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Source: Reuters

President Donald Trump has the chance to begin the reconstruction of the Gaza Strip. Delay will only destabilize the situation.

President Donald Trump's peace plan for Gaza, and his best hope for a Nobel Peace Prize, needs a big push when he meets with Israeli prime minister Benjamin Netanyahu on December 29. As of Christmas, the plan appears to have stalled, but that is only partly true. Hamas's refusal to surrender its weapons is the big problem—but the solution is far more in President Trump's hands than most realize.

I led postwar planning for Iraq at the US State Department and worked on post-conflict operations in Bosnia, Kosovo, Iraq, East Timor, Libya, and Afghanistan. After Hamas' terrorist attack on October 7, 2023, along with many others, I warned of the dangers of failing to plan for postwar Gaza and joined a group of former senior officials to develop a plan for postwar Gaza. President Trump and his team, working with Israel and Arab allies, deserve the credit for Trump's twenty-point peace plan, codified in United Nations Security Council Resolution 2803.

Our plan got closer to Trump's final plan than anyone else: international governance for a transitional period, an international oversight board, working with Palestinians from Gaza, backed up by an international stabilization force, authorized by a United Nations Security Council resolution, with a non-American in charge of the civilian effort and a US general heading up the International Stabilization Force (ISF).

All living and all but one deceased Israeli hostages have been returned, but Hamas has neither disarmed nor given up governance of the west of a "Yellow Line" that divides Gaza in half. Apart from a Civil-Military Coordination Center in Kiryat Gat, Israel, no country has sent forces for the ISF that will provide security, oversee Hamas's disarmament, and allow the Israeli army to withdraw to Gaza's borders.

The Board of Peace, which Trump will chair, will not be announced until January. The Palestinian technocratic committee tasked with rebuilding Gaza's infrastructure has not yet been named. An executive committee that will handle vital day-to-day coordination among internationals, Palestinians, Israelis, Egyptians, and donor states has only four known names: highly respected Bulgarian diplomat Nikolay Mladenov, US envoy Steve Witkoff, Trump's son-in-law Jared Kushner, and former British prime minister Tony Blair.

While visionary plans exist, nobody has put up the money needed to start anything. Arab governments will not finance Gaza's reconstruction as long as Hamas retains its weapons, the use of which would invite Israeli retaliation, destroying whatever was rebuilt. Some think both Hamas and Israel are slow-rolling Trump's plan, increasing the suffering of the two million Gazans living in desperate circumstances and putting the security of both Israelis and Palestinians at risk while Hamas increases its chokehold over half of Gaza's territory and most of Gaza's people.

Despite this, much has been going on behind the scenes, but Trump now has to make a key choice among three clashing visions.

One, which Prime Minister Netanyahu will likely push, is Trump's approval for Israeli military action against Hamas fighters. The strategic logic is that a further weakened Hamas would eventually be unable to interfere with Trump's peace plan. However, this would result in Israeli and many Gazan casualties and disruption of humanitarian aid. How long this would take is unclear. Also, Netanyahu reportedly wants US support for an attack on Iran's missile program, which Iran is actively rebuilding. He may also ask for Trump's authorization to attack Hezbollah if it refuses to turn over its weapons to the Lebanese armed forces. Trump may agree to one of these ideas, but he will not agree to all of them.

The second is the plan that the Tony Blair Institute developed last summer. A leaked draft from September in Haaretz has a small international "executive secretariat" with five "commissioners" overseeing a Palestinian Executive Authority (PEA) that actually runs Gaza. This plan puts substantial responsibilities on the local Palestinians, who would not be affiliated with Hamas. Still, the leaked draft is weak on how Hamas would be disarmed and how to keep Hamas from extorting or coercing Gazans, including those in the PEA, into obeying its will.

It calls for partial deployment in the first two years, with full operations only in Year Three, which is too late. Audit mechanisms appear significantly understaffed. Corruption is a major reason many Palestinians mistrust the Palestinian Authority in Ramallah, and support for Gaza's reconstruction will evaporate if it replicates this failure.

With a total budget of only $90 million in the first year, the plan appears too small to oversee the amount of work required to start Gaza's physical and social reconstruction. This plan has almost certainly been improved since September, but Trump will want to know whether these problems have been addressed.

The third option is the Gaza Supply System, developed by Americans reporting to Witkoff and Kushner, which would use private capital to jump-start Gaza's physical and social reconstruction east of the Yellow Line, while employing private security contractors in roles the International Stabilization Force is unwilling to undertake. This would get around two roadblocks: first, no Arab governments have actually contributed billions of dollars to Gaza's reconstruction, and second, private security contractors are willing to work in Gaza even while the United States insists on no US boots on the ground, and other countries are unwilling to have their troops confront Hamas.

According to an article from The Guardian, private investors would be repaid for jump-starting Gaza's reconstruction through tariffs or tolls on aid and commercial trucks entering Gaza. The United States government similarly relied on customs duties and tariffs to fund public services and security until the advent of the income tax.

Historically, Hamas also charged tolls on aid trucks and taxed Gazans bringing in cash from jobs in Israel. And charging tolls on incoming trucks provides private investors with a positive incentive to increase the number of trucks entering Gaza, aligning their interests with those of the Gazan people while ensuring robust but not excessive security inspections.

Trump will have to decide soon which of these three competing proposals he will support. Waiting on Hamas to voluntarily disarm is unlikely to succeed, prolonging both the misery of 2 million Gazans and the security risk to both Israelis and Palestinians. Arab governments have not embraced Blair's plan.

The people of Gaza and Israel need to see progress, and waiting for an enlarged version of a postwar governance plan to be funded and staffed in mid-2026 is dangerously late. President Trump should approve a plan that starts, urgently, Gaza's physical and social reconstruction. The Gaza Supply System model, for all its limitations, is currently the best available approach to jump-start some level of security and reconstruction in at least half of Gaza. We have to start somewhere—and we need to start now.

Source: The National Interest

China announced largely symbolic sanctions against 20 US defense companies and 10 executives, signaling its anger over Washington's latest arms sales to Taiwan while stopping short of a broader escalation.

The Chinese Foreign Ministry said on Friday it would sanction companies including Northrop Grumman Systems Corp., L3Harris Maritime Services, Boeing's operations in St. Louis, as well as Vantor, formerly known as Maxar Intelligence. The measures include freezing any assets the companies hold in China and banning them from doing business with Chinese entities.

China is also targeting executives at defense companies, including Palmer Luckey, founder of Anduril Industries Inc., and Vantor Chief Executive Officer Dan Smoot, freezing their assets in China and barring dealings and entry to the mainland, Hong Kong and Macau.

The sanctions follow what Beijing described as "large-scale" US arms sales to Taiwan. The State Department said last week that Washington has approved a package worth up to $11 billion — one of its largest ever for the island — covering equipment including missiles, drones and artillery systems.

"Any provocative actions that cross the line on the Taiwan issue will be met with a forceful response from China," a Foreign Ministry spokesperson said in an accompanying statement on Friday. "Any enterprise or individual involved in arms sales to Taiwan will pay the price for their misguided actions."

In reality the impact of the measures is likely to be limited. Most of the companies and executives targeted have little or no presence in China, and some were already placed on the Commerce Ministry's unreliable entity list.

China views Taiwan as a breakaway province that must ultimately be brought under its control, by force if necessary — a position Taipei firmly rejects. Since President Lai Ching-te took office in May 2024, Beijing has stepped up military pressure on the self-governing island of 23 million people.

The issue continues to loom large in US-China relations. In a phone call last month, Chinese leader Xi Jinping told President Donald Trump that Taiwan's return to China was an "integral part of the postwar international order."

Nevertheless, Beijing and Washington have sought to steady ties. They agreed to a one-year truce in their trade dispute, under which China ensures US access to rare earths vital to industries ranging from smartphones to missile systems, while the US lowers tariffs on Chinese goods.

Source: Bloomberg Europe

As usual when Donald Trump occupies the White House, 2025 condensed a decade's worth of political upheaval into a single year. Identifying the most important of those developments is like picking through the wreckage to find a few family heirlooms after a tornado has torn through the neighborhood.

But in the swarm of conflicts, controversies, personnel changes, policy reversals, legal battles, feuds and shifting alliances, several dynamics emerged this year that are most likely to shape the electoral landscape in 2026, 2028 and beyond.

Of those key developments, the most significant was the collapse of faith in Trump's ability to manage the economy. In virtually every survey during Trump's first term, more people approved than disapproved of his handling of the economy. Moreover, his approval rating on the economy almost always exceeded his overall job performance rating, which meant that confidence in his economic agenda was a floor bolstering his support no matter which other controversies engulfed him.

Now, that equation has reversed. Recent surveys routinely show that fewer people approve of Trump's management of the economy than at any point during his first four years; most national surveys this month have shown that 40% or fewer Americans give him positive marks on the economy, and even fewer give him good grades on the cost of living — the problem that tops every survey as Americans' biggest concern. It's a complete inversion from his first term: The economy is now dragging down overall assessments of his performance.

To some extent, Trump is simply suffering from proximity: presidents' approval ratings always sag when voters are unhappy with the economy, as they are today. (Like other presidents, he's found that efforts to blame his predecessor for current conditions fall flat after a few months.) But Trump's problems extend beyond that. Polls consistently find that most Americans believe he has not focused enough on their cost of living. Even more damaging, more voters say his agenda has hurt than helped their finances, often by a crushing margin of two or three to one. Voters particularly dislike his tariffs.

The bottom line: Trump's greatest asset during his first term — confidence in his economic mastery — has become his biggest albatross in his second. "Unless there's a fix to inflation … I think the economy is going to continue to drag him down," says Democratic pollster Jay Campbell, part of the bipartisan polling team that surveys attitudes about the economy and politics for CNBC.

The crumbling of confidence in Trump's economic performance largely explains 2025's second key electoral dynamic: the reversal of the president's beachheads among the new voter groups central to his reelection. In 2024, Trump notably improved his previous performance among several big constituencies—Latinos, young men and non-White voters without a college degree. Republican strategists dreamed of realignment.

But Trump's standing with those groups has rapidly deteriorated. Recent surveys that extensively examined attitudes among Latinos and young people, both with much larger samples than typical public polls, found his approval rating with each group has plummeted below 30%.

Frustration over the economy explains much, but not all, of that decline. In the Pew Research Center's massive recent Latino survey, for instance, more than 7 in 10 said the administration is doing too much to deport immigrants; nearly 8 in 10 said his overall agenda was hurting the Latino community. (Even a third of his 2024 Latino voters said his policies were harming the community.) Former Republican Representative Carlos Curbelo, who represented a heavily Latino South Florida district, told me that Trump "had a lot of rope" with Latinos, but has squandered that opportunity with his militarized deportation offensive. "They have gone way too far," Curbelo added. "It's going to be hard for Republicans to recover some of this support."

Which brings us to the third important development of 2025: In the normal hydraulic fashion of American politics, Trump's fall allowed Democrats to run well in this year's major elections. But the Democratic Party's overall public image remains weak.

That may not matter much next year, because midterm elections are predominantly a referendum on the incumbent president's performance. But "in 2028, the question of who we nominate matters enormously," says Simon Bazelon, an adviser at Welcome, a new centrist Democratic group. Even if Democrats win "a referendum on Trump's unpopularity in 2026," he adds, it would be a mistake to conclude "voters are happy with us again, when in fact they may still be angry at us."

The heated argument between progressives and centrists over the party's direction will play out next year in Senate primaries in Maine, Michigan, Minnesota, Iowa and Texas among other places. But the real battle will come in the 2028 presidential primary. And that race may turn less on ideology than on disposition — who Democratic voters believe is the candidate most committed to fight, and most likely to beat, Trump's Make America Great Again movement.

At home and abroad, Trump is governing as if he feels himself completely unbound. But while other Republican officials, with the rarest exceptions, have bowed to his excesses, he's provoked a clear recoil among voters beyond his core coalition.

In that way, 2025 reaffirmed the most important political trend over roughly the past 60 years. The rapid erosion of Trump's 2024 breakthroughs underscored that we continue to live through the longest period in American history when neither party has been able to establish a durable advantage over the other. The last five times a president has gone into a midterm election with unified control of the federal government (the White House, House and Senate) voters have revoked it — the longest such streak in American history. Nothing that happened in 2025 suggests Trump can stop that wheel from turning again in 2026.

Source: Bloomberg Europe

Japan's Industry Ministry is set to nearly quadruple its budgeted support for cutting-edge semiconductors and artificial intelligence (AI) development to about 1.23 trillion yen (S$10.1 billion) for the fiscal year starting in April.

Overall, the Ministry of Economy, Trade and Industry's budget rose by about 50 per cent from the previous year to 3.07 trillion yen, largely due to the jump in chips and AI spending.

After Prime Minister Sanae Takaichi's Cabinet signed off on it on Dec 26, the government's initial budget plan will be debated in Parliament in the new year.

The jump in chips and AI spending comes at a time when Japan is trying to strengthen its capacities in frontier technology, as the US and China race ahead. As the world's two largest economies remain on tense terms despite a lull in their trade war, Japan is also trying to secure better supply chain access for key technologies.

Starting with the fiscal year beginning in April, the ministry also plans to secure most of the additional funding for chips and AI in regular budgets, instead of through the more ad-hoc approach of funding it through extra budgets later in the year. That is expected to provide more stable funding to the sectors.

For semiconductors, the ministry has earmarked 150 billion yen for state-backed chip venture Rapidus, bringing the cumulative government investment in the venture to 250 billion yen.

For AI, 387.3 billion yen is being marked for the development of domestic foundation AI models, strengthening data infrastructure and "physical AI", in which AI controls robots and machinery.

In the broader budget, 5 billion yen is being set aside for securing key minerals, including rare earths. For decarbonisation, 122 billion yen is earmarked for areas such as the development of so-called next-generation nuclear power plants.

Some 1.78 trillion yen of special bonds will also be issued to help state-backed Nippon Export and Investment Insurance support Japanese investment in the US as part of the two countries' trade agreement.

Source: Straitstimes

USDJPY is showing a recovery amid weak inflation in Tokyo and expectations of a pause in BoJ policy tightening. The current price is 156.29.

USDJPY forecast: key takeaways

• The Japanese yen remains under pressure amid slowing inflation in Tokyo
• Tokyo's annual inflation rate fell to 2.0% in December, the lowest level in more than a year
• Slowing inflation increases uncertainty regarding the timing of further BoJ policy tightening
• USDJPY forecast for 26 December 2025: 157.45

Fundamental analysis

USDJPY is showing a recovery after declining for three consecutive trading sessions. Sellers failed to secure a breakout below the key support level at 155.75, which triggered renewed buying activity.

The Japanese yen came under pressure amid a slowdown in inflation in Tokyo, reinforcing expectations that the Bank of Japan may pause its rate-hiking cycle. Tokyo's annual inflation rate slowed to 2.0% in December, marking the lowest reading in more than a year. The decline was mainly driven by easing price pressures in food and energy components.

Tokyo inflation is regarded as a leading indicator of nationwide inflation dynamics and is closely monitored by the regulator. Its slowdown increases uncertainty around the timing of further monetary policy tightening by the Bank of Japan, which continues to weigh on the yen and supports a bullish outlook for USDJPY.

USDJPY technical analysis

USDJPY has consolidated above the upper boundary of the descending channel. Despite the previous bearish impulse, buyers managed to hold prices above the EMA-65, indicating a significant slowdown in bearish pressure and a potential shift in market dynamics.

The USDJPY forecast for today suggests further upside with a target at 157.45. Additional confirmation of the bullish scenario comes from the Stochastic Oscillator: its signal lines have turned upward after rebounding from the oversold zone, indicating renewed buying pressure.

A sustained breakout and consolidation above the 156.15 resistance level would strengthen bullish positions and confirm the potential for continued upward movement toward new local highs.

Summary

USDJPY technical analysis points to a sustained bullish bias, with the potential for further growth toward the 157.45 level amid slowing inflation in Tokyo, which continues to pressure the Japanese yen.

Source: RoboForex