In Geopolitics Today: Monday, November 25th
US Treasury Sanctions Gazprombank, Sri Lanka Accepts IMF Terms Despite Political Promises, and other stories.
US Treasury Sanctions Gazprombank
The US Treasury has imposed sanctions on Gazprombank, a key facilitator of European gas payments. Gazprombank had been deliberately excluded from previous sanctions rounds to protect European energy security. The bank currently processes gas payments for Slovakia and Hungary, which together receive approximately 360 million cubic meters per week via Ukrainian transit routes, representing 6% of EU gas imports. The sanctions will take effect in December 2024, disrupting the renewal of Ukraine transit agreements expiring at year-end.
The timing and scope of Gazprombank sanctions represent a calculated escalation in Western economic pressure on Russia's energy sector. By waiting until commercial ties with friendly gas buyers were severed, the US Treasury minimized collateral damage to key allies while maximizing impact on Russia's financial infrastructure. This creates a strategic dilemma for potential intermediaries like Azerbaijan's SOCAR, which must balance $6.8 billion in Western financing against opportunities in Russian gas transit. The move effectively forces EU members to choose between continued access to Russian gas and participation in the US financial system, particularly pressuring Hungary and Slovakia's energy security arrangements.
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Germany Complements French Influence in Chad
Chad has become a focal point of competing international interests. German Development Minister Svenja Schulze's recent visit signals Berlin's attempt to gain influence in traditionally French-dominated territory. Chad's President Mahamat Déby has initiated closer ties with Russia. The UAE has secured access to the Amdjarass airbase for RSF militia support and is discussing drone supplies to Chad. Meanwhile, Hungary has approved deployment of up to 200 troops and launched development projects, with France ensuring these forces are stationed near its N'Djamena base.
The flurry of diplomatic activity in Chad reveals a complex power transition from French colonial influence to multipolar competition. Germany's engagement strategy combines humanitarian assistance with strategic positioning, attempting to differentiate itself from France's colonial legacy while countering Russian influence. The intersection of refugee management with great power competition creates unique leverage for N'Djamena. President Déby is skilfully balancing multiple powers: leveraging UAE military support, exploring Russian alternatives, accepting Hungarian development aid, while allowing France to maintain some influence through base monitoring rights.
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France Pursues $4 Billion Submarine Sales Across South America
French President Emmanuel Macron has conducted a strategic South American tour, combining G20 attendance with military sales diplomacy in Argentina, Brazil, and Chile. In Argentina, discussions centred on a $1.5 billion deal for three Scorpene submarines, supported by a proposed $2.31 billion parliamentary loan authorization for 2025, including $800 million in debt service. In Brazil, Macron explored expanding an existing $10 billion submarine program that includes technology transfer provisions. Chile is planning a $1 billion tender in 2026 to replace ageing German submarines, bringing the total potential deals to over $4 billion.
France's coordinated diplomatic-industrial initiative reveals a sophisticated approach to maintaining influence in South America through defence industrial partnerships. The strategy leverages varying levels of industrial cooperation, from Argentina's direct procurement to Brazil's technology transfer model, demonstrating France's flexible approach to defence cooperation. The timing is particularly strategic, coinciding with Argentina's submarine capability gap and Brazil's successful domestication of Scorpene production. This represents more than arms sales — it's an attempt to establish long-term strategic relationships through industrial cooperation, potentially creating decades-long dependencies that enhance French influence.
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China Restrains Power Despite Leverage Over Russia and North Korea
China currently holds unprecedented leverage over both Russia and North Korea: serving as Russia's primary economic lifeline and accounting for 90% of North Korea's trade. Despite this dominance, Beijing has shown remarkable restraint in exercising its influence. This cautious stance stands in stark contrast to the bold manoeuvres of its weaker neighbours. China's “no limits” partnership with Russia and studied silence on these developments reveal a striking diplomatic timidity from the region's strongest power.
China's restraint stems from a paradoxical position: unprecedented strength paired with strategic paralysis. Beijing's deeply rooted strategic culture, fixated on broad structural trends, has produced an overcautious approach that smaller powers are actively exploiting. This defensive mindset, partly rooted in fear of isolation amid US competition, has created an unusual dynamic where weaker states shape regional events while the dominant power remains reactive. The represents a crucial evolution in Northeast Asian power dynamics, where traditional military and economic advantages are being offset by diplomatic agility and calculated risk-taking by lesser powers.
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Sri Lanka Accepts IMF Terms Despite Political Promises
The IMF has reached a staff-level agreement with Sri Lanka on the third review of its $2.9 billion Extended Fund Facility (EFF) arrangement, potentially releasing $333 million in new financing. New President Anura Kumara Dissanayake has shifted from his campaign promise to renegotiate the IMF deal, instead emphasizing strict economic management. The agreement's approval requires Sri Lanka to submit a 2025 budget aligned with program goals, present an interim budget in December, and demonstrate progress in debt restructuring.
This represents a critical juncture in Sri Lanka's economic recovery and institutional relationships. The power dynamics have shifted from electoral populism to pragmatic governance, with Dissanayake's administration accepting IMF conditionality despite campaign promises. The IMF's leverage stems from Sri Lanka's recent debt restructuring progress with bondholders and the Official Creditor Committee, making program continuation important for maintaining international creditor confidence. The administration's commitment to reform indicates a strategic choice to prioritize international institutional relationships over immediate popular demands at home, though with potential domestic political consequences.
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Russia Expands Military Presence in Libya Through Haftar Alliance
Russia is intensifying its military and economic presence in eastern Libya through strengthened ties with General Haftar's Libyan National Army (LNA). Recent developments include the closure of the El Sharara oil field (300,000 bpd capacity), affecting European energy supplies, with 80% of production typically flowing to Europe. Russian military presence has expanded with approximately 3,000 mercenaries and increased activity at five strategic bases: Brak Al Shati, Al-Jufra, Al-Gardabiya, Al-Khadim, and Tobruk port.
Russia's actions in Libya represent a multi-faceted strategy aimed at leveraging Libya's position as the world's 9th largest oil reserve holder to challenge Western influence in North Africa. The power dynamics manifest through three key vectors: energy market manipulation, military positioning, and diplomatic realignment. Moscow's support fills the vacuum left by declining UAE and Egyptian backing for Haftar, while simultaneously pressuring European energy security. Libya's expressed interest in joining BRICS, coupled with Russia's expanding military presence, suggests a broader strategy to establish a Mediterranean foothold for power projection into Sub-Saharan Africa, aimed at disrupting traditional Western economic and security arrangements in the region.