In Geopolitics Today: Monday, February 26th
ECOWAS Lifts Sanctions to Coax Military Regimes Back, Hungary Expands Gripen Fleet and Ratifies Sweden's NATO Membership, and other stories.
ECOWAS Lifts Sanctions to Coax Military Regimes Back
The Economic Community of West African States (ECOWAS) has lifted most sanctions on Niger in a bid to convince the country and two other regional governments to remain within the bloc after they withdrew their participation. While the gesture removes punitive economic restrictions, it has not yet secured the release of Niger's detained former president.
The move represents a pivot from ECOWAS's initial hardline stance following the coups. It suggests a weakened negotiating position as the organization struggles to preserve integration amid fraying regional alignment. While sanctions took an economic toll, they failed to reverse the consolidation of power by military leaders in several member states. Restoring cooperation without concrete concessions risks enabling the entrenchment of transitional governments. ECOWAS now navigates a difficult balancing act between pragmatic interests and upholding its founding principles.
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Zambia Secures Debt Relief from China and India
Zambia has finalized debt restructuring agreements with its top creditors China and India after protracted negotiations. The deal removes a crucial roadblock that was holding up talks with private bondholders, which is the last remaining piece Zambia needs to secure a $1.3 billion IMF bailout program. The agreements come two years after Zambia defaulted on debt payments in late 2020. With its economy hammered by debt servicing costs, soaring inflation and an acute drought devastating harvests, Zambia is desperate for relief.
While the China and India deal marks major progress and could lift Zambia's credit rating, the country still faces a difficult path forward. Concluding talks with private creditors has already taken far longer than expected. Zambia's bumpy overall negotiation process also highlights flaws in the G20 Common Framework that was meant to coordinate debt relief across official and private creditors. The tool has struggled to align the disparate interests and priorities of various lenders and prevent extended stand-offs that exact economic damage on distressed countries. Yet for all its limitations, Zambia's deal with China and India represents a rare cooperation success between major Western and Eastern creditors. It provides a foundation for building further collaboration.
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EU's Carbon Border Tax Impacting China's Aluminium Exports
The European Union's new Carbon Border Adjustment Mechanism (CBAM), implemented in October 2023, appears to have already impacted aluminium exports from China to the bloc. Reports indicate a 30% annual decline in Chinese aluminium products shipped to the EU monitored under the policy.
However, the policy's phase-in could limit short-term impacts. While mandated reporting began last year, actual carbon fees won't start until 2026. Still, the declines suggest some traders are already adjusting flows due to anticipated charges. China's aluminium sector shows some movement in that direction as demand from electric vehicles and renewables continues to rise. But with Russia-China aluminium trade booming, doubts remain about the mechanism's ability to override economic interests.
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Cracks Emerge in Visegrád Alliance
The Russian invasion of Ukraine has fractured unity within the Visegrád Group, a bloc of four Central European countries — Czech Republic, Hungary, Poland, and Slovakia — allied since the Cold War. Despite shared opposition in recent years to EU power, contrasting approaches to the conflict are proving irreconcilable, especially between Hungary and Poland.
While Warsaw, Prague, and Bratislava largely back Ukraine, Budapest refuses, retaining close ties with Moscow. Elections brought leadership changes across the V4, but views solidified along fault lines. With Slovakia wavering under a new government, only the Czech Republic joins Poland in firmly supporting Ukraine. Few avenues exist for compromising Hungary's acquiescence to Russia's actions. As one Czech minister put it, “the V4 brand is now toxic.” A Russian wedge into Central Europe thus weakens a coalition founded on countering Russian power.
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Hungary Expands Gripen Fleet and Ratifies Sweden's NATO Membership
Hungary has agreed to purchase four additional Gripen fighter jets from Sweden, expanding its current fleet of 14 jets to 18. The $500 million deal was inked on Friday between Hungarian and Swedish government officials. On the surface, it boosts Hungarian air defence capabilities with the Swedish-made jets that are well-suited to the country's operational requirements. But the timing of the agreement, coming just before Hungary's parliament approved Sweden's admission into NATO, hints at political calculations.
Prime Minister Viktor Orbán has been slow to endorse Sweden's NATO accession. The new jet sale appears to be an inducement aimed at easing Hungary into approving Sweden's bid to join the alliance. Yet, the deal also entrenches ongoing military cooperation between Hungary and Sweden, locking in a key export customer for Gripen manufacturer Saab. Sweden gains NATO security guarantees, while securing a competitive edge in maintaining Hungary's fighter fleet. The seamless alignment of strategic interests epitomizes growing defence interdependency between NATO member states.
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Egypt Signs $35 Billion UAE Deal to Develop Mediterranean Coast
Egypt has signed a $35 billion deal with a United Arab Emirates (UAE) consortium led by ADQ to develop the Ras al-Hekma region along the Mediterranean coast. The agreement, announced by Egyptian Prime Minister Mostafa Madbouly on February 24th, marks the largest foreign direct investment for an urban development project in Egypt's history.
Under the deal, the UAE will provide $15 billion upfront and another $20 billion within two months to transform the 170 million square meter area of Ras al-Hekma. The ambitious plans feature residential districts, tourist resorts, universities, an industrial zone and a marina. While the project invites foreign control of valuable coastal land, the agreement brings much-needed money needed to alleviate Egypt's economic crisis. It may strengthen Egypt's negotiating position with the IMF over a bailout package and provide reassurance to investors. However, longer-term impacts remain uncertain given Egypt's political volatility and pressing developmental priorities.