FINANCIAL GEOPOLITICS AUGUST 2026: Sanctions high horse – Bond vigilantes – Cambridge cops

Hello, people. Most newsletters have paused for August but we kept going because we thought you’d need briefing as you get back to the world after holidays. Here’s a brilliant X post on something we have been saying for a while: “we live in actual cyberpunk now.” We have news on flaws in the EU’s sanctions announcement logistics, the ongoing global government bonds blowout, a little-noticed strategic change in British white collar crime enforcement, and more!

THE BROAD VIEW WITH FRIEDERICH LINDENBERG

Lindenberg is the founder of Opensanctions.org, a Berlin-based organisation tracking global sanctions designations and publishing a database that is widely used as a reference in the financial sector as well as the media. 

He caught our eye with a punchy LinkedIn post about how the latest EU sanctions package announcement page (briefly) linked to another official communique on equine metritis, which, as serious as it is, has nothing to do with sanctions because it’s a horse disease. He generously agreed to do an interview. The issue has been covered on this corporate blog as well, and our readership won’t need reminding that when billions of euros are at stake, messing up sanctions releases is not just horse play.

Between the EU Council, Commission, press service and other institutions all releasing their own documents and lists when sanctions are announced, it can be difficult for the private sector to keep up in the first hours and days, Lindenberg warned. (Reminder: violating sanctions is a crime even if done unwittingly.)

“That’s the risk: a bank or other financial organisation relying on the EU sanctions list for compliance would be exposed to fines of up to 10% of annual revenue for missing new designations,” according to Lindenberg.

“You basically need a team of lawyers to do exegesis on the amendment to figure out what’s going on. A couple of days, or weeks later, the Commission’s DG FISMA publishes an updated list of financial bans – but not some of the other measures imposed as part of EU sanctions,” said the expert. “The whole thing has splintered further, to the point where another part of the Commission eventually aggregates lists of sanctioned vessels and travel bans on a website that was originally a showpiece for the 2017 Estonian council presidency. In short, a consolidated European sanctions list doesn’t exist.”

We wanted to hear it from the horse’s mouth too, so we contacted the EU Commission for comment, and an official declined to offer an explanation of the equine equation. “We make every effort to ensure that Council press releases contain accurate information and the correct links to the relevant documents. If an error is identified, we try to correct it as quickly as possible.,” said the official.”All listings under all the different EU sanctions regimes are published in the Official Journal of the European Union.” The official pointed to the EU Sanctions Map website for further guidance.

“I feel like this stems from a mismatch between the legal experts in European institutions, who delight in developing ever more sophisticated instruments for restrictive economic policy, and those meant to implement the rules, who are legally required to use a list that doesn’t exist. This could be fixed easily if the Council and Commission coordinated on updating the lists, but maybe they’ve decided that this would scare President Putin,” Lindenberg said.

He suggested that the EU take inspiration from the US, where, “Designations are published, made easily accessible in a form that can be applied to IT systems immediately, and then enforced. A few weeks later, secondary sanctions are applied to a few companies or people that were caught trying to circumvent the initial designations,” he said. “My sense is that the EU views enforcement as a somewhat pedestrian concern, secondary to the legal reality they’re creating.”

Can we get another horse metaphor? Or do we risk flogging a dead horse? 

“What I’m saying is that if the EU wants to help Ukraine defend itself and win the war against Russia, we need to stop horsing around,” Lindenberg concluded.

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TOP LINES

1. THE BONDS THAT TIE: The bond (and stock) market has been the biggest ally of Iran in the war against the US, as President Trump fears inflation pressures and economic instability at home ahead of elections, and can’t push too hard against the regime in Tehran for fear something might break in the global financial sector. But as luck often has it, we might get the worst of both worlds, because even as the US has tempered its attacks, global bond yields have spiked higher, threatening financial stability in several countries, including, famously, Japan, where the US Treasury staged a much-criticised intervention to support the yen and tame the selloff in Tokyo’s debt. Meanwhile, the US Treasury also doubled limits on buying its own debt back to control yields and said it would use a special account to buy back up to a trillion in debt. An online mischief maker called the policy “Weimar-A-Lago”. One veteran City of London watcher told us that apart from bonds cratering, “Oil is high. Governments have no interest in cutting spending, a lot of things are going bad at the same time … central banks out of ammo and fiscal also out of ammo.” A second contact who trades commodities for a living on the European market said “Bessent reminds me of someone who already owes you money but has no shame in asking for more.” And the mullahs in Iran are still where they were when all this began. The US propped up the yen by selling euros, causing apoplexy at the European Central Bank, according to media reports. It is yet another piece of evidence of the fragmentation of the Western alliance. 

Our (non-financial, non-binding) partners at the Geopolitical Insight and Education Foundation (GIEF) have given us their expert’s exclusive analysis on this situation. Writes Ben Iorio, founder and director, GIEF, who has spent over 10 years advising international investors in financial and energy markets before he jumped ship to the nonprofit world: “Washington and Tokyo are now propping up global bond markets between them, doing work usually better left to market forces. Japan pulling the US Treasury into its first joint yen intervention since 1998 was a shift from ordinary currency defence into an attempt to stop a bond selloff turning into something much larger. The trigger was the yen’s slide to 163.73 per dollar, its weakest in nearly forty years, before the joint buying pulled it back to around 157.5. Japan holds just over $1.1 trillion in US Treasuries (Washington’s largest single foreign creditor, in fact), and a persistently weak yen risks triggering further selling in Japanese government bonds, with the spillover pushing yields higher well beyond Japan, including America’s own, a feedback loop both governments are fairly desperately trying to avoid. Each side is now managing the same risk from opposite shores of the Pacific.

“Trump’s calculus on Iran mirrors this. His administration has ruled out extending the ceasefire and rejected further talks with Tehran even as Treasury yields climb to their highest in decades, the ten-year near 4.75% (last seen in 2007), the thirty-year near 5.34%(last seen in 2002), and oil above ninety dollars a barrel, six months into a war that began in late February. A Reuters/Ipsos poll conducted July 29 to August 3 put approval of Trump’s handling of the cost of living at 23% and of inflation specifically at 22%, with 70% disapproving of both; a separate poll in mid-August put his overall approval at 33%, the lowest of his presidency, with only 16% of Americans expecting the Iran war to end quickly. War-driven inflation landing on top of that would normally argue for de-escalation. Instead, the war continues.

“Bond yields are thus, in a sense, doing the work diplomacy isn’t. That the Treasury reportedly funded its yen purchase by selling euros rather than dollars has drawn its own scrutiny: Analysts have read it as Washington trying not to draw attention to its own debt market while propping up someone else’s currency.

“Every basis point added to Treasury yields tightens financing conditions across the economy, at the moment the administration can least afford it politically. Japan’s own bond market is under separate strain, with ten-year JGB yields near 2.9%, their highest since 1996, driven by fiscal expansion plans, including a consumption tax cut on food, and by rising expectations of a Bank of Japan rate hike as its one percent policy rate looks increasingly out of step with a Fed still holding near 3.5 to 3.75%. That’s a second front opening on a market already absorbing shocks from the Middle East.

“What’s emerging is a shared vulnerability; not a coincidence at all. Washington needs Tokyo’s cooperation to keep its own yields from spiralling; Tokyo needs Washington’s restraint on Iran to keep energy costs, and with them inflation and bond pressure, in check. Neither government controls the other half of the equation – nor indeed the outside pressures on either situation, most notably Iran’s own agency in the war, along with its allies – which is precisely what makes this moment so precarious.”

2. POCKET BANK: Just as global markets, including former close colleagues of Treasury Secretary Bessent, are wondering about the policy direction of the US, World Liberty Financial, the Trump family’s cryptocurrency venture, is set to receive a banking license. We do hate to repeat ourselves ad nauseaum but we have been saying to our readers for a while that there are more and more alarming signs of the West today following in the footsteps of Russia and Eastern Europe in the 90s. This is one. Eastern Europe always had a problem with “pocket banks” that were controlled by politically active, or politically connected businesspeople, and used to amplify their power. Given the way that banks are allowed to write loans and largely mark their own homework (at least for a while) in regards to their capital position, these pocket banks have proved extremely destabilising for Eastern European countries such as Russia, Moldova, Ukraine, Latvia and others. One to watch.

3. TRADE TRICKS: Since they don’t have enough to deal with, the US also escalated a trade conflict with Canada, putting $50 billion in tariffs on their neighbours, triggering retaliatory measures – just as the blockade on Iran and a new round of sanctions on its oil and financial services are ramping up as well, and days after ramping up trade pressure on Cuba, too. All of this means that people might be tempted to skirt the rules, inter alia by mislabelling shipments of products to duck fees or, worse, sanctions, warned leading analytics company Sayari in a post on LinkedIn. A new rule coming into force in September will mean importers who have errors in their paperwork will be under additional scrutiny and could get barred. “Filing information you know or should know is wrong puts your license on the line,” the experts said.

4. CAMBRIDGE COPS: An exclusive bit of news from the Cambridge Economic Crime Symposium, where your correspondent was invited this week on condition of upholding the Chatham House rule. The conference is a flagship event of the global anti-financial crime calendar, with current and former officials in attendance from all five continents. The most eye-catching thing for us came from senior British law enforcement officials who said that amid an ongoing gridlock in the criminal courts delaying cases by years and new policies letting crooks off after serving 40% of their sentence, investigators will put more resources into recovering money and assets as an alternative deterrent. Also, high-value clothing and cars are being added to the list of what can be seized by authorities, according to a top cop. A recent example relates to breaches of Russia sanctions. Meanwhile, serious fraud prosecutors are gearing up to launch whistleblower rewards in the near future, according to people present at the conference, following the quiet but successful implementation of such a system by His Majesty’s Revenue and Customs last year. US officials at the same event who have long experience of whistleblower rewards said that this more mercantile way of delivering justice is “only getting started” globally and other allied countries like Australia are also set to adopt it. This means more fraud cases, unexplained wealth orders and general criminal-linked forfeitures in civil courts for the lifers out there who follow these things – happy days!

5. TBILISI TV: Two weeks ago we exclusively reported on a curious situation – global snack company Pepsico continued to advertise on Imedi TV in Georgia, despite the channel being sanctioned by the UK for its pro-Russian propaganda vis-a-vis the Ukraine war, even as Pepsico has a major presence in Great Britain. The company said the ads broke no rules and three lawyers we spoke to for the story confirmed it, but warned that risks remained, including of any future “UK nexus” whereby the part of the company involved in the ads has any UK connection. The story made waves in Georgia, being picked up by several media outlets, including a (non-sanctioned) national TV channel.

6. NUKES FOR FLUKES: The UK may be positioning itself to profit from Europe’s cratering confidence in the US under President Trump. Newspapers have suggested that a new arrangement between the UK and EU could open up trade between the two places without London necessarily becoming a dreaded “rule taker” from Brussels – in exchange for the Brits expanding their nuclear deterrent to include threats to Europe. All this as the UK market is said to become the biggest holder of US debt, echoing the good old days of the eurodollar in the City of London. One of our favourite finance writers, Izabella Kaminska, suggested that US free trade on capital markets and EU free trade on goods could be a strategic game changer for Britain, which admittedly deserves a good run after a few years of polycrisis. It’s obviously a far-fetched idea, but it is delightfully geopolitical and therefore earns its place in the newsletter. Academic David Blagden, a geostrategy expert from Exeter University, was sceptical.

7. BUNKER BOYS: Speaking of nuclear war… Very rich people, or maybe especially them, are subject to fads and trends just like everyone else. And the current thing, which we are neither endorsing nor trying to prove wrong, is to seek shelter for themselves and their assets in case of World War 3, something that the ever-opportunistic services industry catering to the UHNW (ultra-high net worth) population, is more than happy to help with. Switzerland is building 007-style mountain bunkers for the valuables of the global rich, Swissinfo says, while in Argentina, an entrepreneur with Silicon Valley links is planning to build a whole town that could carry civilisation forward post-Pandaemonium, according to the FT. 

8. STRATEGIC DEUTERONOMY: As Europe’s leaders took a not-so-well-deserved break from it all in August, the news cycle felt like something out of a cyberpunk version of the Old Testament. Raging wildfires, drone incursions in Romania, Bulgaria and Moldova, explosions at strategic sites in Italy and The Netherlands, geopolitically weaponised mass migration, an near-mass casualty event at Leipzig airport, and more recently, revelations that China and Russia are manipulating and secretly boosting left-wing pro Palestine protests in Europe in order to create as much chaos as possible in the West. The CIA director himself paid a semi-public visit to Moscow on August 25, triggering speculation, which the WSJ seems to have confirmed, that he was there to warn Putin off further military escalation in NATO countries by way of sabotage, terrorism and other time-honoured tools of Russian statecraft. Which is exactly what the rich people surveyed in the aforementioned FT article said would prompt them to bunker down.

9. MOLDOVAN TIMES: The New York Times published a useful story on Moldova, covering, without credit, much of our own previous and genuinely exclusive reporting around the notorious oligarch Ilan Shor and his sanctions-busting A7 cryptocurrency firm. We noted a few small (but amusing) errors in the article and wished our competitors good luck.

For our readers at least, there won’t be much news in Putin adopting the same stance on Russia’s Western neighbours as every other Russian leader going back at least 200 years. For those who haven’t read Joseph Conrad’s The Secret Agent, it’s a wonderful novel set in London in the 1800s about an anarchist bomb plot at Greenwich, discreetly supported by the Russian Embassy. The more things change, the more they stay the same.

10. CRYPTO CORNER: A series of interesting but not necessarily related updates emerged in August on the subject of cryptocurrency and geopolitics. A shot and chaser from our trusted associate Thomas Rowley: Russian generals are said to have made a stampede to crypto exchanges to convert bags of cash they kept lying around their private residences during a recent corruption crackdown; Police officers were sentenced in Russia for embezzling the accounts of clients of the infamous, sanctioned crypto exchange Garantex, which has its own criminal and Kremlin connection that your correspondent co-wrote about in 2024 at the ICIJ. Also from ICIJ a peach of a feature dissecting the ownership and the risks posed by the structure of Tether, arguably the world’s most important stablecoin, which has taken on a strategic role in the US via its top-notch political links. From our friend Koos Cuvee, the editor of the Europe desk of moneylaundering.com, an exclusive on sanctioned crypto exchange HTX saying it remains a member of a key industry group sharing information on financial crime. 

Alright, that’s it. Enjoy your time and please don’t forget to send us interesting links and thoughts on matei@reporter.london. We’ll be back on payday in September.

Special thanks to BM who helped edit as usual.

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