A World Remade

How Trump's trade wars are creating new geopolitical realities and affirming old ones.

Commercial Summary: Trump is continuing with policies that push BRICS together, even though BRICS is very far from being an alliance. Russia-Iran-India will work more closely together on trade to contain China-Pakistan, but this falls short of an actual alliance. India risks losing access to Western remittances due to Western domestic concerns. Indian defence industries need to double down on modernisation but their partners do not trust them. Countries that try to navigate these competing geopolitical blocs by playing both sides, as Georgia and Azerbaijan are doing, will become increasingly vulnerable to domestic instability.

President Donald Trump, accidentally or intentionally, has effectively recognised, or even cemented, an Indian-Russian unbreakable economic partnership. While condemning it, and using it to berate India for not agreeing to a trade deal on his terms, he also confirmed a new geopolitical reality: an Indian-Russian-Iranian trade corridor is now in effect, and can be used as a soft buffer to counter China-Pakistan. Although the reality is not very tidy - Russia and China are rivals but key trading partners, and Iran needs Chinese air defence systems desperately - this International North-South Transport Corridor, first conceived in 2002, does create an important new geopolitical configuration.

For India, despite the US sanctioning some of its oil refiners, it must continue to acquire Russian natural resources - the alternative is for China to receive these goods at even more favourable prices. India’s strategy is informed by the need to give Russia a non-China option (something which we thought the Trump administration understood perfectly well, before Trump apparently decided to double down on the failing war in Ukraine).

For Iran, it needs a partner against Pakistan, as well as a new geopolitical function and role as champion of the Shi’a, given that its role as a pan-Islamic revolutionary state is over. It needs to resolve its conflicts with its near abroad, and that includes Azerbaijan, a key node in the INSTC.

We emphasise that this is not a Russian - Indian - Iranian alliance. Rather, it is a set of limited partnerships with specific objectives, including, for Russia and India, balancing against both China and the US, and, for Iran, gaining as many partners against the US as possible.

BRICS

Like the India - Iran - Russia combination, BRICS is not an alliance, and, indeed, is considerably looser. China and Russia are rivals. India and China are enemies, close to fighting water wars over the Himalayas. Iran, Saudi Arabia, and the UAE are all rivals. Egypt and Ethiopia are in a vicious competition over the Nile waters. Brasil is only interested in Brasil.

BRICS is merely a trade and talk forum where bilateral trade arrangements can be worked out independently of Western pressure and Western rules. And even that is severely complicated by the role of the American dollar in the global financial system, and the mistrust of all BRICS countries in each other’s currencies.

Allies agree to imperial levies

Meanwhile, the USA has agreed other trade deals with the EU, Japan, and South Korea, with all three agreeing to 15% tariffs on their exports to the US. What these confirm is that the EU, Japan, and South Korea all remain firmly in the American orbit, and will slowly work with the US to contain China, with disagreements over timelines and priorities, but not over strategic aims.

Commercial Implications

India: visas and trade

• The strategy of India is to export as much of its surplus labour abroad, and use them to gain remittances and build up friendly voting blocs in the West.