This week’s newsletter dives into intensifying geopolitical developments across the globe. China’s aggressive diplomatic campaign to isolate Taiwan gains traction in the Global South, while Ukraine’s mineral wealth has become a strategic prize for the US, EU, and Russia. Russia’s influence in Africa expands with new diplomatic and military initiatives, and Trump’s latest Middle East plan revives controversial relocation proposals. On the economic front, China accelerates its self-reliance strategy in response to US pressure, Ray Dalio warns of a potential debt crisis, and traders prepare for new tariffs by stockpiling gold and silver in US depositories. Lastly, the Paris AI Summit highlights growing tech competition amid fragmented global politics, while Trump’s budget cuts to NIH and USAID spark outcry over their impact on humanitarian aid and scientific research.
Geopolitical Concerns
China’s stunning new campaign to turn the world against Taiwan
The Economist
Ukraine’s metals the US, EU and Russia want access to
Russia’s quest to woo Africa is paying off
Mark Galeotti, The Spectator
Donald Trump’s Gaza plan resurrects grandiose Middle East playbook
Mehul Srivastava and Aditi Bhandari, The Financial Times
As of February 2025, geopolitical tensions are escalating across multiple fronts. China is employing a diplomatic offensive to isolate Taiwan, with 70 countries officially endorsing China’s claim over Taiwan and its efforts towards unification. This campaign, gaining momentum over the past 18 months, aims to secure global support for potential coercive actions against Taiwan, such as a quarantine or inspection regime, and to deter international sanctions in case of a conflict. Many of these countries are in the global south, where China has invested in infrastructure and resource access. Simultaneously, Ukraine’s wealth in critical minerals has become a focal point of interest for the US, EU, and Russia. The US, under President Trump, is linking military and financial aid to access to Ukraine’s reserves of industrial minerals and energy-critical elements. These resources, including titanium, lithium, and gallium, are vital for modern industries and weapons manufacturing. While the EU sees Ukraine as a potential key supplier of these materials to reduce dependency on China, Russia may be trying to control some of these reserves amid the ongoing conflict.
Russia is also expanding its influence in Africa, capitalizing on the West’s retreat and leveraging an anti-colonial narrative. Foreign Minister Sergei Lavrov announced a new Department of Partnership with Africa, marking a strategic shift after years of neglect. Through the Africa Corps, a successor to the Wagner Group, Russia provides security assistance and promotes its interests via propaganda networks. By offering discounted oil and fostering an anti-Western sentiment, Russia has opened embassies in Burkina Faso and Equatorial Guinea, with plans for further expansion. Meanwhile, Trump’s new Middle East plan proposes the expulsion of millions of Palestinians from Gaza, echoing ambitions of the Israeli far-right. This plan, reminiscent of the 2020 “peace to prosperity” initiative, aims to resettle Gazans in neighboring Arab countries and develop Gaza’s coastal land. However, this strategy faces strong opposition and raises concerns of repeating the Nakba, the mass displacement of Palestinians during the 1948 war. Saudi Arabia has already rejected any attempts to displace Palestinians from their land.
Geoeconomics
China’s Xi Is Building Economic Fortress Against U.S. Pressure
Brian Spegele, Jason Douglas, and Yoko Kubota, Wall Street Journal
The World Risks a ‘Financial Heart Attack.’ Bridgewater’s Ray Dalio Has the Medicine.
Reshma Kapadia, Barron’s
Traders Load US-Bound Planes With Gold and Silver in Tariff Bet
Yvonne Yue Li, Jack Ryan, and Mark Burton, Bloomberg
In response to increasing pressure from the US, China is implementing a strategy of economic self-reliance, which involves significant state investment in key industries and technology. This initiative, formalized by Xi Jinping with the “Made in China 2025” plan, directs substantial resources into advanced manufacturing to decrease dependence on foreign products. Despite successes in sectors like electric vehicles and shipbuilding, this approach is costly, with an estimated $250 billion spent annually on industrial policies. There have also been substantial failures, particularly in advanced semiconductors. This strategy has also led to trade tensions, as China’s manufacturing overcapacity results in large quantities of goods being exported at reduced prices. While China aims to enhance national security and reduce susceptibility to Western pressure, some economists suggest focusing on strengthening the social safety net to stimulate consumer spending, rather than further expanding its industrial base and accumulating more debt.
Ray Dalio of Bridgewater Associates suggests that heavily indebted countries, including the US and China, need to take immediate action to avert a debt crisis. Dalio proposes a “beautiful deleveraging” strategy, combining debt restructuring with debt monetization. For the US, Dalio recommends reducing the deficit to 3% of GDP by cutting spending, raising taxes, and lowering interest rates. He points to the successful deficit reduction between 1992 and 1998 as an example, where fiscal tightening and monetary easing balanced each other. Meanwhile, fears of impending tariffs by the Trump administration have led traders to transport gold and silver into the US via air freight, a move triggered by the spike in US silver futures and the rush to import metals before new trade measures are implemented. Since Trump’s election in November, nearly 14 million ounces of gold, valued at $38 billion, and 45 million ounces of silver have been moved into the depositories of New York’s Comex futures exchange.
Global Junctions
The Paris AI Summit, a challenge in a fragmented world
Alexandre Piquard and Philippe Ricard, Le Monde
Laure Belot, David Larousserie and Hervé Morin, Le Monde
Does Globalization Have a Future?
Joseph S. Nye, Jr., Project Syndicate
The Paris AI Summit, spanning from February 10-11, aimed to address the challenges of AI development in a world characterized by fragmentation and competition. The summit, co-chaired by French President Emmanuel Macron and Indian Prime Minister Narendra Modi, sought to establish a “third way” for AI development, particularly for emerging countries, as the US and China vie for dominance in the AI sector. The event brought together global leaders, researchers, and companies to discuss industry standards and promote sustainable AI. A key initiative was the launch of a foundation for AI “of general interest,” supported by €2.5 billion in public and private funding, to finance software and databases. Despite these efforts, the summit faced difficulties in achieving consensus, particularly with the US challenging European regulations and focusing on its own AI development through projects like the $500 billion Stargate data center.
Meanwhile, the intersection of science and geopolitics, as examined by experts selected by Le Monde, reveals the increasing alignment of technology with political power, especially in the US and China. This trend is evident in the close relationship between tech companies and governments, exemplified by Elon Musk’s involvement in the White House. China’s rapid rise in AI, driven by substantial investments in research and development, has intensified its competition with the US, while Europe lags behind. This competition is further complicated by declining public funding for research relative to corporate R&D budgets. As Joseph Nye, Jr. observes, globalization, driven by communication and transportation technologies, persists despite protectionist policies and geopolitical events. While economic globalization may face setbacks, technological advancements ensure its continuation, albeit not always in a beneficial form.
Global Trajectories
NIH cuts billions of dollars in biomedical funding, effective immediately
Dan Diamond, Carolyn Y. Johnson, Lena H. Sun, The Washington Post
Opinion | The World’s Richest Men Take On the World’s Poorest Children
Nicholas Kristof, The New York Times
US Aid Freeze Slows Relief in Congo as Bodies Lie in Streets
Michael J Kavanagh, Bloomberg
In the past month, the Trump administration enacted significant cuts to biomedical research funding through the National Institutes of Health (NIH), a move praised by Elon Musk, who called the previous funding policy “a ripoff.” The NIH’s new policy, effective immediately, lowered the maximum indirect cost rate research institutions can charge the government to 15%, which is projected to save over $4 billion annually. This action came in response to the perception that too much money was going to administrative overhead rather than direct scientific research. In 2023, out of $35 billion in awarded grants, $9 billion went to overhead, and many universities charged indirect rates of over 50%, in some cases more than 60%. The policy change, seen as a massive budget cut to science and medical centers across the country, was quickly denounced by universities and research organizations. Some scientists noted that the move could threaten research already underway and could cause some universities to not be able to afford to accept federal life science grants. The Council on Government Relations called the move a “self-inflicted wound” that would cripple lifesaving research and innovation. Democrats also criticized the policy change as illegal and arbitrary, with some stating it would imperil clinical research, patient care, and laboratory operations. Meanwhile, Trump allies, including the US DOGE Service led by Elon Musk, hailed the NIH’s move as a victory for government efficiency.
Concurrently, the Trump administration suspended the US Agency for International Development (USAID), a move described by Elon Musk as shoving the agency “into the wood chipper”. This action halted humanitarian assistance in various parts of the world, including in the Democratic Republic of Congo, which is facing a significant humanitarian crisis. In Congo, nearly 3,000 people died in fighting last week, and a US government freeze on almost all foreign aid is hampering an adequate response. The UN has retrieved 2,000 bodies, with 900 more in morgues, and many decomposing bodies still in the streets. The suspension of USAID led many partners to stop work, further complicating the crisis. The US was Congo’s biggest humanitarian donor in 2024, providing more than $916 million. The aid freeze also interrupted bird flu surveillance in 49 countries and slowed the response to an Ebola outbreak in Uganda. Furthermore, aid workers struggled to contain a Marburg virus outbreak in Tanzania without US support. While USAID has been criticized for being bureaucratic, its programs have resulted in major strides in fighting diseases like malaria, AIDS, and blindness and saved millions of lives. These cuts have been criticized for being not only cruel but also shortsighted. A humanitarian summit was scheduled for Feb 7-8 in Tanzania to address the crisis.
