Geopolitical Dispatch

In today's weekly review for Geopolitical Strategy clients, I look at the idea for a so-called "Mar-a-Lago Accord", spelt out last year by Donald Trump's new Council of Economic Advisers chair, Stephen Miran. It's been subject to a lot of speculation in the financial media and has arguably been one of the factors driving up the price of gold in recent weeks. In short, like many of the White House's ideas on the movement of goods, people and information, this proposal to upend the global monetary and capital system is mad, bad and dangerous. In fact, it's hard not to see it as a joke, considering the unintended consequences it could yield. If you want to get to the punch line, click on the link in the comments. As always, welcome your views. #geopolitics, #economics, #MarALago, #badjokes, Geopolitical Dispatch

Reports that the UK, France and Germany are preparing for a "transfer of responsibilities" from the US, and that Washington may relinquish its traditional role of providing NATO's Supreme Allied Commander Europe, have again sent a chill through Brussels. All this may give yet more impetus to European defence stocks, but the hedging that's going on for a possible post-NATO future risks turning into a labyrinth should reliance on Washington simply be replaced by reliance on Ankara or other more mercurial powers. I look at this, and other transatlantic tensions over US border controls, in today's Geopolitical Strategy client note, also on Geopolitical Dispatch. I additionally cover the latest sanctions on Iran, the constitutional crisis in Israel, and worries for Indonesia. Link in the comments. Always welcome your views. #geopolitics, #NATO, #Europe, #defence (image: View of the Chateau de Mousseaux and Its Gardens, Jean Francois Hue, c. 1775-80, oil on canvas, private collection, Paris)

What's next for China and Australia in the age of Trump? Yesterday, I had the privilege of hosting the latest Nab Business Market Economic event. A sincere thank you to John Bennett for warmly welcoming our guests and contributing to the success of the event! Tapas Strickland delved into the implications of policies under a second term of the Trump presidency. From tariffs to geopolitical risks, inflation to interest rates, the discussion centred on how these factors could influence the Australian dollar and the Australian & Chinese Economy. Special thanks to Patrick Mayoh , CEO of the Australia China Business Council (NSW), and Damien Bruckard Founder & CEO of Geopolitical Strategy, for their enlightening presentations on the evolving landscape of Australia and China trade relations. Their insights shed light on the challenges, risks, and opportunities that lie ahead in this dynamic economic environment. #EconomicOutlook #TradeRelations #Australia&China NAB John Bennett James Sheehan Tracy Ferguson Paula Garay Tom Simpson Daniel Turner Jennifer Zhang Toly Stoikos Adam Hall Cheyne Gates Tansyn Press @Nicolette m Desanctis @Tom l Sutton Alun Campbell Leigh Harink Jack Cogan Australia China Business Council

Thank you to Patrick Mayoh, CEO (NSW) of the Australia China Business Council for the opportunity to speak to a full house at NAB yesterday on “Australia-China Economic and Trade Relations in the World of Trump 2.0”. John Bennett set the stage making a compelling case for why companies would do well to conduct scenario planning to deal with the many uncertainties in today’s geopolitical environment. Tapas Strickland gave an insightful and data-rich presentation on the key foreign and trade policy actions of the new U.S. Administration as well as the global macro context, the impacts of different possible US trade policies, and the current state of Australia-China trade and the broader Australian economy. Especially fascinating to consider whether the upcoming American “reciprocal tariffs” will trigger retaliatory actions or prompt nations to lower their trade barriers to try to get punitive measures lifted. Patrick Mayoh enriched the conversation further, diving deep into the current and potential future dynamics of the Australia-China bilateral relationship plus the many opportunities in trade, investment and cross border joint ventures. (Side note: any Australian businesses with interests in China should definitely connect with Patrick!) Building on these remarks, I spoke to how companies can use this sort of contextual economic and political information to very practically stress-test their strategy, identify both risks and opportunities amidst geopolitical flux, and make themselves more resilient in today’s volatile, uncertain, complex and ambiguous world. And so together we sketched out ten key drivers of geopolitical change, identified protectionism/openness and stability/instability of the global order as two of the most relevant and impactful, and drew up a simple 2x2 matrix to generate four scenarios for what the business environment could look like over the next few years. Each of the scenarios we looked at ended up being realistic (proof: the votes were split pretty evenly between the options) but with very different consequences both at the macro level and for individual businesses. All of which begged the question: has your organisation stress-tested its business model against various realistic geopolitical outcomes that could have major consequences for your business — and do you therefore have a robust strategy to navigate this wild world of change? If not, happy to discuss how Geopolitical Strategy can assist. Many thanks to NAB’s Jun Guo for organising and Tracy Ferguson for the expert moderation ??

Volodymyr Zelensky agreed Wednesday to halt attacks on energy infrastructure in a call Donald Trump described as "fantastic." The White House said US ownership of Ukraine's energy infrastructure would offer "the best protection". Sound familiar? Washington has pivoted from a minerals deal to owning Ukraine’s nuclear plants and grid. The value of Ukraine's rare earth deposits was always hyped. A recent analysis of US coal ash landfills suggests greenfield mining is uneconomic. But Ukraine’s electrical network, and the pipelines transporting Russian oil and gas, have a net present value. Hunter Biden, an ex-director of pipeline firm Burisma, may have a pitch deck to share. I analyse this and overnight developments in Turkey, Iran, the UAE and the Congo in today's Geopolitical Strategy client note, also on Geopolitical Dispatch. Link in the comments. As always, welcome your views. #geopolitics, #Ukraine, #Trump, #protection (image: Bird Cloud (Vogelwolke), Lyonel Feininger, 1926, oil on canvas, Busch-Reisinger Museum, Cambridge, Mass.)

Airstrikes have resumed in Gaza. Itamar Ben Gvir has rejoined Benjamin Netanyahu's cabinet. Houthi missiles are heading north. With the ceasefire all but over, and Israel vowing for hostage negotiations to now "only take place under fire", the Middle East looks much as it did before Donald Trump took office. Israel's domestic politics have returned to type as well. Netanyahu is at war with his attorney general and other officials. Likud's brief polling respite is over. Almost three in four Israelis want the prime minister to resign. But things have changed, of course. And from Ukraine to the United States, there not all changing in a positive direction. I look at this and more in today's Geopolitical Strategy client note, also on Geopolitical Dispatch. Link in the comments. As always, welcome your views. #geopolitics, #Israel, #Gaza, #MiddleEast (image: Genesis, Mordecai Ardon, c. 1970s, lithograph, private collection, Israel)

Donald Trump is due to speak with Vladimir Putin in the coming hours. Top of the agenda, according to the US president, is "dividing up certain assets", including land and power plants. As in the case of West Germany and South Korea, a deal that includes the loss of territory need not be a bad outcome for those on the right side of the border. The main risk – as it was in the Cold War – is that it rewards aggression and the sphere of influence politics Washington has hitherto sought to avoid. It's for this reason that Brussels, not just Kyiv, will hate almost any deal Washington and Moscow agree to. And while a quid pro quo is possible, where non-NATO badged troops can protect what remains of Ukrainian sovereignty, winning a friend in Russia while losing many in Europe is ultimately a bad outcome for the US as well. I discuss this in today's Geopolitical Strategy client note, also on Geopolitical Dispatch. Link in the comments. #geopolitics, #Ukraine, #Russia, #assets (image: The most human human, V Ivanov, 1969, poster, private collection, London)

Donald Trump ordered airstrikes against Yemen's Houthis over the weekend, vowing to continue them until attacks against Red Sea shipping ended. With their effective blockade of one of the world's top shipping lanes, the Houthis have made a mockery of freedom of navigation. Yet Joe Biden's inability to stop them was less a matter of ineptitude than of poor options. While characterised as rag-tag rebels, the Houthis are the successors to a 1,000-year-old monarchy and rule a territory of 25 million. They're more akin to a state (a rogue one for sure) than a crappy terrorist outfit. Biden learned this the hard way, sending $2 million missiles against $20,000 drones. So did Saudi Arabia, with a 7-year military intervention and up to around 75,000 airstrikes over that period (using the same weapons Trump will presumably use). Hundreds of thousands died. The Houthis are tough, ruthless and, while backed by Iran, don't like to answer to anyone. Sound familiar? Trump is unlikely to create his own Afghanistan here, but vowing to destroy a largely popular force that's survived for decades, and has only grown stronger, requires a lot of backing. I hope I'm wrong, but I don't expect ships to start returning to the Bab al-Mandab Strait soon. Analysis in today's Geopolitical Strategy client note on Geopolitical Dispatch. A link is in the comments. Welcome your thoughts. #geopolitics, #shipping, #Yemen, #Houthis (image: The Destruction of Pharaoh’s Host, John Mrtin, 1836, pencil and watercolour with gum arabic, J. Paul Getty Museum, Los Angeles)

Essential background reading from my colleague Damien Bruckard on the US’s strikes against Yemen’s Houthis. We’ll be writing more for Geopolitical Strategy clients in Geopolitical Dispatch tomorrow.

President Trump's decision to launch "decisive and powerful military action against the Houthi terrorists in Yemen" is a major shift from the Biden Administration's relatively soft stance on the Houthis' attacks on shipping in the Red Sea. As we wrote in this background brief, "media coverage of the Houthis can create misleading impressions: of a band of pirates, a ragtag militia, or a mere puppet of Iran (the phrase “Iran-backed” almost always precedes their name in the Western media). But the Houthis are much more than that. And while they may have only recently made front page news, they are far from new – and they are hardly strangers to fighting." Check out out full report here to understand who the Houthis are, where they came from, their current motivations in attacking Red Sea vessels, and the challenges the United States may find in arresting them: https://lnkd.in/e78mP9wT President Trump sent a clear message to Iran: "Support for the Houthi terrorists must end IMMEDIATELY!" Important context, as we wrote in our brief on the Houthis, is that "many of the Houthis’ actions are aligned with Iran’s interests – and they do form part of the so-called Axis of Resistance, the informal anti-Israeli and anti-Western political and military coalition led by Iran... the Houthis are acting out of their own interests: creating leverage in peace talks, boosting domestic popularity, and gaining greater standing and legitimacy as a leader of the Arab world. All of which suggest that the Houthis have little interest in de-escalation until they achieve their objectives." This makes the current situation especially febrile. It also means understanding Iran's core drivers, foreign policy interests, and relations with both the United States and nations and groups of the Middle East equally important to grasp -- a topic we covered in depth in this briefing on Iran: https://lnkd.in/eGdakEwH And for broader context on the Geopolitics of Shipping and the strategic significance of maritime choke points such as the Red Sea, this backgrounder can also assist: https://lnkd.in/eg7N3_st Below: Smoke rising from a location reportedly struck by US airstrikes in Sanaa, Yemen, on Saturday, courtesy of Associated Press