In Geopolitics Today: Thursday, May 18th
Iran and Russia Sign Railway Agreement to Complete Transport Corridor, Conflict in Sudan Threatens Gum Arabic Supply, and other stories.
India Expands Military Diplomacy in the Gulf
India has been strengthening its bilateral ties with Gulf countries, moving beyond the traditional focus on energy cooperation. The political relations between India and the Gulf states have been on an upward trajectory, fuelled by personal rapport between leaders and a shared vision of military-security and defence cooperation. This growing collaboration includes joint military exercises, intelligence sharing, counterterrorism efforts, and cybersecurity cooperation.
The expanding military diplomacy between India and the Gulf countries is driven by shared security challenges and the desire to establish self-reliant defence industries. As India aims to increase its strategic presence in the Indian Ocean Region, it is actively seeking to enhance military-to-military engagements and defence industrial cooperation. India sees the untapped markets in the Gulf as a potential destination for its locally-developed defence products. While facing competition from established arms exporters, India remains optimistic about forging co-production initiatives and securing arms contracts.
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Iran and Russia Sign Railway Agreement to Complete Transport Corridor
Iran and Russia have signed a significant railway agreement as part of their joint efforts to develop the International North–South Transport Corridor. The $1.6 billion deal involves the construction of a 162-kilometer railway between Rasht and Astara in Iran, linking existing sections of the corridor.
The International North–South Transport Corridor is a multimodal network connecting Russia to India through rail, road, and sea routes. The initiative aims to bolster trade between the participating countries, including Russia, Kazakhstan, Turkmenistan, Azerbaijan, Iran, and India. By providing an alternative to the Suez Canal, this corridor presents an opportunity to increase trade volume along the route. Despite facing challenges, such as the Suez Canal's dominant position in global trade, the agreement between Iran and Russia underscores their ongoing efforts to expand bilateral trade and overcome US sanctions.
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Conflict in Sudan Threatens Gum Arabic Supply
The ongoing civil war in Sudan is threatening the global supply of gum arabic, a crucial ingredient found in a wide range of products, including fizzy drinks, cosmetics, and pharmaceuticals. Sudan's Acacia Senegal trees make up approximately 70% of the world's gum Arabic supply. If the conflict persists, the yield of the next gum crop may be negatively impacted, as many gum arabic farmers have fled the affected areas.
The implications of the supply disruption extend beyond Sudan. European gum manufacturers and distributors, such as Morouj UK, currently have stock that will last for a few months. However, if the war continues, the supply chain for gum arabic could be severely affected. Companies like Agrigum, which relies on Sudan-based partners, are facing electricity shortages and a scarcity of essential resources, hindering the processing and sourcing of gum arabic. With no clear resolution in sight, the industry is hopeful for a swift end to the conflict, allowing people to resume their work, secure their families, and stabilize the gum arabic supply chain.
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UK and Japan Form Semiconductor Partnership
British Prime Minister Rishi Sunak has announced a partnership with Japan in the semiconductor sector, aimed at reducing geopolitical risks by diversifying the UK's chip supply chain. This move comes ahead of the publication of the British semiconductor strategy, which will highlight the dangers of overreliance on a few supplier countries, including Taiwan. The partnership with Japan will focus on R&D cooperation, skills exchange, and strengthening domestic sectors to enhance supply chain resilience.
The UK's semiconductor sector development plan, set to be revealed shortly, will involve £1 billion in government spending over the medium term. However, this amount is significantly smaller compared to the subsidies and incentives provided by the US and the EU through their respective semiconductor acts. The partnership with Japan and the increased funding from the UK government aim to reduce dependence on adversaries and enhance the semiconductor capabilities, particularly in value-added areas such as research and design, compound semiconductors, and advanced packaging. This strategic collaboration signifies the UK's efforts to secure its semiconductor supply chain and mitigate risks associated with a conflict over Taiwan.
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Wagner Group Maintains Strategic Importance for Russia
Despite the casualties suffered by Wagner mercenaries and the group's controversial activities, its strategic importance to Russia remains, as it offers the Kremlin a means to evade sanctions and gain access to commodities to bolster Russia's economy. Wagner has particularly expanded its presence in Africa, where the company has operated in various countries, providing military, political, economic, logistical, and information-related services.
Efforts to counter Wagner's influence have been underway, with the United States and its European allies engaging with African nations to mitigate the impact of the private military company. The US has declared Wagner a transnational criminal organization and has shared intelligence with countries such as Chad, Rwanda, Burkina Faso, the Democratic Republic of Congo, and the Central African Republic. While Moscow may be exploring the development of alternative private military companies, Wagner's demand remains high, particularly in fragile states, where the group typically provides security services.