In Geopolitics Today: Wednesday, January 15th
UK Signs £12.3 Billion Iraqi Infrastructure Package, Russia's Rosatom Wins Vietnam Nuclear Contract, and other stories.
UAE Expands African Presence Through Kenya Trade Deal
The UAE and Kenya signed a Comprehensive Economic Partnership Agreement (CEPA), marking the Emirates' first such deal with a mainland African nation. The agreement aims to eliminate trade barriers and deepen economic ties between the UAE, a major logistics hub, and Kenya, East Africa's leading economy. Trade between the nations reached 445 billion Kenyan shillings in 2023, with the UAE becoming Kenya's second-largest import source after China and sixth-largest export destination.
The deal comes as the UAE pursues an aggressive economic expansion, targeting an $800 billion economy by decade's end. For Kenya, which saw 5.6% GDP growth in 2023, the agreement opens investment opportunities in energy, agriculture, ports, and ICT sectors. Bilateral non-oil trade hit $3.1 billion in the first nine months of 2024, up 29.1% year-on-year. Kenya exports primarily agricultural products to the UAE, including meat ($9.9 billion in 2023), fruits ($5.2 billion), and flowers, while importing petroleum, machinery, and chemicals. The agreement adds to Kenya's growing portfolio of trade deals, including partnerships with the EU, UK, and US through AGOA.
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UK Signs £12.3 Billion Iraqi Infrastructure Package
The UK and Iraq signed a Partnership & Cooperation Agreement Tuesday, including £12.3 billion in trade deals across infrastructure, defence, and border security. The agreement, signed during Iraqi PM Mohammed Shia al-Sudani's London visit, features major infrastructure projects: a £5.3 billion water system development, £3.3 billion Basra desalination plant, and £1.2 billion power grid connection between Iraq and Saudi Arabia. British companies will also provide £66.5 million in border security technology and clear legacy mines across Iraq in a £330 million contract.
The defence agreement comes as Iraq prepares for the September 2025 end of the US-led presence, which currently includes 2,500 US troops in Iraq and 900 in Syria. Alongside military cooperation, the package includes Vodafone's £410 million 5G network design, a UK-led consortium for water infrastructure, and British technology for Iraq's emergency services communications. The deal builds on BP's recent long-term investment commitment in Iraq and establishes the Iraq Fund for Development to attract private investment.
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Israel and Hamas Reach Phased Deal After Strategic Exhaustion
Israel and Hamas have agreed to a phased deal to end the 15-month Gaza war, following Israel's elimination of top Hamas and Hezbollah leadership and mounting economic pressures. The agreement starts with a six-week ceasefire and Israeli troop withdrawal from Gaza, coupled with the release of 33 Israeli hostages in exchange for Palestinian prisoners. Subsequent phases aim for complete Israeli withdrawal and the release of remaining hostages, followed by UN-supervised reconstruction of Gaza.
The deal, brokered by Egypt and Qatar with US backing, comes as Israel faces significant domestic economic strain, with rising prices, capital flight, and weakening infrastructure. The agreement leaves unresolved the critical question of Gaza's future governance, with Israel opposing both Hamas and Palestinian Authority control. The conflict's spillover had escalated regional tensions, with Iranian-backed groups in Lebanon, Iraq, and Yemen targeting Israeli interests. Implementation of the complex, multiphase agreement requires further negotiation amid competing regional power interests.
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Venezuela Restricts European Diplomatic Presence
Venezuela imposed limits Tuesday on diplomatic missions from France, Italy, and the Netherlands, restricting each embassy to three accredited staff members and requiring written authorization for travel beyond 40 kilometres from Caracas. Foreign Minister Yvan Gil cited these nations' “support for extremist groups” following their alignment with US-led efforts to isolate Maduro's government after July's disputed election. The US and European Union have backed opposition leader Edmundo González Urrutia, now in Spain under Western protection.
The diplomatic restrictions signal an escalation in Venezuela's confrontation with Western powers, with Dutch Foreign Minister Caspar Veldkamp promising retaliation. Venezuela's move builds on existing tensions — Italy is demanding answers about detained aid worker Alberto Trentini while France seeks regional influence through mediation attempts alongside Brazil's Lula. The crisis has reinforced existing geopolitical alignments: Cuba and Nicaragua maintain close ties with Caracas, Russia's Putin sent congratulations, and China dispatched a special envoy to Maduro's inauguration. Meanwhile, Washington and London imposed new sanctions targeting Venezuela's government, reflecting coordinated Western pressure that now includes restricted diplomatic presence, economic measures, and support for opposition figures.
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India Shifts Military Resources After China Border Agreement
India's 2020-2024 Ladakh confrontation with China has triggered lasting strategic shifts that persist beyond October's disengagement deal. India reinforced its northern border by reassigning a Pakistan-focused Strike Corps, upgrading infrastructure, and deploying new drone capabilities. These changes proved effective in December 2022 when Indian forces, aided by US intelligence, rapidly intercepted Chinese movements at Yangtse.
Trade between India and China hit record levels during the crisis despite political tensions, yet India's military establishment remains deeply sceptical of Chinese border commitments. Defence ties with the US have strengthened substantially, with Defence Secretary Aramane publicly acknowledging India's reliance on US intelligence during the stand-off. India now faces a concrete challenge: maintaining expanded ground forces against China while developing the maritime capabilities that its QUAD partners like the US and Australia are requesting for Indo-Pacific security.
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Russia's Rosatom Wins Vietnam Nuclear Contract
Vietnam and Russia have signed an agreement on nuclear power cooperation, reviving plans for Vietnam's 4,000-megawatt nuclear facility in Ninh Thuan province. Russian state firm Rosatom will partner with Vietnam's EVN utility on the project, which follows Vietnam's 2016 cancellation of similar plans due to cost and safety concerns. The agreement comes as Vietnam projects power consumption to reach 1,200 billion kWh by 2045, exceeding current infrastructure plans.
The project faces three immediate challenges: high initial investment costs despite Vietnam's expanding economy, public safety concerns post-Fukushima, and the need for specialized workforce development. US sanctions on Rosatom officials since January 10 add complexity to implementation. Vietnam maintains relatively limited trade with Russia ($3.6 billion in 2023) compared to its economic ties with China ($171 billion) and the US ($111 billion), though Russia remains a key defence and energy partner. The agreement builds on existing cooperation, including Russia's construction of Vietnam's only current nuclear facility — a 500-kilowatt research reactor in Dalat built in the 1980s.