electric vehicles, batteries, solar equipment and consumer electronics -- is direct evidence of this competitiveness gap in exactly the technologies that will matter most over the next decade. Where the United States has poured public and private capital into semiconductors and artificial intelligence, and China has built dominant scale in batteries and clean-energy manufacturing, Europe has largely regulated its way through the same period, producing a dense rulebook rather than a comparable industrial base.

None of this is helped by the fragmentation of Europe’s own capital markets. A continent of national exchanges, national pension systems and national banking champions has struggled to concentrate capital behind its own technology companies at the scale needed to compete with Silicon Valley or Shenzhen. The result is a familiar pattern: European researchers and start-ups often build the early-stage innovation, only to sell out to American or Asian capital once meaningful scale is required, exporting the eventual economic value of the invention along with the intellectual property that created it.

Strategically, European capitals are recalibrating toward both Beijing and New Delhi -- not out of any inherited historical alignment, but out of economic necessity: supply-chain diversification away from an increasingly unpredictable US tariff regime, and a search for growth partners as domestic demand stagnates. It is a realignment born of weakness rather than choice, and it marks a meaningful shift from the transatlantic order that defined European strategy for the better part of a century.

The investment reading

For an Indian investor, the operative question is not whether Europe is collapsing in the dramatic sense of Rome or the Maya, but whether its relative economic weight will keep shrinking against Asia over the coming decade -- and it is difficult to build a credible case that it will not. The demographic arithmetic, the energy-cost burden, the innovation gap and the strain of managing large-scale immigration are all structural, not cyclical, and structural problems do not resolve on a market cycle’s timeline. This argues for a portfolio construction that leans structurally toward India, China and the Gulf capital pools, and treats European exposure as a value trap dressed in the language of stability rather than a genuine long-term compounding opportunity.

This is not a call to abandon Europe entirely. Pockets of genuine strength remain -- in luxury goods, specialty industrials, pharmaceuticals and select areas of aerospace -- where European companies still hold global pricing power built over decades. But these are increasingly exceptions carved out of a broader structural decline, not evidence against it. Portfolio construction should treat them as selective, name-specific bets rather than a reason to hold broad European market exposure at the weights an earlier era of global allocation would have justified.

A closing thought

Krishna’s counsel to Arjuna is that forms arise and dissolve, and that grieving the passing of a particular order mistakes the transient for the permanent. Rome fell and successor orders filled the vacuum it left; none of those successor powers imagined its own impermanence either. Europe’s twilight, if that is what this is, will not arrive as a single dramatic collapse but as a slow erosion of relative weight -- in growth, in innovation, in strategic weight -- while the world’s center of economic gravity continues its shift toward Asia. The task for the investor is not to wait for the headline moment of collapse, but to price the erosion that is already underway.

For those looking to obtain European passports to escape tax burdens in the US, India or elsewhere the task might be urgent and more important.