Middle East/North Africa
- In early February, US President Donald Trump proposed that the US should take control of Gaza, remove its 2.3 million residents, and relocate them to Egypt and Jordan, in order to “redevelop” Gaza. His plan was widely condemned and a violation of international law, with Palestinians rejecting the idea, citing their deep connection to the land. Neighboring countries such as Egypt, Jordan, and Saudi Arabia have also rejected Trump’s proposal, emphasizing the need to address Gaza’s humanitarian crisis without forced displacement. Despite Israel’s initial support, experts argue that Trump lacks the legal, military, or diplomatic power to enforce such a proposal, which is viewed as unrealistic and morally unacceptable.
- Jordan’s King Abdullah II visited Washington where he met with President Donald Trump amid growing tensions over Gaza. As discussed above, Trump proposed relocating Gaza’s 2 million residents to Jordan and Egypt, a plan strongly rejected by both countries, with Jordan viewing it as a threat to its national security and demographic balance. Jordan has received nearly $30 billion in US aid since 1949 and is a key US partner in regional stability, but the proposal risks straining this relationship, especially if the US follows through on its threat to withhold aid. King Abdullah’s visit aimed to reaffirm Jordan’s strategic role while opposing policies that could undermine its sovereignty and security.
- Over the past month, Egypt has seen a rise in tensions with the US, traditionally a close partner, over President Trump’s plan for Gaza. President Abdel Fattah al-Sisi has rejected this idea, launching diplomatic efforts to counter it, despite the US being a major ally and providing Egypt with $1.3 billion in military aid annually. Egyptians are also concerned about the economic impact, as the war in Gaza has cost Egypt $8 billion in lost Suez Canal revenues. Meanwhile, Egypt is proposing an alternative $20 billion reconstruction plan for Gaza, focusing on rebuilding without displacing Palestinians and involving a new Palestinian leadership, as Egypt calls for a regional summit to discuss a comprehensive peace solution.
- On February 12th, Russian President Vladimir Putin spoke with Syria’s interim leader, Ahmad al-Sharaa, marking the first high-level contact since the fall of Bashar al-Assad in December 2024. Assad was ousted by rebels led by al-Sharaa’s Hayat Tahrir al-Sham after a rapid offensive, and Russia is now focused on securing its military bases in Syria, notably the Tartus naval base and Khmeimim airbase. In the conversation, al-Sharaa emphasized Syria’s openness to all parties, while Putin reiterated Russia’s support for Syria’s sovereignty and territorial integrity. Syria’s interim government has also formed a preparatory committee to chart the country’s future, including diverse representation, as it works toward national dialogue and stability.
- Market Implications: Markets across the Middle East and North Africa (MENA) are navigating heightened uncertainty as diplomatic tensions and shifting alliances reshape the region’s economic landscape. Trump’s remarks on Gaza could fuel further instability, with potential ramifications for investor sentiment, trade, and capital flows. At the same time, Jordan’s King Abdullah’s visit to the White House signals renewed US engagement in the region. However, pressure on Jordan to take a stronger role in the Palestinian crisis may introduce political complexities that could weigh on investor confidence. Meanwhile, the US-Egypt row over Palestinian policies adds further uncertainty. With Egypt’s economy already under strain, deteriorating ties with Washington could impact US aid, foreign direct investment, and debt markets. Sectors reliant on US partnerships, including defense, trade, and energy, may experience volatility. Russian involvement in Syria’s governance could impact regional security and influence energy markets, particularly regarding oil and gas interests.
Latin America & the Caribbean
- During his first trip abroad as US Secretary of State Marco Rubio focused on immigration, counternarcotics, and curbing Chinese influence in the Western Hemisphere, visiting Panama, El Salvador, Costa Rica, Guatemala, and the Dominican Republic. Key developments included securing deportation agreements with El Salvador and Guatemala, with the latter also agreeing to create a border security force, while El Salvador offered to house US prisoners. Rubio also had to juggle many changes to the US policy and presence during his trip, such as the controversial dismantling of the US Agency for International Development (USAID) and President Trump’s unexpected proposal to take control of the Gaza Strip. In Panama, Rubio raised concerns over China’s influence near the Panama Canal, securing a pledge from the government to exit China’s Belt and Road initiative, but faced disagreements over the status of US canal transit fees.
- Ecuador’s presidential race has reached a runoff between conservative incumbent Daniel Noboa and leftist lawyer Luisa González, after both secured around 44% of the vote in the February 9th election, surpassing 14 other candidates. Noboa, who took office in October 2023, has made efforts to reduce crime but faces criticism for his heavy-handed tactics, including deploying military forces against organized crime. González, a protégé of former President Rafael Correa, is gaining support for her stance on crime reduction and the economy, despite skepticism about government corruption. The runoff, set for April 13th, will decide whether Noboa earns a full term, or González succeeds in a comeback for Correa’s leftist-populist political movement.
- On February 2nd, Donald Trump reiterated his threat to “take back” the Panama Canal, citing China’s growing influence in the region and warning of “powerful” US action. The dispute stems from concerns over Chinese control of key terminals near the canal, but Panama’s President José Raúl Mulino rejected the idea, asserting the canal would remain under Panama’s sovereignty. Mulino also announced that Panama would not renew its participation in China’s Belt and Road initiative and sought to strengthen US-Panama relations through new investments. Trump’s remarks come amid ongoing audits of Chinese-linked companies operating around the canal and discussions on expanding US-funded migrant repatriation programs.
- Late last month, Colombian President Gustavo Petro triggered a diplomatic crisis by accusing the US of mistreating Colombian deportees, denying entry to US flights carrying migrants, and demanding they be returned on civilian aircraft. In response, US President Trump threatened 25% tariffs on Colombian goods and visa restrictions, escalating tensions. Within two days, Petro backed down, allowing deportation flights to resume on Colombian Air Force planes, marking a diplomatic victory for Trump. This confrontation, highlighting the rift between Petro’s administration and US policies, and contributed to political fractures in Colombia, with the Liberal Party leaving the governing coalition and raising concerns over Petro’s foreign policy direction.
- Market Implications: Latin American markets are navigating a complex landscape as political tensions and shifting US relations shape investor sentiment. Is the US providing leverage to the region to disassociate from US policies? US Secretary of State Marco Rubio’s trip to Central America signals Washington’s renewed focus on the region, likely prioritizing security, migration, and economic cooperation. However, increased US pressure on migration policies may create political friction, leading to market volatility in affected countries. Meanwhile, the 2025 Ecuadorian elections introduce further uncertainty. With Ecuador facing economic and security challenges, investor confidence will depend on the policies of the next administration. Tensions are also rising in Panama, where President José Raúl Mulino has rejected US claims of a deal to allow American warships free passage through the Panama Canal. Any US retaliatory measures could disrupt trade flows, impacting global shipping costs and Panama’s crucial logistics sector. Colombian President Gustavo Petro’s criticism of US deportation policies under Trump could strain relations between Bogotá and Washington. If tensions escalate, potential trade or investment repercussions could affect Colombia’s markets, particularly in sectors reliant on US partnerships.
Asia (ex-China/India)
- Merger talks between Honda and Nissan, aimed at creating a $60 billion automotive giant and the world’s fourth-largest carmaker, collapsed due to disagreements over Nissan’s role—equal partner or subsidiary. The merger, which included Mitsubishi, was intended to counter growing competition from Chinese manufacturers like BYD in the electric vehicle market. Honda’s CEO Toshihiro Mibe emphasized Nissan’s need to complete its turnaround after financial struggles stemming from the 2018 arrest of former executive Carlos Ghosn and subsequent job cuts. With the merger off the table, Taiwan’s Foxconn has shown interest in collaborating with Nissan, while Renault, which holds a 36% stake in Nissan, deemed the deal’s terms “unacceptable.”
- South Korean President Yoon Suk Yeol was charged with insurrection on January 26th, following his declaration of martial law in early December 2024 which was swiftly overturned by parliament and led to his impeachment. Yoon, who accused the opposition of pro-North Korean activities, allegedly ordered military leaders to break into parliament and arrest political figures, sparking his arrest after weeks of resistance at his residence. This marks the first indictment of a sitting South Korean president, with Yoon now facing two trials: one on impeachment at the Constitutional Court and another criminal trial for insurrection, carrying a potential life sentence or death penalty. Yoon’s defense team denies wrongdoing, while the opposition Democratic Party supports the indictment for violating the constitutional order.
- In mid-February, Japan, the US, and France conducted their first joint aircraft carrier drills off the Philippine coast to strengthen Indo-Pacific deterrence amid rising tensions with China and Russia. The USS Carl Vinson and France’s Charles de Gaulle participated alongside Japan’s JS Kaga, which is being modified to carry F-35B stealth fighters by 2028. France deployed a carrier battle group to the Pacific for the first time in 60 years, reflecting Europe’s increasing focus on Indo-Pacific security after Russia’s invasion of Ukraine. The exercise follows broader efforts to enhance Japan-European military cooperation, including joint drills and pending agreements to streamline future collaborations.
- On December 29th, a Jeju Air Boeing 737-800 flight from Bangkok crashed at Muan Airport, South Korea, killing 179 of 181 on board after hitting an embankment during an emergency belly landing. A preliminary report released on January 27th confirmed both engines contained Baikal Teal duck DNA, with the bird strike occurring during a go-around, but critical black box recordings stopped four minutes before impact. The aircraft was flying at 498 feet and 161 knots about 1.1 nautical miles from the runway when data recording ceased, falling outside a regulatory change for backup recording power implemented after 2010. Investigators from South Korea, the ICAO, Thailand, the US, and France are analyzing the engines, localisers, and other evidence to determine the cause, with a final report expected within a year.
- Market Implications: Asian markets outside of China and India are navigating a complex landscape as geopolitical tensions and economic shifts unfold. The failed Honda-Nissan merger marks a significant setback for Japan’s auto industry, raising concerns about the competitiveness of its major automakers in an evolving global market. Meanwhile, South Korea’s political turmoil following the indictment of President Yoon for insurrection could heighten market volatility. Sectors reliant on government policy, such as technology and infrastructure, may face short-term uncertainty, though South Korea’s strong corporate fundamentals could provide resilience. At the same time, rising military cooperation between Australia, Japan, the Philippines, and the US—highlighted by joint drills off the Philippines—signals increasing regional security tensions. While defense-related industries in these countries may see a boost, heightened geopolitical risks could deter broader investment in Southeast Asian markets.
Sub-Saharan Africa
- On February 16th, Rwandan-backed M23 rebels seized Bukavu, the second-largest city in eastern DR Congo, following their capture of Goma weeks earlier, marking a significant territorial gain in the mineral-rich region. Bukavu’s provincial governor confirmed the rebels entered the city without resistance, as Congolese troops withdrew to avoid urban combat, leaving the city in chaos with reports of prison breaks and the looting of nearly 7,000 tonnes of food from a UN warehouse. The Congolese government has accused Rwanda of territorial ambitions and destabilization, while President Félix Tshisekedi is seeking sanctions against Rwandan President Paul Kagame, who denies involvement. The African Union has called on the M23 to disarm, warning that the conflict could escalate into a broader regional war amid ongoing concerns over Rwanda’s grievances about DR Congo-based rebel groups.
- This month, Sudan’s military captured a major bridge linking eastern and southern Khartoum after retaking the northern part of the capital from the Rapid Support Forces (RSF). Despite the army’s gains, the RSF still controls key areas, including the central market, the presidential palace, and parts of Darfur, where they recently attacked the famine-stricken Zamzam displacement camp near el-Fashir. Since the conflict began in April 2023, 11.4 million people have been displaced, with three million refugees in neighboring countries and over eight million internally displaced. At a humanitarian conference in Addis Ababa, UN Secretary-General António Guterres described the crisis as a “staggering” catastrophe, urging world leaders to push for peace and increase humanitarian aid, especially before Ramadan.
- On January 29th, Niger, Mali, and Burkina Faso formally withdrew from the Economic Community of West African States (ECOWAS), concluding a year-long diplomatic effort to prevent their exit following military coups in all three nations. The withdrawal, announced a year prior, led the three junta-led nations to establish the Alliance of Sahel States (ASS) in September 2024, focusing on regional security cooperation. Despite their departure, ECOWAS requested member states to continue offering privileges like free movement with ECOWAS passports. Established in 1975, ECOWAS aimed to enhance cooperation and integration across West Africa to improve living standards and economic stability.
- US President Donald Trump signed an executive order cutting US financial aid to South Africa, which amounted to nearly $440 million in 2023, citing disapproval of South Africa’s land expropriation policy and its genocide case against Israel at the International Court of Justice. The order included a provision to resettle white South African farmers and their families as refugees in the US, which South Africa criticized as ignoring the country’s colonial and apartheid history. South African President Cyril Ramaphosa defended the land policy as an effort to address racial disparities, noting no land had been confiscated. Additionally, the White House raised concerns about South Africa’s ties with Iran and its accusations against Israel, reflecting broader tensions in US-South Africa relations.
- Market Implications: The escalating conflicts across the Sub-Saharan Africa region will be detrimental for local and regional economies. The breakdown of ECOWAS, a group that has facilitated the free movement of goods, services, and people across member states, will lead to further trade disruptions and higher costs for businesses operating in the region. The cut in aid to South Africa could significantly affect the region’s economy. Key sectors such as health, education, and infrastructure, which rely on international support, may face challenges. Broader diplomatic tensions could lead to a decrease in foreign investment in South Africa as investors may perceive increased political and economic instability, which could deter investment and slow economic growth.
Recommended Reads
Trump the Disruptor Collides With the Middle East
Shayndi Raice, Wall Street Journal
What Trump Really Wants in Panama
Brian Winter, Americas Quarterly
Southeast Asia Responds to Trump Tariffs
Joshua Kurlantzick, Council on Foreign Relations
The Conflict in Congo Has Rekindled Rwanda-South Africa Tensions
Chris Olaoluwa Ògúnmọ́dẹdé, World Politics Review
