November 3rd, 2026: Trump's Economic Offer to Putin & China's Expanding Warship Fleet

It's Tuesday, the 3rd of November. Well, would you look at that? It's Election Day in the U.S. You may have heard about the U.S. midterm elections. Welcome to the President's Daily Brief. I'm Mike Baker. Your eyes and ears on the world stage. All right, let's get briefed. First up, the Trump administration is exploring a controversial proposal to restore Russian natural gas sales to Europe. Look, it's another concession to Putin in hopes of securing a ceasefire in Ukraine. But the plan faces serious opposition as Russian forces continue their deadly attacks on Ukrainian civilians. Later in the show, America's naval dominance is facing its biggest challenge as China builds a massive fleet of warships and aircraft carriers designed to challenge U.S. military power in the Pacific. Plus, the latest from the ground in Yemen, where the Iran-backed Houthis have advanced to within 50 miles of the city of Aden. That's the temporary capital of the country's internationally recognized government, marking their closest approach to the city in more than a decade. And in today's back of the brief, hackers are targeting supermarket refrigerators across Europe. Hmm, which is not a sentence that I've ever said before. I'll have the details. But first, today's PDB spotlight. We begin today with a controversial new proposal from the Trump administration that could see Russian natural gas flowing back into Europe, potentially providing Vladimir Putin with a lucrative economic opportunity while his military continues its war against Ukraine. According to a new investigation by the Wall Street Journal, American officials are pushing to restore Russian natural gas sales to Europe. And they're pushing to restore Russian gas shipments through pipelines crossing Ukrainian territory, hoping that the financial incentive will persuade Moscow to agree to a ceasefire targeting energy infrastructure ahead of winter. The proposal was reportedly raised by Trump's envoys. Are they the only two U.S. envoys? Steve Whitgoff and Jared Kushner during meetings with Russian and Ukrainian officials in September. Under the arrangement, Russian gas would flow through Ukraine to European customers, potentially with an American company acting as an intermediary. Ukraine would collect transit fees, while Russia would regain access to a market that once generated enormous revenue from Moscow. The administration has proposed, reportedly, placing Russia's proceeds into an escrow account in a third country, theoretically preventing the Kremlin from using that money to finance its military operations. The thinking behind the proposal is that the U.S. and Ukraine should be responsible for restoring Russian gas to Europe, and the Russian government should not be the one to do so. It's unclear what the incentive is for Russia if their revenues from selling gas are put into an escrow account that limits how they use the funds, which leads one to assume that the incentive is that they will be able to access those funds. And Ukraine would collect transit fees, which in reality would be insignificant compared to the sales proceeds that Russia would theoretically make. The U.S. and Ukraine would collect transit fees, which in reality would be significant compared to the sales proceeds that Russia would theoretically make. The U.S. The U.S. Ukraine is facing another difficult winter, of course, with ongoing Russian strikes severely damaging its energy infrastructure. European gas supplies are also under pressure, particularly as the ongoing conflict with Iran disrupts shipments from the Persian Gulf. Washington hopes that renewed gas sales could ease Europe's energy concerns, provide Ukraine with transit revenue, and give Moscow a financial incentive to stop attacking Ukrainian power plants. But there are some serious questions about whether this approach would actually work. Are there really? Oh, look, there's some serious questions. First, consider what Europe has spent the past several years trying to accomplish. Before Russia's full-scale invasion of Ukraine in 2022, Moscow supplied approximately 45 percent of Europe's natural gas. Well, that dependence gave Putin enormous economic leverage over European governments. Since the invasion, European countries have spent billions diversifying their energy supplies, building new infrastructure, and reducing their reliance on Russia. Today, Russian gas accounts for approximately 11 percent of European consumption. And the EU has adopted legislation requiring Russian natural gas imports to be phased out completely by the end of 2027. Now, the Trump administration is floating a proposal that could reverse that progress. And there's an interesting historical contradiction here. During his first administration, President Trump repeatedly criticized Germany for pursuing the Nord Stream 2 pipeline, warning that reliance on Russian gas would leave Berlin vulnerable to Moscow. He even imposed sanctions on the project back in 2019. Now, Washington is exploring ways to restore the same energy relationship that President Trump once argued was dangerous. European officials are understandably skeptical. They argue that allowing Russian gas back into their markets would restore some of Moscow's natural gas supply. But they don't know what to do. They don't know what to do. Moscow's economic influence potentially undermines sanctions and creates new vulnerabilities that Europe has spent years trying to eliminate. And while an escrow arrangement might, and I emphasize the word might, restrict Moscow's access to the money, exactly how that would be enforced remains, of course, an open question. Again, if their access is restricted, it's likely Putin will not view this offer as an incentive. And if they are given access, it's likely that Putin will use some, if not all, of the proceeds to fund his war machine. There's also the issue of what specific concessions Russia might make in some distant limited peace deal. The Journal reports that Ukraine recently suspended attacks on Russian oil refineries for nearly two weeks under pressure from Washington. But during that pause, Russian forces continued attacking Ukraine's energy infrastructure. Kiev eventually resumed its strikes against Russian refineries on Friday. Effectively demonstrated a willingness to reduce pressure on Russia's energy sector, but Moscow did not respond with comparable restraint. And now Washington is discussing an arrangement that could offer Russia substantial financial benefits in exchange for a promise to stop some of those attacks. And the reality is the Kremlin is not embracing the proposal. On Monday, spokesman Dmitry Peskov said that current conditions make restarting Russian gas shipments through Ukraine practically impossible. Although he left open the possibility of future discussions. Meanwhile, three-way negotiations involving the U.S., Russia, and Ukraine are reportedly being planned for the middle of November in Abu Dhabi. And as those diplomatic efforts continue, well, we received another reminder Monday of the brutality of Putin's war. Russian forces launched a devastating bomb attack on a village in southeastern Ukraine. According to Ukrainian President Zelensky, the initial strike hit a school. Zelensky said the bomb was being used to distribute humanitarian assistance to civilians. He says Russian aircraft then dropped nine additional bombs on a nearby shelter where residents had gathered. Ukraine's emergency services reported 24 people killed, with approximately 20 others still missing as rescuers searched through the rubble. Additional Russian drone attacks reportedly complicated the rescue operation. Zelensky condemned the bombing, saying it demonstrated that Moscow had no genuine interest in de-escalation. And that brings us back to the administration's proposal. There's nothing inherently wrong with using economic incentives to pursue a diplomatic settlement. If an agreement could protect Ukrainian civilians, keep the lights on through winter, and move the two sides closer to ending the war, well, that would be a significant accomplishment. But incentives only work when the other side is prepared to make meaningful concessions. And after nearly five years of Russia's full-scale invasion, Putin has not given a word. But he's prepared to do that. The Trump administration continues to act as if the answer to this conflict is to make concessions to Putin, thinking that he'll show goodwill and sit down at the negotiating table for meaningful discussions. One could argue that, instead, Putin views each concession from the White House as a sign of weakness, which only incentivizes him to continue on his current path. All right, coming up next, China's growing navy. Challenges American dominance in the Pacific. And Iran-backed Houthi forces advance toward the seat of Yemen's internationally recognized and Saudi-backed government. I'll be right back. Hey, Mike Baker here with an important message for homeowners. Now, one of the most frustrating things, I suppose, about owning a home is that major repairs never seem to happen at a convenient time. You know what I'm talking about. 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That's HomeServe.com slash Daily Brief for 50% less. Savings are compared to renewal price void in Florida. Welcome back to the PDB. For many decades, the U.S. Navy has been the world's dominant maritime force, capable of projecting American military power almost anywhere on the planet. But China is mounting an increasingly serious challenge to that dominance, and by one important measure, Beijing has already surpassed Washington. According to a major investigation by the Wall Street Journal, China's Navy now operates more than 400 warships and submarines, compared with roughly 290 American vessels. That gives Beijing a lot of power. But the U.S. Navy has been the world's dominant maritime force, capable of the world's largest Navy by ship count, with a fleet approximately 35% larger than America's. And the speed of China's expansion is remarkable. Since 2020, Beijing has added 71 major warships and submarines to its fleet, including 19 last year alone. But perhaps the most interesting part of the journal's investigation is how China got here. Back in 1998, a little-known entertainment company based in Macau purchased an unfinished Soviet aircraft carrier from Ukraine. The vessel, called the Vryag, had been sitting unfinished in a Ukrainian shipyard since the collapse of the Soviet Union. The Chinese buyers paid roughly $20 million for it, claiming that they intended to transform the enormous warship into a floating casino. But the vessel never became a casino. Instead, China hauled it home, spent years rebuilding it, and eventually commissioned it as the Liaoning, the country's first operational aircraft carrier. That was in 2012. Today, China operates three aircraft carriers, with a fourth reportedly under development. And the Pentagon estimates Beijing could eventually have nine carriers by the year 2035. It's an extraordinary transformation for a Navy that, just a few decades ago, was largely confined to defending China's coastline. Under President Xi Jinping, that mission has changed dramatically. Beijing is building a Navy capable of operating across the Pacific. China is building a Navy capable of operating across the Pacific. But the real story may not be the warships. It's the industrial machine that's building them. The Wall Street Journal examined China's enormous shipbuilding industry, which now produces more than half of the world's commercial vessels. At one massive facility near Shanghai, satellite imagery revealed multiple destroyers, cruisers, frigates, and amphibious assault ships under construction. The satellite imagery revealed multiple destroyers, cruisers, cruisers, frigates, and amphibious assault ships under construction, or undergoing maintenance. And Beijing keeps expanding those facilities. Now, that's a significant advantage in any potential confrontation with the U.S. Because building a powerful Navy isn't simply about how many ships you have when a war begins. It's also about how quickly you can replace damaged or destroyed vessels, repair existing ships, and keep additional warships coming off the production line. And right now, China's shipbuilding industry operates on a scale larger than any other nation. The U.S. still possesses enormous naval advantages, of course, including more experienced carrier operations, advanced nuclear submarines, and the ability to sustain military deployments around the world. American warships are also generally larger, meaning the U.S. Navy retains an advantage in total fleet tonnage. So, counting ships alone doesn't tell us which Navy would win a war. But there's another factor to consider, and that's geography. China doesn't necessarily have a plan to win a war, but it does have a plan to win a war. China doesn't necessarily need to defeat the American Navy everywhere in the world. In a confrontation over Taiwan, for example, Beijing would be fighting relatively close to home, supported by land-based aircraft, missiles, and an enormous network of military installations along its coastline. American forces, meanwhile, would have to operate thousands of miles from the continental U.S., relying on bases and logistics networks spread throughout the Pacific. And that's how Beijing is steadily expanding operations beyond its traditional coastal waters, sending carrier groups deeper into the Pacific and deploying warships around places like Taiwan and Australia. The objective is to make it increasingly difficult and potentially much more dangerous for the U.S. to intervene militarily in China's backyard. Meanwhile, America's own shipbuilding industry has struggled with delays, rising costs, and shortages of skilled workers. The Journal reports that the U.S. Navy has been working on a series of operations that U.S. naval shipbuilding spending has doubled over the past 20 years without producing a substantially larger fleet. The Trump administration has acknowledged those problems and is pursuing efforts to rebuild America's shipbuilding capacity. But restoring an industrial base capable of competing with China's, well, that could take years. All right, I want to turn now to what's happening on the ground in Yemen, where Houthi rebels are taking territory and forcing government troops back toward Aden, that's the internationally recognized government's temporary capital. They're now just 50 miles away, that's 5-0. 50 miles away, that's their closest approach to the city since 2015. To understand the danger here, let's look at what's happened in just the past three days. Four military sources told Reuters that the Houthis launched an assault on government positions in Al-Makatira, that's a mountainous district in southwestern Yemen. By Monday, those sources said the entire district had been bombed. The Houthis said that the Houthis had been bombed. The Houthis had fallen. Government troops were forced to retreat toward neighboring Tarel Baha. That's one of the main approaches to Aden. Fighting was still underway yesterday at a military camp near its entrance, and that's 50 miles from Aden. We've been following this broader Iran-backed Houthi offensive since it began in September, with the rebels pushing south along Yemen's Red Sea coast. Now, that campaign is moving farther inland toward Aden. A Houthi official also posted a video. The video, he said, showed the group's fighters entering Al-Makatira. Reuters could not immediately verify the footage. The terrain the government forces have lost makes that retreat especially concerning. Al-Makatira overlooks the main road connecting Aden with Tez, Yemen's third-largest city. That road had been Tez's last remaining link to government-held territory until the Houthis cut it in early October, encircling the city. More than 100,000 people have already been displaced by the siege, and residents are said to be running short of food, fuel, and medicine. Another danger looms for the government troops trying to stop them. Government forces had only recently driven Houthi fighters out of parts of the mountain range overlooking the Bab al-Mandeb Strait. Military sources say this latest advance could allow the rebels to move around those defensive positions, threatening gains the government made just weeks ago. The city itself has already come under attack. The Houthis struck its airport last Wednesday, and the Houthis have been fighting the Houthis since then, after warning people to evacuate, and the presidential palace was hit in October. For the internationally recognized government, losing Aden would mean losing the place that it's governed from since being driven out of Sana'a. Now, some of you may recall that the Houthis briefly entered Aden back in 2015, before government-aligned forces backed by Saudi Arabia drove them out. If they returned and took the city, government leaders could be forced to leave. Now, that would not automatically erase every government foothold in Yemen, of course, but losing its temporary capital and main stronghold would make governing from inside the country far harder, while handing the Iran-backed Houthis a major military and political victory. The stakes also extend beyond Aden. The broader Houthi offensive has brought territorial gains near the Bab al-Mandeb Strait, and that, of course, is the narrow passage connecting the Red Sea to the Arabian Peninsula. Those gains give the Iran-backed rebels more opportunities to track and threaten passing ships, putting commercial traffic and energy shipments at greater risk. For Saudi Arabia, the pressure is even more direct. The kingdom is backing Yemen's internationally recognized government while facing renewed Houthi attacks on its own territory. The Saudi-led coalition has responded by stepping up strikes on Houthi positions inside Yemen. So, Aden has not fallen, and this latest advance does not make that outcome inevitable. But an entire district has reportedly changed hands in three days. The pressure now is on government forces and their Saudi backers to stop that momentum before the fighting reaches the Yemeni government's capital. All right, coming up in today's Back of the Brief, a new wave of cyber attacks is exposing an unexpected vulnerability across Europe as hackers take control of market refrigeration systems, threatening food supplies. More on that when we come back. consistent. 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Tax relief advocates, real solutions for real people. In today's back of the brief, imagine arriving at your local supermarket only to discover that the freezers are set to 122 degrees Fahrenheit and the food inside is spoiled. All right, let's start with what happened at a supermarket in Stockholm, Sweden. The attack, struck around two o'clock Monday morning, but employees obviously didn't discover anything was wrong until hours later when the store opened. The store's sales manager described the damage to Reuters in three words, quote, everything is destroyed. Over in Belgium, an employee woke a butcher shop owner south of Antwerp around 3.30 that morning to report a problem. He rushed to the shop and found his refrigerators turned up as high as 65 degrees Fahrenheit. He estimated that nearly $17,000 worth of meat had been ruined. As he explained, quote, they're hacking the system that is doing the registration of the temperature and they can program it at a distance, end quote. Now, to be clear, investigators haven't established who carried out the attacks or what they intended, but what was already becoming clear was the scale of the attack. Dozens of stores across several countries were affected. Supermarket chains in Sweden, Belgium, and Luxembourg reported interference with their refrigeration systems. Even Ikea, known for its furniture and, of course, those famous Swedish meatballs, confirmed that one Belgian location had been hit. It couldn't rule out disruptions at other locations. In Ireland, wholesaler Musgrave reported problems at 13 supermarkets, forcing employees to pull some chilled and frozen products from sale. The opening for hackers is in the connected controllers that let stores monitor temperatures and adjust settings remotely. If a controller is exposed or vulnerable, an intruder may be able to access those same settings. Now, similar attacks hit hundreds of supermarkets in France just last month, where police said hackers took control of refrigeration systems, causing food losses and fires. At least some of the units affected Monday used temperature control technology from the Danish company Danfoss, whose technology was also targeted in France. Danfoss says it's been working with customers to implement fixes. The shared technology gives investigators a connection to examine. It does not explain why it is so important to use the technology. It does not establish that the same people carried out all of the attacks. And then there's the motive. A researcher at cybersecurity firm Sentinel-1 said attacks on these systems are typically associated with extortion, political objectives, or operations involving foreign governments. Financial demands apparently have not followed the attacks. The European Commissioner for Agriculture put the concern this way, quote, They are a deliberate attempt to disrupt our food supply chain and undermine consumers' confidence in it, a warning that we must take seriously, end quote. Now, finding out who's responsible is another challenge, of course. Nobody has publicly claimed responsibility for either the latest incidents or the earlier attacks in France. The Sentinel-1 researcher explained why investigators may have so little to work with, quote, An attacker who logs into an exposed control panel leaves almost nothing behind. A teenager at an intelligence service would look much the same from the defense's point of view. An attacker who logs into an exposed control panel leaves almost nothing behind. For the sabotage and hybrid threats that we've been following here on the PDB throughout Russia's war against Ukraine. But there's no publicly established evidence linking Russia to these supermarket attacks. At least not yet. And that, my friends, is the President's Daily Brief for Tuesday, the 3rd of November. Now, if you have any questions or comments, please reach out to me at pdbatthefirsttv.com. And of course, if you're watching this on YouTube, please make sure to in the U.S., do not forget today is election day. Get out and vote. If you don't like the outcome, but you didn't vote, well, it's tough to complain. And if you've been wondering what an ad-free PDB experience would be like, wonder no more. Just become a premium member of the President's Daily Brief by visiting pdbpremium.com. I'm Mike Baker, and I'll be back later today with the PDB Afternoon Bulletin. Until then, stay informed, stay safe, stay cool. We'll see you next time.