In Geopolitics Today: Wednesday, January 17th
India Expands Steel, Aluminium Exports to US, Qatar's Neutrality Frays Amid Mounting War Polarization, and other stories.
India Expands Steel, Aluminium Exports to US
India has established a system involving multiple government departments to facilitate reduced-duty exports of certain steel and aluminium products to the United States. This comes as the US agreed to import 336,000 tons of these metals from India without extra tariffs, reciprocating India's removal of retaliatory duties on some US goods. The new export monitoring mechanism aims to quickly resolve any trade barriers Indian companies face.
This development aligns with India's broader strategy to pursue free trade agreements (FTAs) with many nations to boost trade volumes. This represents a shift away from using tariffs as a primary revenue source. India is engaged in FTA talks with the UK, EU, Australia, and others that could significantly cut import duties. As its largest trading partner, stronger trade ties with the US also furthers India's goals. However, India will still apply extra tariffs on some US imports. More broadly, India is moving to align with other Asian nations in embracing free trade.
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US Re-designates Yemen's Houthis as Terrorists
The United States is intensifying measures against Yemen's Houthi rebels by redesignating them as a specially designated global terrorist organization. Despite repeated US demands for attacks in the Red Sea to stop, as well as retaliatory airstrikes on Houthi launch infrastructure, the strikes have defiantly continued unabated.
The goal of the designation is to pressure and convince the Houthis to halt their campaign of strikes and change behaviour. The designation will freeze any Houthi assets under US jurisdiction and prohibit US entities from conducting financial transactions with them. Unlike a previous foreign terrorist designation, this aims to avoid excessively hindering aid groups operating in Houthi-held territory in Yemen. Safeguards for imports of food, medicine, and fuel will remain in place. Still, the shift comes just three years after the US removed the designation, signalling growing frustration at the Houthis' actions in defiance of demands and retaliation.
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Russia Still Importing Billions in Sanctioned War Materials
Despite extensive sanctions, Russia has largely succeeded in acquiring the technology and components it needs to sustain its war effort in Ukraine. A joint study by a US-Ukraine research team found that Russian imports of “battlefield goods” subject to sanctions totalled nearly $9 billion from January-October 2022, just a 10% drop from pre-invasion levels. The study details how Russian missile and drone production capacity is actually growing.
The United States and its allies have undertaken efforts to curb this sanctions evasion, but have achieved limited success so far. Diplomatic pressure on countries like Turkey and UAE to restrict facilitating such trade has shown limited impact. Russia's deepening economic ties with China and India are helping mitigate sanctions fallout. Bilateral trade with China surged almost 30% in 2022 to over $200 billion. Russia's economy remains weaker but more resilient than expected, as sanctions workarounds sustain wartime spending.
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A Strategic Re-orientation in South Korea's Global Relations
In his nearly two years as president, Yoon Suk-yeol has engineered a dramatic shift in South Korea's foreign policy orientation. Yoon firmly rejected previous engagement efforts with North Korea, instead demanding cessation of its nuclear program before ties can improve. In a similarly major reversal, Yoon rapidly improved relations with neighbouring Japan, downplaying divisive issues to enable trilateral cooperation with Japan and the United States. Yoon has also tilted Seoul away from China and toward containment.
Yoon's new Indo-Pacific strategy redefines South Korea's role as a “global pivotal state” actively contributing to regional security, referencing resolving tensions like the South China Sea disputes. This marks a departure from the previous, more limited focus on North Korea. Despite domestic criticism, progress in Japan relations aims to solidify US ties in the long-term. Trilateral summits have advanced cooperation with Japan and the US across shared threats from missiles to supply chains. While South Korean economic interests still curb fully joining any US-China rivalry, the administration's seismic shifts in geopolitical orientation will prove significant if sustained over time.
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Qatar's Neutrality Frays Amid Mounting War Polarization
Qatar has cultivated pragmatic neutrality, leveraging its connections to mediate disputes from Israeli-Palestinian talks to hostage releases. The United States relies indirectly on Doha's unique links with Hamas. However, as the war polarizes the region, Qatar's balancing act frays.
Intensifying great power rivalry squeezes the space for small state manoeuvring. As leading powers pressure allies to take sides, it leaves fewer neutrals to mediate conflicts or explore back channels. This could make negotiations harder for warring states. Qatar's niche role risks being a casualty as hardening divides undercut nuanced positions. Its model of engaged neutrality is being severely tested. But if creative middle grounds disappear, diplomacy loses dimensionality. All sides lose potential conduits when the world is framed starkly as good vs evil.
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Attacks Boost Interest in New Central Asia Trade Routes
The sustained attacks on merchant shipping in the Red Sea by Yemen's Houthi rebels have boosted interest in the Middle Corridor, a Central Asian trade network. Countries along this network recently met to discuss developing two new transit trade routes — one between Turkmenistan and Uzbekistan, and another linking the former to Iran. Combining these could benefit Iran economically and strategically, offering a lifeline and closer ties with key ally China.
The Turkmenistan-Uzbekistan route saw its first rail shipment in late 2022, as the countries hope to replicate the success of earlier Middle Corridor routes in attracting investment. The proposed addition of a route to Iran could make China and Iran the biggest winners. For Iran, it offers a way to skirt sanctions and trade more freely with China. For China, it would ease reliance on seaborne trade, reducing US leverage, as well as expand its regional clout. An expansion linking Central Asia and Iran would likely worry the US over growing China-Iran ties and reduced neutrality of Turkmenistan and Uzbekistan.