FINANCIAL GEOPOLITICS APRIL 2026: Luttwak lessons – Crypto conflict – Ukraine lawsuit

Hello, people. Welcome to the first, extra chunky edition of Financial Geopolitics Chungus from reporter.london. We have the goods on state-of-the-art crypto investigation tactics, fragility in Russia’s financial system, the role of banks in triggering the Iran crisis, an unexpected US extension of sanctions relief for Russian oil, the fallout of a hare-brained Hungarian seizure of Ukrainian bank money, implications from the collapse of a London luxury real estate lender, the dawn of a new age of bearish optimism in capital markets, and more.

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We kick off with an interview with one of the world’s most renowned strategists, Edward Luttwak, who is an expert in war, international affairs, geopolitics, statecraft and special operations. He wrote the definitive book on overthrowing a government by force, (38 years later still in print), and advised more sovereigns and CEOs than I have had hot breakfasts.

Nobody is better placed to give us a cold-eyed big-picture assessment.

THE BROAD VIEW WITH EDWARD LUTTWAK

It’s not looking good for Europe. Contrary to the prevailing wisdom that once Trump completes his second term, US-Europe relations will go back to normal, Luttwak warns that NATO and Europe itself as a civilisation are in grave, existential danger, fundamentally because Europeans are unwilling to fight.

Many in the European power elite believe that “as soon as Trump leaves, everybody will try to kiss and become friends,” Luttwak said. “But there is a fundamental problem now […] European people have stopped fighting,” he said. This became obvious when Europe refused to fight Russia over Ukraine and relied on the US for the bulk of the aid in the first two years of the war, and again when Europe refused to beat back the Houthis in Yemen despite blocking Bab el Mandeb in 2024. For the record, Great Britain did participate in US-led retaliatory strikes at the time.

”The whole logic for the United States to maintain NATO has gone. Because there are no NATO armies. Only people who wear uniforms and eat breakfast, lunch, and dinner, wearing uniforms. And they’re called officers. But we have discovered from the Ukraine war that there’s not one soldier in Europe. Nobody is willing to fight,” said Luttwak.

This, he says, is a deeply embedded social characteristic which cannot be repaired easily. Pointing to Italy, he says the country refused to fight against the Houthis of Yemen even though they knocked as much as 40% from the turnover of key Italian ports at the height of the crisis.

The way to salvage Europe and NATO is to adopt the Finnish model, Luttwak says, with mandatory conscription to the army and a culture of defending the homeland. But he is not optimistic. “In Finland, everybody goes to the army,” said the scholar, adding that it is “the happiest country in the world.” “But the problem is that for that you need a specific culture,” he said. “And [most Europeans] don’t have that culture.”

“The old European who fought wars and came home and married women and made children is dead,” he said. “This is called cultural change. And the whole of NATO, the whole US-Europe relationship is based on the old culture,” Luttwak said, referencing a Gallup poll that showed only a minority of Europeans, even in Eastern flank countries facing Russia, were willing to fight, and the proportions were in general much smaller than in the US.  “That… it is fundamental structural problem.”

What does it mean for business? European military elites have begun calling for conscription and increasing patriotic sentiment through education in schools. Political elites have pledged to hike military spending and in many cases followed through – so there is perhaps a glimmer of hope on the horizon, despite Luttwak’s gloomier views. But, in the here and now, “If you’re involved in day-to-day activity, you have to accept these realities, and maybe you can make a business out of them,” he said.

He also said the media and commentariat were caught wrongfooted on the start of the Iran war, which caused major losses to firms, because journalists were used to lengthy open debates in Congress ahead of the invasion of Iraq under Bush, and wrote off Trump’s military buildup in the region as a bluff.

“They misunderstood politics in Washington,” said Luttwak of analysts and journalists who insisted the US wouldn’t attack Iran. “Decision making in Washington is no longer systematic and open,” he added, also noting that “it is legitimate for Trump not to share. Given the political situation there’s no reason he should give advance notice.”

In this context, “if people were wrong about the Iran war, they have many excuses for that,” said the expert. “The fact is that you’re making only a guess, you cannot analyse.” However, he warns that the commentariat “don’t have so many excuses when they take positions on the Iran war. And they say things like attacking infrastructure, like bridges and power stations, is a war crime. This is just an invention. It wasn’t a war crime until a week ago.”

“So there’s been a lot of distortion in the commentary.”

TOP LINES

1. GLOBAL CRYPTO WARS: Across the world governments are becoming aware of the ways crypto’s borderless nature makes it ideal for financing elections. Just last month the UK government announced a ban on political crypto donations. Together with our dear associate Tom Rowley, a veteran journalist and editor, and overall excellent guy, we reveal a bit of detail on events in Moldova, the frontier of Europe, where crypto has already been used by a sanctioned Russian oligarch in partnership with the Kremlin to unduly influence a national parliamentary race. Gold dust: key to the way Moldova investigated crypto, leading to successful prosecutions, is “dusting,” a cutting edge technique pioneered by Richard Sanders, an independent and often pro bono analyst. Sanders, a man with a heart full of love for Western civilisation, travelled to Ukraine, Moldova (including separatist Transnistria), Palestine and other hard-to-reach places. There he investigated how crypto is traded for cash in innocuous-looking shops, on street corners and in bars and cafes, facilitated by Telegram chats. Then he dusted. In short, dusting takes advantage of the structure of cryptocurrency blockchains, to send fractions of a coin to a wallet deemed of interest and then watch as that value is bundled together and sent further by the owners of the wallet, identifying other addresses in the “cluster”. If you know that the wallet you are dusting is involved in, for example, helping organised crime exchange cash for crypto, or viceverse, your dusting can provide actionable intelligence to the authorities. “Why has the guy in Ukraine not getting paid spent more money on dusting than billion dollar analytics firms? Why am I having to teach this to public sector when it is the singular most important thing they can be doing to collect on-chain evidence of foreign interference in their elections?” Sanders said in an interview. “Those were rhetorical questions, because the truth is, certain analytics firms are covering for their VASP clients that don’t want this stuff labelled, and not only are failing to educate public sector on practical and inexpensive solutions, but are actively diverting their attention away to provide so-called training on rarely if ever relevant issues.”
2. RUBLE RUMBLE: One of the less obvious side-effects of the end of the Orban era in Europe, as pointed out by star Russia watcher Mark Galeotti in the i newspaper, will be that Hungarian banking regulators might start enforcing EU sanctions on Russian banks. Until now, according to the expert, they had been lowkey cooperating with the Budapest financial sector. This, Galeotti suggests, will add to the pressure on Russia’s economy. Indeed, another ongoing theme this newsletter will be covering closely is the growing instability of Russian banks and the risk of an implosion, which could put an elegant end to the invasion of Ukraine. Not even the brilliant Russian Central Bank Governor Elvira Nabiullina can keep things going infinitely, and the securocrats who really run things in Moscow have an inadequate understanding of what it takes to have a functioning banking sector. Hackin’ hell: As reporter.london covered in detail, the Kremlin has innovated considerably in its attempt to keep foreign trade flowing amid worldwide sanctions. It has come to rely on cryptocurrency markets in ways that might end up hurting it more than they help. As of April 16, Russian media said that Grinex, a Kremlin-friendly cryptocurrency exchange that had been used to facilitate money laundering and sanctions evasion, had been hacked. Naturally, it blamed Western spies, according to an update from analytics firm Elliptic. However, the co-founder of Elliptic, Tom Robinson, suggested in a Linkedin comment that the hacker could also have been a criminal actor, as not enough evidence was available.
3. BANK BLOCKADE: It feels like a lifetime ago now, but try to cast your mind back to February when the US and Israel first started bombing Iran. One of the Trump administration’s stated rationales for the action was Tehran’s brutal repression of pro-democracy protests. With estimated death tolls ranging as high as 30,000 civilians, the White House said it was keen to push the Ayatollah over the edge. In time, the explanation hardened into something more straightforward: that Iran was a mere two weeks away from a nuclear bomb which would have threatened the whole world. The interesting thing for this newsletter is that the social unrest that ultimately led to a global crisis seems to have started with the failure of a local bank, according to the WSJ . And the US took credit for the bank’s failure, Scott Bessent told Congress in a hearing. “What we had done was created a dollar shortage in the country… it came to a swift and grand culmination in December, when one of the largest banks in Iran went under, there was a run on the bank, the central bank had to print money, the Iranian currency went into freefall, inflation exploded and hence we have seen the Iranian people out in the street.” Bank runs as a tool of geopolitics? The bread and butter of this publication, folks.
4. WAIVER WAVER: The US Treasury surprised markets last Friday evening by issuing a new general licence allowing the trade of sanctioned Russian oil despite a commitment by Treasury Secretary Scott Bessent not to, just a few days prior. Speculation about the reasons for this wobbling has ranged from conspiracy (Russiagate-type interventions by Moscow) to suggestions that not everyone in the American power structure has confidence in Trump’s ability to re-open the Strait of Hormuz. In fact, over the weekend the strait was opened and then shut back up again several times, according to media reports. In any case, those who care about Russia’s capacity to wage war on Ukraine and hybrid war on the rest of the world were dismayed. Big-picture analysis of Russia’s oil business is worth following from the popular War on the Rocks blog and our friend Tanya Kozyreva, an investigations reporter, writing for a Harvard university blog. At reporter.london we have published recently a collaborative investigation with a top Substack page in the UK looking at alleged pro-Russian influence in oil and gas policy thinking. This is another one we’re staying close to. But it’s not always clear-cut. By issuing the latest waiver the US did a favour to Asian commercial partners struggling with the oil crisis harder than the West, according to Russian sanctions expert George Voloshin. “GL134/134A has allowed energy-poor countries in Asia to strike import deals with Russia whereas they haven’t done so historically and have been deterred by US secondary sanctions in recent years (especially large corporations and banks which need constant access to the US financial system). I suppose that the policy intent of GL 134B is to allow these business relationships to continue before supply from the Persian Gulf stabilizes,” said Voloshin.
5. THE GREAT GEOPOLITICAL BANK ROBBERY: The outgoing Hungarian government led by Russian ally Viktor Orban pulled a lot of dark arts in the run-up to the April 12 election, which it lost anyway. One of the most interesting capers, in March, was to stop and seize a transport to Ukraine carrying some $80 million in gold and banknotes, which Orban’s people said was a money laundering scheme. Detailed reporting from investigative media Vsquare, who are friends of this newsletter, has suggested otherwise. The episode turned into an international incident, with the intervention of Ukraine’s finance and foreign ministries, and some top Ukrainian voices suggesting the real reason Hungary did this was to provoke a violent reaction from Kyiv, which in the event did not materialise. Now that the dust is settling, one source with knowledge of Ukraine’s plans says that even if the new Hungarian government returns the money in full, a blockbuster civil case is likely to be filed against the Hungarian government for the severe distress inflicted on the people who carried the money, including, allegedly, injecting one of them with an unknown substance, KGB-style. “We can state that Oschadbank continues to consistently defend its rights within the framework of its previously announced strategy,” the bank told reporter.london in an emailed reply. “Our primary focus remains protecting the interests of our employees and ensuring the return of valuables belonging to the state-owned bank. However, we cannot confirm the specific information regarding a civil claim for damages being brought by an employee against Hungary in relation to the incident you described.” Such a lawsuit could be pre-empted by an offer of settlement from the new leadership in Hungary, according to legal experts who spoke privately to reporter.london. If that doesn’t happen, losing in court would put the Hungarian taxpayer on the hook for potentially millions of euros, on top of the billions wasted and, some say, outright stolen, during the Orban years. This is what we mean when we say we live in an age of cyberpunk, hyperactive financial geopolitics. Next time a bank transports money to a country with unfriendly neighbours, should it take into account the possibility of random, state-sponsored seizure? PS: Coincidentally, Oschadbank, whose transport the Hungarians seized, has also successfully pursued the Russian government for multi-billion dollar arbitration awards over loss of business in Ukraine’s occupied territory.
6. MFS BE LIKE: By the way of regime change, those who are owed money by Viktor Orban’s friends might want to pay attention to this little anecdote. A ‘scoop of interpretation’ gem from our dear friend Roger Hamilton-Martin, a cracking investigative reporter and researcher in London: Market Financial Solutions, a specialist lender focusing on London’s high-end residential real estate market, spectacularly went bust earlier this year with founder Paresh Raja himself undergoing a precautionary off-balance sheet decampment to Dubai. The company was structured in such a convoluted way that risk was obfuscated and diffused to a degree that unwinding it has caused national corporate insolvency statistics to spike. This is according to the FT, by far the best mainstream paper to cover this issue (special mention to trade outlet 9fin on the credit details, and Al Jazeera which exposed some of the underlying corruption). Allegations of financial malfeasance and double-pledging of assets weren’t far behind. With top global firms exposed via private credit agreements with MFS, you can be sure that sparks will continue to fly in civil court. However, what the FT did not highlight is the (perhaps obvious) fact that MFS collapsed to begin with due to overexposure to one client in Bangladesh, a HNW PEP (high net worth politically-exposed person). Bangladesh recently had a revolution driven by nationalists, smartphone-wielding GenZ students, and Islamists – cyberpunk alert again – which overthrew the government, sweeping MFS’ client out of power. Outstanding debts secured against Minister Chowdhury’s properties and businesses began defaulting immediately after the fall of the government in 2024. It didn’t help that the new regime petitioned the UK’s National Crime Agency to freeze his assets around mid-2025. The world today imposes on financial institutions a new risk: is your client ‘money good’ in case of revolution back home? Put that in your internal ratings-based credit risk model and smoke it. (And keep your eyes peeled for the “watch-to-house ratio”.)

7. BOND FLIP FLOP: Amid the walked-back US Greenland land grab earlier this year, EU officials and their friends in the newspapers reached for a familiar trope of financial geopolitics – threatening to dump US debt; The idea, as always, died on the vine. It started promisingly – a minor Danish pension fund announced it would exit US Treasuries. A Deutsche Bank analyst also pitched in with a report that inferred the EU could cut a leg from America by dumping bonds, but the report was reportedly disowned within hours by the CEO of the firm . That’s because this tactic, though much beloved by reporters, is of limited value since the seller has to accept serious losses to impose a sudden drop in the price of the adversary’s national debt (which is the whole point). Plus, given how tightly regulated European firms are when it comes to capital buffers, it is likely they are forced to hold dollar bonds whether they like it or not. The Danish pension fund that made headlines when announcing (perhaps in a knee-jerk reaction or under political pressure) that it was divesting from US Treasuries was later shown to be exposed to the US with a large majority of its assets; this brings to mind an old saying in banking – when the creditor borrows small and can’t repay, the creditor has a problem, but when the creditor borrows big and can’t repay, the bank has a problem. This is a matter of physics, not finance, because you can’t very well dump 60+% of your assets overnight to pressure a political rival if the writedowns will wipe out your whole business. Still, providence was on Europe’s side: in the event, a completely unrelated blowout in Japanese bonds, which dragged global bonds down with it, took place just as Denmark and the EU Commission threatened bond wars on the US – enabling the Europeans to save face and claim victory, after what had all the makings of a humiliation, with Trump obtaining the promise of a renegotiated Greenland treaty which would hand over at least some territory to the US in the future. The FT, which we endlessly admire and read carefully, dutifully puffed Europe’s pillow with an article completely abstracting from the market context and inferring Europe’s pressure on Trump was working; The message was sent: EU leaders can go back to bed now — they live to pretend to fight another day, as Mr Luttwak, the strategist, would put it. The best reaction came from Michael Pettis, a known academic expert on the financial system and China, which is itself a big fan of putting it about in the media that it could (repeat, could) cause the US a financial crisis by selling many bonds at the same time. “This talk about Europe’s ability to wield its holdings of US Treasuries as a political tool is as divorced from reality as the talk about China’s ability to wield its holdings of US Treasuries as a political tool,” Pettis wrote.
8. STERN BEARS: Albert Edwards of Societe Generale, one of the best-known capital market strategists in the world and an avowed “perma-bear,” turns 65 this month (many happy returns to him). This would give him some 45 years of watching capital. According to his penultimate note we are entering a “secular bond bear market” which will put huge pressure on governments at exactly the wrong time from a geopolitical and strategic point of view. This has been visible in UK bond yields reaching levels not seen since the 2007-8 financial crisis. But most countries are contending with the same conditions, at a time when defense and reindustrialisation spending is being ramped up. So-called core Europe countries have begun to be downgraded by ratings agencies due to unsustainable debt, and the general consensus among financiers is that this is just the start. Edwards warns that governments, especially the UK, are unable to solve a fundamental tension between excessive public spending and voter expectations of even more money being distributed. “The failure of the current UK government to restrain what most commentators regard as uniquely out-of-control welfare spending is a prime example – and that is despite having a huge 165 parliamentary majority. Meanwhile some EU governments have rushed to cushion the blow of rising energy prices on angry electorates despite grave warnings that their fiscal deficits are edging ever closer to crisis levels. Bond vigilantes are observing these events with a mixture of exasperation and dismay,” he writes. This situation was already putting the UK in a tough position internationally, with foreign allies issuing vocal warnings that the country is not meeting its defence commitments — even before yields spiked further on April 21 amid a chaotic political scandal. His view chimes with a recent article in the FT covering another sub-species of bear, the short-seller. Carson Block, one of the famous short-sellers quoted, is optimistic that the advent of AI and geopolitics is once again creating conditions for this type of activity to thrive; Another seasoned London-based short seller told reporter.london: “I think Carson is right in thesis but I’d maybe quibble the cause. I’m yet to be convinced AI will lead to a great disruption. But with or without, we are in a high inflation, low growth cycle with severe sovereign debt pressure. The outcome will be the same: rising unemployment, falling corporate profits and market turmoil. That is a much better environment for shorts than we have seen in recent years. The tide is on the way out and we are about to see who is swimming naked, to quote Warren Buffett.”
9. BACK TO THE WOODS? One theme we will be closely following in this newsletter is the ongoing reshaping of the global financial sector. This includes the advent of crypto, the separation of closed and open economies via tariffs and sanctions, and the potential emergence of a new banking model based on stablecoins rather than classical fractional reserve. US Treasury Secretary Scott Bessent, driving much of this change, is said to be an avowed adept of game theory and long-term thinking. He is on record calling for a new arrangement following the collapse of Bretton Woods and the void it left in the Western economy. Most recently Bessent detailed his views at an International Institute of Finance event in Washington. He suggests that the period of Bretton Woods – namely the pegging of the Western economy to gold and the dollar – was preferable to today’s status quo in terms of growth and development indicators. Not coincidentally, perhaps, Bessent has been an advocate for the global proliferation of stablecoins, which themselves are pegged to the US dollar. This newsletter’s author has argued in August last year that stablecoins are emerging as a core pillar of American grand strategy, and so far this view is proving correct. The secondary effect of this, at least in the short term, will be a proliferation of money laundering and fraud, although the US Treasury has also been pushing to develop new tools to clamp down on dirty money in crypto, most recently with a rule announced April 8.
10. SANTANDER SALSA: The Spanish president’s overt opposition to the US war in Iran has attracted speculation that a takeover in the US by Santander, Spain’s largest bank, might be hampered in retaliation. Analysts are now pricing in direct political reprisals on international banks arising from geopolitical conflicts between NATO allies. We truly live in a new world. And this suggests banks are very exposed to this new kind of risk due to the sector’s international footprint. Again, a topic this newsletter will endeavour to cover closely. 
11. ROMANIAN DEADLIFT: A Romanian central banker muses on the difficulties of running monetary policy in a world driven by geopolitics: Some of the specifics mentioned only apply to Romania. But, the tenor of the article ought to be of great interest to anyone following monetary responses to global crises, especially those who are invested in the FX market. Notably, Romania has some of the world’s most active “arbitrageurs” working for the National Bank. The country is known to deploy billions to stabilise its currency in times of crisis, so much so that top players often shy away from speculating against the Romanian Leu (RON). 
12. REMITTANCE RESISTANCE: In a move less noticed by international partners, the US has announced controls on remittances by people on public assistance: This, if implemented, is a small step toward re-instituting overall foreign capital controls and effectively rolling back global financial flows to make international capital subservient to national politics. Ultimately, we are in a reality where security trumps politics and politics trumps economics. We cannot expect “free trade,” whatever that means in today’s fractured context, to remain a guiding principle of government policy any longer. 17th century power dynamics in 2026. Cyberpunk.
13. JURISDICTION JUMP: From our friends at Offshore Alert, who we admire hugely, comes a warning that a recent US supreme Court decision (‘Fuld v. Palestine Liberation Organization’) has expanded the jurisdiction of American courts even further outside the country’s borders. This, according to experts cited at an Offshore Alert event, means that civil litigation pertaining to global cases is even more likely to be brought to US courts, with huge positive implications for the already powerful US law firms and adjacent investigations practices. “The new “outer bound” is unknown, but the line is much further now than most realize. We are in the middle of a “sea change” that will alter international litigation of all kinds, and particularly Asset Recovery and fraud litigation arising out of securities and financial litigation,” said Offshore Alert. Another rolling topic to keep a close eye on. By the way: Investigative reporter Jack Adamovic Davies, a friend of this publication, spoke at Offshore Alert’s Bangkok conference in March, and he came back with some amazingly cyberpunk photos. Enjoy.
14. SINO SHOUT OUT: The trend of all-encompassing geopolitics that we are jumping on in this newsletter has unsurprisingly been spotted by others in the media. Including by ex-journalist Samuel McIlhagga, who has expertise in the Spanish-speaking world. He recently launched an online service analysing and aggregating business developments relating to China in the South American region. Some of our readers will undoubtedly be finding this website useful. We suggest snapping up Sam’s weekly briefing while it’s still free! 
15. EMIRATI EMOTIONS: Global crime kingpin Daniel Kinahan was arrested in Dubai April 17. His capture came amid growing tensions over the fact that one of the world’s most wanted cartel bosses seemingly enjoyed total freedom and impunity in the desert. The Kinahan arrest will be analysed from a geopolitical perspective as a potential strategic shift by Abu Dhabi, to preserve its special relationship with the West, but it’s much too early to tell. One expert talking to the Daily Mail supported this angle, telling the paper that “The missile and drone strikes have strengthened the view here that they need the US more than they need Iran,” said the Mail’s source, pointing to the wanted (and sanctioned) status the Kinahans had with the US Drug Enforcement Administration and Treasury. “The Kinahans, given their links to Hezbollah and their pariah status with the DEA [Drug Enforcement Agency], are starting to become an embarrassment to the UAE – and this place is all about image.” The news comes as the UAE is also negotiating central bank contingencies with the US Fed in case of further escalation of the war in the region.
16. DALIO’s DECREE: Famous financier Ray Dalio, who is on the record saying that Chinese hegemony globally is more or less inevitable, has been publishing long explainers on his socials, theorising that we are about to enter an era of wars following the decline of US empire.The videos are convincing, and as we would expect from a lifelong successful investor, make brilliant use of charts, data and graphics. The firm editorial policy of this newsletter is that there’s more life than it currently seems in the old Western dog yet. But we are happy to air views to the contrary. It is interesting in and of itself that a career investor would use his trade’s methods to analyse historical events and make forecasts on the future of humanity writ large.

Alright, that’s it. We’ll be with you again next payday. Enjoy the rest of your Friday! Remember to subscribe, this letter may not be free next time!