In Geopolitics This Week
Armed Mutiny in Russia Ends as Prigozhin Agrees to Halt Movement, India Draws Closer to the United States, Intel Makes Major Investments in Israel and Germany, and other stories.
I will be taking some time off over the next few weeks. Therefore, there will be no publications until next month. The newsletter will return sometime in July.
Armed Mutiny in Russia Ends as Prigozhin Agrees to Halt Movement
Russia has been gripped by a series of events involving an armed mutiny led by Yevgeny Prigozhin, the leader of the Wagner Group. The situation took an unexpected turn as Prigozhin evolved from a disgruntled paramilitary leader to an armed rebel threatening Russian territory and the top military brass. However, the mutiny seems to have come to an end, as Prigozhin has decided to halt his forces' advance toward Moscow. Belarusian President Alexander Lukashenko played a crucial role in brokering an agreement between Prigozhin and Russian President Vladimir Putin.
Prigozhin intensified his attacks on Russia's Ministry of Defence, blaming them and their allies for launching the full-scale invasion of Ukraine. He declared the need to stop the “evil brought by the military leadership” and threatened resistance forces and any overhead aviation. In response, President Putin swiftly condemned Prigozhin's actions, labelling him a criminal, and ordered Wagner troops to stand down. Putin addressed the nation, warning of “inescapable punishment” for Prigozhin and his supporters.
The mutiny posed significant challenges for Russian operations, particularly in Ukraine, as Prigozhin's Wagner Group gained control of major Russian cities like Rostov-on-Don and Voronezh. The situation brought logistical complications and exposed dissension within the Russian military ranks. Prigozhin's ability to garner support from local commanders indicated that the conflict could have extended longer than anticipated. Nonetheless, efforts to resolve the crisis progressed swiftly behind closed doors, culminating in an agreement between Lukashenko and Prigozhin.
Lukashenko engaged in multiple telephone conversations with President Putin, updating him on the outcomes of his talks with Prigozhin. Under the agreement, the fighters who initially refused to participate in Prigozhin's campaign will sign contracts with the Ministry of Defence, and Prigozhin himself will relocate to Belarus, with the criminal charges against him being dropped. While rumours of reshuffling in the army leadership remain unconfirmed, the true outcome will only become evident in the near future. Should no resignations occur, it appears that Prigozhin's “march of justice” has left him with nothing, despite the significant loss of Russian lives and valuable aircraft.
India Draws Closer to the United States
The United States and India have recently strengthened their defence cooperation through a series of new initiatives, highlighting the significance of their partnership. The agreements, valued at billions of dollars, encompass various industries such as semiconductors, aerospace, and artificial intelligence. These developments reflect shared strategic interests and economic incentives, building upon previous efforts to foster collaboration between the two countries. Initiatives like the QUAD and the “Initiative on Emerging and Technology” have laid the groundwork for this upgraded partnership, which is expected to advance military technology collaboration and reinforce bilateral ties.
Trade and investment relations between the US and India have also witnessed substantial growth. Trade between the two nations reached a record $191 billion, with the US becoming India's largest trading partner. Furthermore, the US has invested over $54 billion in India, spanning sectors like manufacturing and telecommunications. Indian companies have reciprocated with investments of over $40 billion in the US, supporting hundreds of thousands of jobs. The deepening economic ties between the two countries, as exemplified by Air India's purchase of Boeing aircraft, are expected to enhance productivity and attractiveness for investors in both nations.
The defence sector is a crucial area of cooperation between the two countries. As a major defence partner of the US, India has already procured military equipment worth over $18 billion, showcasing the value of the technological edge of US defence companies are able to offer New Delhi. The “Make in India” policy further emphasizes an opportunity for US companies to adapt their operations in India to support the country's domestic defence industry. India's defence budget has allocated a significant portion for research and development, including collaboration with start-ups and the private sector.
The evolving US-India relationship encompasses economic and defence cooperation but also highlights India's assertion of its own interests. This partnership is driven by both the pursuit of profits for US corporations and the need to balance China's regional influence, although concerns arise over the potential for destructive conflicts given the nuclear capabilities of China, India, and Pakistan. The relationship holds implications for the US-China political confrontation, serving as a veiled message to counter China's growing power. Furthermore, investments in education and the contributions of Indian-Americans in various sectors demonstrate the multifaceted nature of the bilateral ties.
Intel Makes Major Investments in Israel and Germany
Intel, the US semiconductor giant, has announced plans to invest $25 billion in a new chip manufacturing plant in Israel, marking the country's largest foreign investment to date. The facility, set to open by 2027, will operate until at least 2035 and is expected to contribute to Israel's growing economy, particularly highlighting the strength of its technological sector.
While the investment demonstrates international confidence in Israel's economic stability and technological advancements, it raises concerns about Israel's economic relationship with China. The US has expressed concerns about potential collaboration between Israel and China in sensitive technologies, as semiconductor technology becomes a focal point of the US-China geopolitical rivalry.
In addition to the investment in Israel, Intel has expanded its presence in Germany, with plans to spend over €30 billion on developing two chip-making plants in Magdeburg. The German government has agreed to provide subsidies of nearly €10 billion, surpassing the initial offer of €6.8 billion. Intel CEO Pat Gelsinger expressed gratitude to the German government and the state of Saxony-Anhalt for their support in establishing a semiconductor industry in Germany and across the EU more broadly. This move is part of Intel's global strategy to regain dominance in chip making and compete with industry rivals.
The semiconductor industry is projected to become a trillion-dollar industry by 2030, and both the US and Europe are actively attracting major players through a combination of state subsidies and favourable legislation. Germany, in particular, aims to enhance its appeal as a high-tech production location and strengthen its resilience by investing billions of euros in subsidies to attract tech companies. With concerns over supply chain fragility and dependency, governments are keen to secure investments in the semiconductor sector, which plays a crucial role in numerous industries.