With the interim peace agreement signed by Hamas and the Israeli government last week, it seemed that the world could finally take a breather, after two years of a savage war initiated by Hamas’ brutal terrorist attack of October 7th, 2023, and continued by the subsequent Israeli invasion of the Gaza strip. The leaders of the various parties involved, including the US, will gather in Egypt in coming days to formalise the deal and hopefully put in place the necessary conditions for a longer-lasting peace process and sketch the contours of a recovery phase.
US President Donald Trump was hoping to win the Nobel Peace Prize on the back of this, but the Norwegian committee instead chose Corinna Machado, the leader of the Venezuelan opposition. Trump was reportedly furious, but the committee had to choose those who contributed to the advancement of peace during the year 2024, when Trump was re-elected but not yet back in office. He may therefore stand a chance for next year’s prize.
Perhaps this year will be productively used to try to make progress on the Russia-Ukraine front. This is the reason why Ukraine’s President Zelensky has already called Trump: not just to congratulate him for the diplomatic success over the Gaza war, but to reiterate his request for more powerful weapons, including Tomahawk missiles. In his view, this is the only way to convince Russia to the negotiating table.
While Trump and the West were partly celebrating this potential respite in Israel and Gaza, the news emerged that China decided to introduce severe export controls for their rare earth materials. Trump reacted by announcing a new round of tariffs, with an additional 100% rate over and above what China is already paying. For a change, Trump could say he wasn’t the initiator of this new escalation. China however could say this was still a reaction to the tariffs imposed in the last few months. In the end, it’s a chicken and egg situation and it’s broadly irrelevant who started it.
The net result is the same either way: global equity prices collapsed on Friday, and even Bitcoin, which seemed headed to 125,000 versus the USD, collapsed back towards 110,000. The only asset to benefit from the news was gold, which has recently reached 4,000 USD per troy ounce, and seems to have more room to grow further, if global tensions continue.
Theoretically speaking, Chinese President Xi and Trump may soon have an occasion for a direct confrontation, on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit scheduled for the end of October, in South Korea. Trump has threatened to cancel the meeting if China insists on its embargo of rare earths, which are essential for key productions of the US industrial and even militaryuses. Last time around, the negotiators of the two sides reached a truce in Geneva after a quick negotiating round. The hope is that something similar may happen again in the coming days. Otherwise, we are set for another rollercoaster ride, as we had in April after “Liberation Day”.
