In Geopolitics This Week
Indonesia Leverages Nickel Monopoly with Competing Trade Blocs, Iraq Eliminates Kurdish Energy Autonomy, Israel Converts Syrian Fragmentation Into Territorial Expansion, and other stories.
Indonesia Leverages Nickel Monopoly with Competing Trade Blocs
Indonesia has accepted 19% tariffs while securing US market access and $19.5 billion in procurement commitments, including $15 billion in energy exports, $4.5 billion in agricultural products, and 50 Boeing aircraft. Jakarta controls 51% of global nickel production through 44 operational smelters and 21 under construction, with processing capacity expanding from 2 facilities in 2014 to over 60 by 2024. Chinese investments totalling $30 billion built 90% of Indonesian smelting infrastructure. Indonesia's 2020 raw ore export ban forces foreign manufacturers into permanent infrastructure dependencies, creating leverage that survives policy changes and trade disputes.
Indonesia's resource nationalism exploits its vast nickel reserves and processing capacity for diplomatic advantage. This strategy amplifies through Indonesia's smelting capacity exceeding domestic ore availability, enabling output manipulation that compels competitors toward supply agreements. Jakarta exploits great power competition by simultaneously finalizing a Comprehensive Economic Partnership Agreement with Brussels, eliminating barriers on the majority of exports to Europe. The EU agreement provides preferential market access without strict compliance mechanisms, while the US deal includes anti-transshipment clauses targeting Chinese goods.
Indonesia's market dominance is prompting Western diversification efforts that may challenge long-term control. The country's nickel surge has driven down global prices, forcing mine closures across Australia and New Caledonia that consolidate Indonesian dominance through competitive pricing. To secure alternative nickel resources, France is establishing New Caledonia as a constitutional state within the French Republic, ensuring continued access to its substantial reserves for integration into the European electric vehicle supply chain and reducing reliance on Indonesian processing facilities.
Iraq Eliminates Kurdish Energy Autonomy
Iraq's federal government has pressured the Kurdistan Regional Government into surrendering oil export control through a July 18 agreement. Drone strikes targeted six Kurdish oil fields July 14-17, shutting down operations affecting up to 200,000 barrels per day at facilities operated by US companies HKN Energy and Hunt Oil plus Norwegian operator DNO. Iraq's Federal Supreme Court declared autonomous Kurdish exports unconstitutional in February 2022, yet Kurdistan has maintained operational control through contracts signed without Baghdad's approval.
Popular Mobilization Forces executed precision strikes against energy infrastructure after negotiations stalled, forcing international oil companies to halt operations within 72 hours and creating substantial daily losses that compelled immediate Kurdish compliance. Iraqi Kurdistan faces geographic constraints through Turkey's single pipeline route to Mediterranean markets, while federal Iraq controls banking systems and currency exchange necessary for international transactions. Baghdad's pressure intensified as oil prices declined, with Kurdistan unable to generate sufficient revenue to maintain government operations independently.
Federal victory consolidates hydrocarbon authority while strengthening Baghdad's position against external pressure. Kurdistan transfers majority production to federal control while retaining minimal domestic consumption volumes, ending autonomous energy policy that enabled independent relations with foreign governments. International oil companies operating in Kurdistan face billions in potential losses, accepting unfavourable federal terms rather than complete asset abandonment. Iraq's centralized oil authority now controls approximately 95% of national production, reducing internal fragmentation that previously allowed the US, Iran, and Turkey to exploit federal-regional divisions for competing strategic objectives.
Israel Converts Syrian Fragmentation Into Territorial Expansion
Armed clashes between Druze militias and Bedouin tribes in Syria's Suwayda province beginning July 13 triggered Syrian government military deployment and immediate Israeli intervention. Damascus deployed forces to address the conflict but withdrew within 48 hours after Israeli strikes on Defence Ministry headquarters severely degraded command capacity for southern operations. Israel maintains air dominance over southern Syria while conducting ground strikes against Syrian military convoys, effectively establishing a de facto buffer zone protecting Golan Heights settlements. Syria's transitional government lacks military capacity to contest Israeli operations.
Syrian state fragmentation creates permissive conditions for indefinite Israeli influence through the breakdown of sovereignty defence mechanisms. Damascus controls neither military resources nor administrative authority necessary to project force into contested border regions, while economic collapse limits reconstruction of defensive capabilities. Israel has gradually destroyed Syrian strategic military assets through systematic airstrikes, creating a regional military imbalance favouring sustained Israeli leverage. Local Druze control of Suwayda provides Israel strategic depth protecting Golan Heights settlements while fragmenting Syrian territorial integrity through demographic leverage over Druze populations.
Israel exploits Syrian institutional weakness to expand a security perimeter beyond formal occupation zones. The Syrian government controls neither integrated command structures nor logistics networks necessary for sustained military operations in contested southern territories. Israeli air superiority enables selective targeting of Syrian military assets without triggering broader regional escalation, as neither Turkey nor Iran possess forward-deployed capabilities for immediate intervention. Syria's fragmented authority structure allows external powers to exploit internal divisions, with Israel positioning itself as Druze protector while Turkey focuses on Kurdish containment in the northeast.