New dependencies and strategic hedging

The Week in Brief

As we celebrate the holiday of freedom, this issue examines how countries worldwide are working to break free from historical dependencies. But there's a catch: cutting ties with one power often just means getting hooked on another. Take the crisis around the Strait of Hormuz. As it spills over into multiple sectors, India is running back into Russia's arms—and Washington is letting it happen. The reality? Sky-high Middle Eastern energy prices are bankrolling Russia's war in Ukraine, even as Kyiv scores wins on the battlefield. Meanwhile, economic heavyweights like Japan and the EU are locking in bypass trade deals to protect themselves, making sure their newfound strategic freedom doesn't just turn into a different kind of trap.

Geopolitical Dynamics

A. Energy Pragmatism Over Sanctions: To make up for the energy bottleneck at the Strait of Hormuz, India is pivoting back to Moscow. It's gearing up to buy Russian LNG for the first time since 2022 and doubling its crude oil imports. Here’s the wild part: the U.S., which has spent years pressuring allies to cut off Russia, is basically giving India a pass. Washington even let a Russian oil tanker dock in Cuba, effectively breaking its own blockade. Mexico is smelling the inconsistency and just announced it will ignore U.S. pressure and keep hosting Cuban medical teams. The takeaway? Domestic survival and energy needs are now overriding geopolitical loyalty, and Washington's influence is taking a hit.

B. Hedging Bets in Asia and the Middle East: "Middle powers" are still shopping around for partners outside the classic U.S. umbrella. The Philippines and France just signed a military pact as tensions with China heat up, while Saudi Arabia and the UAE locked in a defense-tech deal with Ukraine.

C. The Global South Pushes Back: It’s not just about security anymore; the "Global South" is stepping up its fight with the West over resources and capital. Pushed by African nations, a historic UN resolution just passed by a massive majority (with the U.S. voting against and the EU abstaining). It officially recognizes the transatlantic slave trade as a crime against humanity, setting the stage for historical reparation demands. It's a clear sign that Western dominance in global institutions is slipping.

Security and Threats

A. The Iran Campaign: The Gulf is boiling over. Oil just crossed $116 a barrel, and more U.S. troops are touching down in the region. Meanwhile, a massive scandal just hit Washington: a broker close to the U.S. Secretary of Defense was caught trying to pull off some insider trading, attempting to scoop up BlackRock shares right before the Iran conflict kicked off.

B. Crippling Russia's Exports: The war in Ukraine has shifted from the trenches to a full-on infrastructure takedown. Kyiv has managed to knock out up to 40% of oil exports from Russia's western ports using pinpoint drone strikes on pipelines, terminals, and tankers. This is putting a massive squeeze on an already suffocating global energy market.

Economy and Trade

A. The Cobalt Scramble in Congo: Africa is still ground zero for the minerals of the future. China and the Democratic Republic of Congo (DRC) just expanded their mining deals, directly challenging a recent U.S. security-economic pact in the area. Congo—the world’s top producer of cobalt, which is critical for EV batteries—is playing the superpowers against each other to get the best deal. For Western supply chains, this means a lot more uncertainty.

B. Tech Regulation and the Chip War: The AI and tech sector is taking hits from all sides. The U.S. Justice Department is turning up the heat in the trade war, indicting people for smuggling microchips into China. At the same time, a federal judge blocked the Pentagon from slapping a "supply chain threat" label on the AI firm Anthropic (calling the move "Orwellian"). Wikipedia just banned articles written by AI language models because reliability has tanked. And in the background, Iran is actively threatening 18 tech giants, accusing them of "helping Israel and the U.S."

C. Trade Blocs are the New Normal: The global system is gridlocked again. WTO talks to extend a tax break on digital trade completely collapsed because the U.S. and Brazil couldn't agree. With global institutions stalling and the threat of tariffs looming, alternative trade blocs are moving fast. Canada and the Mercosur bloc are making serious headway on a deal. For South America—which relies on the U.S. for over 80% of its trade—this kind of strategic hedging is a matter of survival.

Crises and Upheavals

A. War Economies and Rationing: The IMF is waving red flags, warning that the Iran conflict is going to slow down global growth and make the food crisis much worse. We're already seeing governments panic: EU officials are actually urging member states to limit citizens' driving and flying to save energy. South Korea is throwing together a $17 billion emergency budget just to subsidize operating costs for businesses and the public.

B. Governments Shaking in Asia: Across Asia, we're seeing governments flip, and political institutions lose their legitimacy—which is bad news for regional stability. In Nepal, massive protests forced a new government into power and led to the arrest of former top officials. In Taiwan, a major opposition leader was just slapped with a 17-year prison sentence for corruption, sparking intense internal polarization right when pressure from China is at its worst. Over in Myanmar, the junta leader who took power in a coup just named himself president after an election that totally locked out the main opposition. To cement his rule, he established a supreme council that controls both civil and military life, ensuring that the civil war and rebel fighting would not drag on.

Wishing you a Happy and Kosher Passover,

The Geopolitics Lab Team