President Trump’s National Security Strategy and the National Defense Authorization Act of 2026, which passed the Senate on December 17th, codify a significant shift toward using defense and development dollars for equity investments in strategic infrastructure, creating commercial opportunities for US industrial companies operating in the US and abroad, and particularly in Latin America and Africa.
Capstone predicted last February that President Trump would push to reduce federal foreign aid in favor of private-sector investment in strategic infrastructure projects. Since then, the Trump administration has accelerated the deployment of defense and Development Finance Corporation funds for equity investments and loans to support projects intended to reduce dependence on Chinese supply chains. Publicly announced initiatives include a $9 billion stake in Intel, a $400 million equity stake in and significant purchasing commitments for the specialty magnets produced by MP Materials, a $2.26 billion federal loan to Lithium Americas’ Nevada mine, an equity stake in Alcoa’s joint venture to build a gallium plant in Australia that could provide up to 10 percent of global gallium supply, and joint venture with MP Materials to build rare earths refining capacity in Saudi Arabia, and other countries.
The recently released National Security Strategy (NSS) formalizes this approach further by explicitly directing the government to identify strategic acquisition and investment opportunities for American companies and for inclusion in every US government financing program. This directive will signal to the Pentagon, Development Finance Corporation, Department of Commerce, and smaller agencies to find private partnerships that help diversify US supply chains in key sectors dominated by China.
The NDAA reinforces this skin-in-the-game approach through several new authorities that enable the Department of Defense to fund private sector investments. As Capstone predicted in October, key changes include massive expansion of the Pentagon’s Industrial Base Fund to support investment in castings and forgings, machine tools, advanced manufacturing, kinetic capabilities, critical minerals, unmanned vehicles, batteries, and ships and submarines. The NDAA also includes the DFC Modernization and Reauthorization Act, which extends DFC’s life and allows it to make equity investments through a $5 billion capital fund—a bipartisan expansion that highlights support for leveraging DFC to challenge China’s economic expansionism.
Beyond China competition, Syria represents an underappreciated policy development for investors and companies that either previously had a presence in the Syrian market or have a risk appetite for frontier market investment and economic reconstruction. Specifically, the 2026 NDAA formally lifts sanctions on Syria’s government imposed during the Syrian civil war, codifying President Trump’s rapprochement with the new Syrian government and allowing for investment that strengthens arguments for Syrian regional integration. The Saudi, Qatari, and Turkish governments have already announced massive investments in ports, airports, roads, telecom, and energy, likely competing for influence with the new government, which aligns with their overall regional competition. However, significant obstacles will confront investors, including a highly unstable security situation outside Damascus, ongoing corruption, and massive infrastructure challenges.
If successful, Syrian reconstruction could track the recent growth opportunities that multinational companies are investing in in Iraq. FDI, largely focused on energy, industrials, and infrastructure investment, is returning to the country. While there is and always has been a material difference between the business environment in Iraqi Kurdistan and the rest of the country—with the Kurdish region always being a far easier place to do business for international firms—the overall environment in Iraq is certainly stabilizing, with the demand for infrastructure and energy investment particularly significant.
The NSS and NDAA underscore the Trump administration’s commitment to marry traditional government tools, such as foreign aid and other government lending programs, with private-sector investment to aggressively counter China. We explore this dynamic in our 2026 preview, including the expanded DOD authorities on direct investments, and will continue to monitor opportunities for our clients as they arise.
