USA

Kevin Warsh has broken away from US President Donald Trump in his first Fed move, and he has done it with the entire committee behind him.

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The Federal Open Market Committee lifted rates on Wednesday after holding them at 3.5% to 3.75% since December, ending a pause that had grown harder to justify as energy costs pushed prices higher.

Not a single member dissented in a unanimous 12-0 vote.

That matters because the pressure ran in both directions as three regional presidents had voted for a hike in July, while the White House spent months demanding cuts.

Nobody voted for either extreme.

At the time of writing, the market reaction to the decision has been fairly muted likely due to the fact that the hike was widely expected.

A statement stripped to the bone

The Fed’s communication was as striking as its decision.

The statement ran to three short paragraphs, a fraction of the length markets are used to, with no forward guidance and no hedging.

“Inflation remains elevated,” it read, adding that “today’s policy action will support a timelier return to the Committee’s 2 percent goal.”

The word “timelier” carries an implicit admission that the return had been too slow.

Then a sentence the Fed almost never writes: “The Committee will deliver price stability.” Not seeks to, not is committed to. Will.

The economic assessment was also confident throughout.

Activity is “expanding at a solid pace”, domestic spending “has been resilient”, productivity growth is “strong” and capital investment “robust”, while job gains “have kept pace with the workforce”.

Uncertainty remains elevated, the Fed said, owing partly to “geopolitical developments”, its formulation for the Iran war.

By describing an economy in good health, the committee removed the argument that higher rates would damage growth, which is precisely the case US President Donald Trump has been making.

Boxed in by the data

The decision had been building for months.

Three regional Fed presidents dissented in July in favour of an increase, the most in one direction since 2016, and several others said afterwards they were ready to move unless inflation eased which it did not.

The Fed’s preferred gauge, the personal consumption expenditures index, ran at 3.7% in both June and July, with core inflation at 3.3%. Before the Iran war sent fuel prices climbing, core stood at 3%.

Consumer prices held at 3.4% in August, but the monthly increase of 0.4% was the sharpest since May, evidence the energy shock is feeding through. Inflation has now been above the 2% target for more than five years.

Warsh had effectively committed himself at Jackson Hole in August, telling the symposium he “would be hard pressed to describe broad financial conditions as restrictive” and warning that unless underlying inflation moved to target “clearly and at sufficient speed”, the Fed had “work to do”.

Markets took him at his word as the CME’s FedWatch tool put the probability of a rate hike above 90% before today’s decision.

Defying the president who chose him

US President Donald Trump had spent months demanding the opposite, insisting the country should have the lowest interest rates in the world and choosing Warsh partly on the expectation he would deliver them.

Warsh himself said while campaigning for the job that rates could come down.

The treatment of his predecessor sharpened the stakes as Jerome Powell was publicly attacked for moving too slowly, and the US Justice Department opened a criminal investigation into testimony he gave to Congress.

Today’s decision could also have a restoring effect on the perceived independence of the Federal Reserve as an institution.

The technical details point to a Fed settling in at the new level.

The interest rate on reserve balances rises to 3.90% from Thursday, the primary credit rate to 4%, and standing repurchase operations will run at 4%. Seven regional reserve banks requested the discount rate increase.

The Fed’s new dot plot shows 12 of 18 officials expect another 0.25% hike by year-end, taking rates to 4.125%, while four see rates reaching 4.375%.

The hawkish signal extends well beyond 2026 as 14 officials see rates ending 2027 above today’s level, while the 2028 median stands at 3.9% versus 3.4% expected.

The longer-run rate also rose to 3.2%, suggesting officials increasingly believe neutral rates have moved higher while economists also expect more to follow.

WASHINGTON: Jason Eaton insisted he was acting on orders from the CIA and Mossad when he shot three Palestinian college students who were walking past his home a few days after Thanksgiving. He said the US and Israeli intelligence agencies transmitted the messages to him via FM radio and that God was commanding him to protect his Jewish neighbors.

Eaton’s claims were at the heart of his insanity defens e as he went on trial Monday on attempted murder charges in a case that shook Burlington, Vermont, and reverberated in the West Bank, where the three wounded men grew up and became friends as schoolmates in Ramallah before moving to the US for college.

The November 2023 shooting, weeks after the start of the Israel-Hamas war, spawned calls for a hate crime investigation. But no hate crime charges were filed as questions persisted about whether anti-Palestinian animus, an altered mental state or something else had compelled Eaton to open fire on Hisham Awartani, Tahseen Aliahmad and Kinnan Abdalhamid, who were all 20 at the time.

The men testified one after another as Eaton, now 51, watched stoically from the defense table in a Burlington courtroom. He has pleaded not guilty but doesn’t dispute that he was the shooter. If convicted, he faces up to life in prison. If found not guilty by reason of insanity, he could be ordered to undergo mental health treatment.

Defense lawyer Joshua O’Hara, previewing testimony from a defense psychiatrist, told jurors in an opening statement that Eaton was suffering from a delusional, psychotic disorder after losing his job at a credit union two weeks before the shooting.

While listening to a local NPR affiliate, Eaton believed he was hearing messages that he attributed to the CIA, O’Hara said. At first, the messages were encouraging and validating, the lawyer said, but subsequent messages turned dark, insisting that Eaton “has to go out and shoot somebody.”

Prosecutor Sally Adams told jurors that a state psychiatrist who is slated to testify concluded that Eaton did not have a mental disease or defect. Evidence will show he intended to kill the men, was not legally justified in shooting them, and does not meet the test of legal insanity, Adams said.

Authorities found three shotguns in Eaton’s apartment and a Ruger .380-caliber handgun that crime lab testing concluded was the gun used in the shooting, Adams said. Eaton had purchased the gun seven months earlier from a Vermont gun store.

“If the defense tries to focus on the story that Mr. Eaton tells about why he intended to kill these three young men, that story is only part of the whole picture,” said Adams, the chief administrative deputy at the Chittenden County State’s Attorney’s Office.

Awartani, Aliahmad and Abdalhamid, all of whom are now 23, told jurors of their holiday weekend visit to Awartani’s grandmother’s house, a trip to a bowling alley to celebrate his twin cousins’ birthday, and the walk they took near the University of Vermont campus after dusk that ended in bloodshed.

Awartani, who was studying at Brown University in Rhode Island at the time, said they were smoking cigarettes and speaking a mix of English and Arabic. Two of them said they were wearing traditional Palestinian scarves known as keffiyehs. Awartani said he first noticed Eaton standing on a porch as they approached the apartment house where he lived.

Within seconds, Awartani said, Eaton was off the porch and walking toward them. His face was expressionless and he didn’t say anything. As Eaton got to about five to 10 feet (1.5 to 3 meters) away, “he pulled out a handgun and started shooting at us,” said Awartani, who was paralyzed from the waist down in the shooting and now uses a wheelchair.

Jacob Pyne, who lived in a different apartment in the same house as Eaton, testified that he heard four to six gunshots, followed by footsteps going up the stairs of the apartment house. He said he ran outside and heard two men speaking, one of whom was more vocal and yelling, “I’ve been shot, help me.” He then brought the men blankets and called 911.

Abdalhamid, a student at Haverford College near Philadelphia, said he fled and hid behind another home after seeing Aliahmad fall to the ground. He said he only realized later when he sat down that he had also been wounded. Awartani was shot in the chest and the bullet ricocheted off his scapula, causing paraplegia in his spinal cord. Aliahmad, who was a student at Trinity College in Connecticut, was struck in the collarbone, and Abdalhamid was shot in the right buttock.

O’Hara, the supervising attorney at the Chittenden County Public Defender Office, told jurors that Eaton was confused by the messages he said he was receiving, and became convinced that the CIA and Mossad were enlisting him into “overwatch duty” to protect a Jewish family living across the street.

“These were delusions,” O’Hara said. “He believed in the moment that he was doing something that was right. He had been commanded to do this. And that he did not have the ability to appreciate the wrongfulness of his conduct in the moment because he believed he’d been instructed to do this by a government agency or God.”

BRUSSELS, Belgium: Belgium’s top universities condemned on Monday the government’s refusal to help 13 students from war-torn Gaza who received scholarships at Belgian universities reach the country.

Brussels set aside plans to evacuate the Palestinian students last week in a case that has split the coalition government.

The rectors of the European country’s top 10 universities expressed their “dismay” at the move in a letter, accusing the administration of using the students as “bargaining chips” in a “disgraceful political horse-trading.”

Centrist Foreign Minister Maxime Prevot has advocated in favor of evacuating the students but has faced opposition from the Flemish conservatives party of Prime Minister Bart De Wever, according to a government source.

Prevot said one member of the five-party coalition demanded concessions on migration, including the creation of deportation centers, in return for greenlighting the evacuations.

“They must not be treated as bargaining chips or as variables to be adjusted in political debates on migration,” the rectors wrote of the Gaza students.

“Their cases must be assessed for what they are: those of students and researchers who have been awarded scholarships on the basis of their academic merit and who have all expressed their intention to return to their home countries to contribute to their reconstruction.”

The students are among about 1,500 Palestinians in Gaza currently waiting to reach Belgium, having been granted the right to do so, mainly under family reunification rules, according to several NGOs.

Yet, evacuations from the Palestinian territory at war with Israel are proceeding at a trickle, with activists and now the universities accusing the government of deliberately slowing down the process.

“Discussions in recent weeks also show that the obstacles cited do not stem from insurmountable constraints but rather from a lack of political will,” the university chiefs wrote.

The case is not isolated, with Palestinian students hoping to study in Italy, Turkiye, the Netherlands, Germany also reporting delays in recent months.

Palestinian militant group Hamas launched an attack on Israel on October 7, 2023, which killed 1,221 people, according to official Israeli figures.

Israel’s offensive has since claimed at least 73,470 lives in Gaza, according to the Gaza health ministry, which operates under Hamas.

JERUSALEM: Prime Minister Benjamin Netanyahu warned on Monday of heavy reprisals on Israel’s enemies if they attacked, as he lauded the recent demolition of a Hezbollah tunnel network in southern Lebanon.

Netanyahu said Israel’s destruction of Hezbollah positions at the Beaufort and Ali Al-Taher ridges was a “massive victory” and vowed to “continue to destroy terrorist infrastructure.”

“I say to our enemies: If you haven’t learned the lesson by now, and you choose to attack us again, you will suffer even heavier blows. There is still work to complete,” Netanyahu added, according to a video published by his office.

On Thursday, Israel blew up what it described as a vast network of tunnels under the Ali Al-Taher ridge where Hezbollah kept a command center, living quarters and stocks of weapons with which to strike northern Israel and invading Israeli troops.

A huge fireball was seen in the area, with the US Geological Survey recording a tremor equivalent to a 4.1 magnitude earthquake.

The blast came a week after Israeli troops said they had seized the strategic highlands as they solidified control of a “security zone” in southern Lebanon.

Israel said the tunnel network was built over two decades with the help of Hezbollah’s patron Iran, whose clerical government has also backed Hamas in the Gaza Strip.

Israel and the United States attacked Iran in late February, sparking the Middle East war.

Hezbollah dragged Lebanon into the wider conflict when it fired rockets at Israel in solidarity with Iran.

Israel has struck south Lebanon during the war and its forces continue to occupy what it calls a “security zone” there.

The Ali Al-Taher ridge lies on the edge of Israel’s security zone just a few kilometers from the UNESCO-listed Beaufort castle, another strategic site that Israel captured in recent months.

Israel and Lebanon signed a US-sponsored framework agreement in late June that involves the disarmament of Hezbollah, a gradual withdrawal of Israeli forces from Lebanon’s south and the deployment of the Lebanese army to the region, starting in test areas known as “pilot zones.”

Central banks’ record, price-insensitive gold buying is a more credible signal of the dollar’s structural trajectory than this year’s currency markets, because FX markets are structurally bad at pricing the discontinuous, wartime-style tail risk central banks are actually hedging — so this autumn’s calmer dollar should not reassure anyone that de-dollarization has stalled.

In June, the European Central Bank made an announcement most people missed: gold has overtaken US Treasuries as the world’s single largest reserve asset. Central banks bought 289 tonnes of it in the second quarter alone — a record for that quarter and five times Q1’s pace — with Poland’s central bank openly telling investors it was “buying the dip.” Here is the part that should stop you: gold’s price fell 22% between January and September. Central banks were never more convinced buyers of an asset than while it was crashing. Either the reserve managers are wrong, or currency markets — which show none of this urgency — are the ones asleep at the wheel.

Gold peaked at $5,589 an ounce on 28 January, the same month the dollar index hit a four-year low of 95.5 and the dollar’s share of global reserves fell toward its lowest level since 1995. Both moves reflected the same story: Fed rate cuts through 2025, a US debt load past $37 trillion, and BRICS states settling more trade outside the dollar. Then the picture split. Kevin Warsh, confirmed as Fed chair in May, signalled a hawkish pivot in August; the Iran war pushed oil and inflation higher through September, and markets began pricing a rate hike rather than a cut. The dollar index clawed back to 99.46. Gold fell to $4,330. Central-bank buying did not follow the price down — Poland alone added 82 tonnes this year toward a 700-tonne target, and a World Gold Council survey found a record 45% of central banks plan to buy more within twelve months.

State the gap plainly. Two signals, same underlying question — is the dollar-centred monetary order changing — and they disagree by a wide margin. The buying signal says yes, decisively: record quarterly purchases, gold displacing Treasuries at the ECB’s own reckoning, 74% of surveyed reserve managers expecting the dollar’s reserve share to keep falling over five years, and buyers adding tonnage through a 22% drawdown rather than fleeing it. The price signal says not yet: the dollar just posted one of its sharper rallies of the year, gold is down sharply from its high, and nothing in currency markets shows the kind of stress a genuine regime shift would produce.

The strongest objection to trusting the buying signal is a good one, and it needs to be taken seriously rather than waved away: foreign exchange is the deepest, most liquid market in the world, turning over more than $7 trillion a day. A few hundred tonnes of central-bank gold buying — perhaps $30–40 billion a quarter — is a rounding error against that. If professional currency traders, sitting on far more capital and far better short-term information than a handful of reserve managers, saw a serious de-dollarization story unfolding, it would already be in the price. Instead the dollar just rallied. On this view, central banks are not seeing something markets are missing; they are pattern-matching off 2022, when Russia’s $300 billion in reserves was frozen overnight, and over-hedging a tail risk that has not recurred and mostly will not.

That objection assumes FX markets and central-bank reserve committees are pricing the same kind of risk, on the same time horizon, and they are not. Currency markets are exceptionally good at pricing continuous, high-frequency variables — rate differentials, growth surprises, this week’s inflation print — because that is what moves flows daily. They are structurally poor at pricing discontinuous, low-probability events until those events occur: equity volatility did not price 2008 in 2007; sovereign spreads did not price the Russia reserve freeze in the weeks before it happened. A reserve freeze, a secondary-sanctions campaign, or exclusion from SWIFT-style settlement infrastructure is exactly that kind of event — binary, rare, and catastrophic for whoever it hits — which is precisely why Poland’s central bank governor, Adam Glapiński, described his buying not as a trade but as insurance: reserves that keep the state secure “under all circumstances, including wartime, which of course we’re not expecting.” That is not the language of someone chasing momentum. It is the language of someone who manages the one asset class that keeps its value if their country is ever cut off from the dollar system, and who would rather hold it and be wrong for a decade than not hold it and be wrong once.

The buying pattern itself supports that reading. Momentum money sells into a 22% drawdown; insurance money adds to it. Central banks did the latter through the first half of this year, which is the behavioural signature of a structural reallocation program with a fixed multi-year target — Poland’s is explicit, 700 tonnes — not speculative flow riding gold’s rally. Meanwhile the dollar’s autumn recovery has an identifiable, largely cyclical cause: a new, more hawkish Fed chair and a war-driven oil shock forcing a rate-hike repricing. Neither event reverses the debt trajectory, the BRICS settlement trend, or the reserve-freeze precedent that pushed the dollar to a four-year low in January. A rally built on this year’s Fed chair and this year’s war is not proof that last year’s structural story is over; it is evidence that a cyclical force is currently strong enough to mask it.

The Scenarios

Base case (55%): The gap persists rather than resolves. The dollar holds most of its autumn gains through the current rate-hike cycle, gold range-trades below its January peak, and central banks keep buying at a steadier, slower pace toward stated targets like Poland’s 700 tonnes. Nobody is “proven right” on any particular Tuesday, because reserve diversification is a decade-scale hedge, not a trade with a catalyst date. This is the least satisfying outcome for anyone wanting a verdict, and the most likely one.

Downside case (for dollar holders): A discrete trigger — a fresh reserve-freeze or secondary-sanctions episode, plausibly connected to the still-live US-Iran war spilling into action against a third country’s assets, or a shock to Fed independence under a more political Warsh chairmanship — crystallizes the exact tail risk central banks have been hedging. Gold spikes back through its January high, the dollar index breaks below its 95.5 low, and the gap closes in weeks rather than years, vindicating the reserve managers all at once and catching FX markets flat-footed exactly as the theory predicts.

Upside case (for the dollar): The Iran war resolves, Warsh’s rate hikes cool inflation without a recession, US fiscal metrics stabilize, and BRICS local-currency settlement growth stalls on friction between its own members. Central-bank gold buying does not reverse but plateaus as reserve managers hit conventional diversification ceilings — most target 15–20% of reserves in gold, not open-ended accumulation. The gap closes gradually as price drifts up toward the buying signal over several years, with no crisis required to force the reconciliation.

The Takeaway

The dollar’s calmer autumn is not evidence the de-dollarization hedge was a mistake; it is evidence that currency markets and central-bank reserve committees are pricing two different things on two different clocks, and only one of those clocks rings in a crisis. Central banks bought through a 22% drawdown because the point of the position was never this quarter’s return.

Watch for: the World Gold Council’s Q3 2026 Gold Demand Trends report, expected in early November. A third consecutive quarter of buying that ignores price direction will confirm this is policy, not opportunism — and the moment currency markets have to agree with that policy will not be a quiet one.

Vandals spray red paint on Charlie Kirk statue days after its unveiling to mark one year since his death.

A new memorial statue of the slain right-wing activist Charlie Kirk has been vandalised days after it was installed outside Turning Point USA’s headquarters, the youth-focused organisation he co-founded.

Turning Point chief operating officer Tyler Bowyer said on Sunday that the bronze statue, alongside an accompanying sign, was defaced with red spray paint in Phoenix, Arizona.

“This morning we woke up to radical criminals vandalizing our Headquarters. Crossing over Charlie’s face, scratching out Jesus and the Cross & spraying red paint on his neck,” Bowyer wrote on X.

The statue was unveiled on Thursday to mark one year since Kirk’s death. Kirk, a co-founder of Turning Point and staunch ally of US President Donald Trump, was fatally shot while speaking to students at Utah Valley University.

The man accused of killing Kirk, Tyler Robinson, faces a possible death penalty after pleading not guilty to murder charges earlier this month.

Phoenix police said they received calls on Sunday morning about a vandalised memorial outside Turning Point’s headquarters.

Turning Point accused the vandals of intentionally spraying the statue’s neck, the spot where Kirk was shot in the attack, which was captured on video.

“We will restore the statue and replace the signs, but we are also reviewing the footage of the incident and are working with law enforcement to identify who did this and hold them accountable,” Turning Point said in a post on X.

Egypt can leverage the US-China rivalry and its strategic partnership with Beijing to bolster its national security and its position as a global logistics hub through several strategic avenues:

1) Enhancing its status as a global logistics and trade center, through:

– Developing the Suez Canal Economic Zone: Leveraging the massive Chinese investments and projects in the TEDA zone in Ain Sokhna to establish vital industries such as green hydrogen, solar panels, and electric vehicles, transforming Egypt from a mere waterway into a global manufacturing and logistics hub.

– Linking the Belt and Road Initiative with Egypt’s Vision 2030: Integrating Egyptian ports, such as East Port Said, Alexandria, and Ain Sokhna, into the Chinese maritime trade network, while maintaining a balance that allows for alternative investments in other ports and logistics corridors to expand its options and international network of allies.

– Alternative Supply Chains: Egypt offers a secure regional base for global and Chinese companies seeking to diversify their supply chains away from areas of direct conflict, leveraging its strategic location connecting three continents.

2) Enhancing National Security and Red Sea Security, through:

– Diversifying Sources of Armament and Military Technology: The partnership with China allows Egypt to acquire advanced military technology, such as drones, air defense systems, and space and satellite technology, without the stringent political conditions imposed by Washington, thus strengthening the independence of Egyptian military decision-making.

– Securing Navigation in the Red Sea and the El-Mandeb Strait: This can be achieved by utilizing the Chinese military presence in Djibouti and China’s interest in maritime security to coordinate and build a joint security umbrella protecting the Suez Canal from emerging threats, such as attacks in the Red Sea, given that the stability of this waterway is a vital shared interest for both Egypt and China.

– Balancing Political Pressures: By employing flexible diplomacy and strategic balancing, Egypt’s rapprochement with China (especially after joining the BRICS group) provides it with strong leverage in its negotiations with the United States and Western international institutions, and vice versa.

3) Egyptian Expansion and Influence in Africa via China, through:

The Joint Projects (Triangular Cooperation) by acting as a strategic gateway for Chinese investments directed towards the African continent, through the implementation of joint infrastructure projects (roads, power plants, dams) in cooperation between Egyptian and Chinese companies in the Nile Basin and Horn of Africa countries, Egypt can enhance its influence and development diplomacy.

Here, Egypt can benefit from international and Chinese competition over Africa, the Red Sea, and Ethiopia, and from its partnership with China, to strengthen its national security and its position as a logistical and commercial hub. Thus, Chinese economic influence can become a factor of stability and development for Egypt, rather than a new arena for international competition in the future.  Egypt can enhance its national security and logistical standing by leveraging its unique strategic location as a link between Africa, Asia, and Europe and by transforming international competition and its partnership with China into well-considered development opportunities. This can be achieved by studying and understanding the following strategic dimensions:

– First: Mechanisms for Egypt to Benefit from International Competition and the Chinese Partnership

– Developing Global Logistics Hubs: Continuing to expand and develop the Suez Canal Economic Zone in conjunction with Chinese investments, such as the TEDA Zone in Ain Sokhna, to transform the canal from a mere waterway into a global manufacturing and re-export hub.

– Continental Connectivity and Infrastructure: Leading regional connectivity projects in Africa, such as the Cairo-Cape Town Highway and the Lake Victoria-Mediterranean Waterway Project, and utilizing funding from China’s Belt and Road Initiative to connect African trade to the Red Sea.

– Diversifying security and military partnerships: Leveraging international competition in the Red Sea to secure navigation and combat piracy and terrorism through building flexible alliances and modernizing Egyptian naval capabilities (the Berenice naval base) without aligning completely with any single international power.

– Localizing industry and technology: Making technology transfer and the localization of industries, such as electric vehicles, renewable energy, and communications, a requirement in investment contracts with China and Western countries. This will reduce reliance on imports and bolster Egyptian economic security.

– Second: Chinese Economic Influence: Stability and Development or an Arena of Competition? Future indicators of Chinese influence in Egypt and the region point to two overlapping scenarios:

– The first scenario: A factor of stability and development, achieved by focusing on infrastructure, providing soft loans, creating local job opportunities, and supporting regional integration. This would have a positive impact on Egypt and Africa, contributing to easing conflicts stemming from poverty and offering African countries alternative financing options for developing their economies.

– The second scenario: Chinese influence within Africa as a negative factor, transforming it into a new arena of international competition. Increased Western (American and European) fears of Chinese hegemony and attempts to contain it through counter-initiatives or political pressure could turn the Red Sea region and Africa into areas of military and political polarization, forcing countries to choose between the Eastern and Western blocs.

– Third: Analyzing China’s role regarding the Grand Ethiopian Renaissance Dam (GERD) issue and whether Beijing can play a role in supporting stability and negotiations between Egypt and Ethiopia

On the other hand, given China’s growing relations with Ethiopia and the Nile Basin countries, its role regarding the GERD issue can be viewed positively for Egypt. Beijing can play a role in supporting stability and negotiations, even though its economic interests might make it more cautious about clashing with Ethiopia. Here, China adopts a pragmatic and cautious approach, balancing its substantial economic interests in Ethiopia with its strategic relationship with Egypt. This limits its role to quiet diplomacy and calls for negotiations without exerting direct pressure or engaging in confrontation with Addis Ababa. This can be understood through:

1) Analyzing China’s role regarding the GERD

– Technical and financial support: Chinese companies and funding have contributed directly to the infrastructure and electricity distribution stations associated with the GERD and Ethiopian projects.

– Non-interference policy: Beijing traditionally adheres to the principle of non-interference in the internal affairs of other countries and avoids taking public stances against Ethiopian development projects.

– Diplomatic balance: China is careful to issue joint statements with Egypt emphasizing the importance of international law and the need to avoid harming water security, but these remain diplomatic statements that fall short of exerting pressure through mediation.

2) Can Beijing support stability and negotiations between Egypt and Ethiopia?

– The capacity exists: China possesses significant economic and financial influence over Ethiopia, enabling it to exert influence if it so desired, given the scale of its investments and loans.

– The will to exert pressure is lacking: China refuses to become a serious mediator or a pressure party and prefers to distance itself from the sharp points of contention between Egypt, Ethiopia, and Sudan.

– Maximum possible role: Beijing’s available role is limited to quiet mediation and encouraging the parties to return to regional negotiating tables without imposing binding solutions.

3) Economic interests and avoiding confrontation:

– Deep strategic partnership: For China, Ethiopia is a key gateway and the heart of Africa ​​for implementing the Belt and Road Initiative and penetrating the Horn of Africa.

– Interconnected projects: Chinese interests in Ethiopia are linked to agricultural, electricity, and railway projects that directly benefit from the dam’s energy.

Here, we conclude that major economic interests make China very wary of losing its Ethiopian ally, which keeps its position biased towards avoiding confrontation and refraining from imposing any forced settlement on it.

From this, we understand that Chinese influence holds enormous developmental potential for Africa, but it remains surrounded by the risks of geopolitical competition with other powers, most notably the United States.  Egypt’s ability to achieve diplomatic balance and rely on a policy of multiple partners is the guarantor of transforming this influence into a stabilizing factor that supports its national security.

CAIRO: A ​vessel has been struck by an ‌unknown ‌projectile ​while ‌transiting ⁠the ​Strait of ⁠Hormuz, the United Kingdom ⁠Maritime ‌Trade Operations ‌said ​early ‌on ‌Sunday.

It said the ‌crew’s status, damage assessment ⁠and environmental ⁠impact were unknown.

President Donald Trump is making himself the centre of the Republican Party’s campaign for the 2026 midterm elections, but growing concerns within his own party are raising questions about whether a Trump focused strategy can attract the independent voters Republicans need to retain control of Congress.

At the Republican Party’s first ever midterm convention in Dallas this week, Trump urged voters to “pretend that I’m on the ballot” as he sought to recreate the enthusiasm and turnout that helped him win the presidency in 2016 and 2024.

The strategy is designed to energise Trump’s loyal supporters, but it comes with significant risks. Trump’s approval ratings have fallen sharply among independents, while inflation and the war with Iran have created vulnerabilities for Republicans seeking to defend their congressional majorities.

Trump Puts Himself at the Centre

Trump’s message at the convention was straightforward: the midterms should be treated as a referendum on his presidency.

Rather than allowing individual Republican candidates to campaign primarily on local issues, the party is seeking to nationalise the election around Trump’s agenda and political brand.

The approach reflects Trump’s continued dominance within the Republican Party. His most committed supporters remain highly loyal, and party activists believe his presence can motivate voters who might otherwise stay home during a midterm election.

But the strategy also exposes Republicans to Trump’s weaknesses.

A president who is popular among Republican voters but significantly less popular with independents could become an obstacle for candidates fighting in competitive districts and states.

The Independent Voter Problem

The divide between Republican voters and independents is particularly important.

A Reuters/Ipsos poll conducted in late August found Trump’s overall approval rating at 33%, the lowest level of his presidency. His approval among Republicans stood at 82%, while among independents it had fallen to 22%.

That creates a difficult electoral calculation.

Republicans need Trump’s supporters to turn out, but they also need to persuade voters who are not firmly aligned with either party.

Five of the 15 Republicans interviewed at the convention expressed doubts about whether Trump was the party’s strongest messenger for reaching independents.

Even those who supported putting Trump at the centre of the campaign acknowledged that the strategy carried risks.

The Economy Could Be Trump’s Biggest Vulnerability

The convention also highlighted a gap between Trump’s political messaging and voters’ economic concerns.

The high cost of living remains one of the most important issues facing American voters, but Trump devoted relatively little attention in his convention speeches to addressing those concerns.

He instead claimed that food prices were rapidly declining, despite government data indicating otherwise.

Trump also promised a $5,000 “Trump dividend” for every American adult if Republicans retain control of Congress, without explaining how the payments would be financed.

The economic issue presents a particular challenge because Republicans cannot rely solely on Trump’s popularity with their base if voters are dissatisfied with their personal financial circumstances.

Republicans Still See Trump as Their Best Option

Despite the concerns, most Republicans at the convention supported the strategy.

Ten of the 15 Republicans interviewed said putting Trump front and centre was the party’s best approach. They argued that his ability to energise Republican voters outweighed the risks created by his lower support among the broader electorate.

For many Republicans, the alternative may appear even less attractive.

Trump remains the party’s most powerful political figure, and his supporters are among the most engaged parts of the Republican electorate.

The question is whether that enthusiasm can be converted into the broader coalition required to win competitive races.

Democrats Welcome the Strategy

Democrats have little incentive to discourage Republicans from making the election a referendum on Trump.

The Democratic Party can use the president’s economic record, approval ratings and handling of foreign policy to argue that voters should reject Republican candidates as a way of rejecting Trump’s agenda.

Republicans are attempting to counter that strategy by portraying Democrats as increasingly radical and warning that a Democratic victory would threaten American values and way of life.

For Republican activists, the argument is that concerns about the Democratic Party could ultimately outweigh dissatisfaction with Trump.

But that calculation may be more difficult in closely contested districts where voters are less ideologically committed.

Vulnerable Republicans Keep Their Distance

The tension between Trump’s national strategy and individual candidates’ electoral needs was visible at the convention itself.

Some of the Republican Party’s most vulnerable candidates did not attend the Dallas gathering, instead remaining focused on their own districts.

For candidates representing competitive areas, distancing themselves from the national political environment could allow them to emphasise local concerns and avoid becoming entirely associated with Trump’s approval ratings.

That creates a potential contradiction within the Republican campaign.

The party leadership wants Trump at the centre of the election, while some candidates may have more to gain by keeping their own campaigns focused on local voters.

What Comes Next?

Trump is likely to remain heavily involved in the Republican campaign as the midterms approach.

His political organisation can provide candidates with fundraising, publicity and access to a highly motivated voter base.

But Republican candidates will have to decide how closely they want to associate themselves with him, particularly in competitive districts.

The party’s success may ultimately depend on whether it can combine Trump’s ability to mobilise his core supporters with messages that address the economic concerns of independent and moderate voters.

Implications and Analysis

The Republican Party’s dilemma is fundamentally about the difference between mobilising voters and persuading voters.

Trump is highly effective at the first. His political brand can generate enthusiasm among Republicans and give supporters a reason to participate in an election in which he himself is not on the ballot.

The harder question is whether he can do the second.

Midterm elections are not presidential elections, and congressional candidates often need to build broader coalitions than those required to win a party’s presidential nomination. If Republican candidates make the election entirely about Trump, they may benefit from stronger turnout among his supporters but also inherit his weaknesses among independents.

The Dallas convention therefore represents a calculated gamble.

Republicans appear to believe that Trump’s ability to energise their base is more valuable than the potential cost of alienating voters outside it. Democrats, meanwhile, are likely to welcome any strategy that allows them to make the election a referendum on a president whose approval among independents has fallen sharply.

The Republican Party’s challenge will be to ensure that Trump remains an electoral asset rather than becoming the only issue voters are asked to consider.

If his political machinery succeeds in bringing disengaged Republicans back to the polls, the strategy could strengthen the party’s position.

But if economic dissatisfaction and concerns about Trump’s broader record dominate among independents, putting him at the centre of the campaign could give Democrats exactly what they want: a national election in which every Republican candidate is forced to defend a president who is not actually on the ballot.

With information from Reuters.

NEW YORK: An Iranian American jeweler from New York has been released from prison in Iran, but he is prohibited from leaving the country, according to his family and federal officials.

Kamran Hekmati was let out of Tehran’s notorious Evin prison on Sept. 5 after completing about half of a two-year sentence, his family recently wrote on a website advocating for his release.

The family said they are also “desperately afraid for his health and well-being” as he requires regular medical checkups to ensure his bladder cancer doesn’t relapse.

“The Iranian regime couldn’t care less,” the family wrote of Hekmati’s medical challenges. “Much like other wrongful detention cases in Iran, Kamran appears to be caught up in Iran’s traditional approach of detaining Americans to obtain political concessions from the US.”

Representatives for the family and the federal government didn’t say where Hekmati, who turned 62 in August, is currently staying in Iran.

But Shohreh Nowfar, Hekmati’s cousin in California, said Friday that the family is “excited” and hopeful that his passport can be returned soon so he can leave the country, which has been at war with the US and Israel for more than six months now.

“We continue to hope this is a signal from the Iranian side as to their willingness to send Kamran home,” added Kieran Ramsey, chief investigative officer at Global Reach, a US nonprofit working on Hekmati’s case.

The Iranian American, who is also Jewish, owns a jewelry business in Manhattan’s Diamond District and has lived with his family for years in Great Neck Estates, on suburban Long Island.

He was arrested by Iranian authorities last July after having his passport seized while trying to fly out of the airport in Tehran that May.

Hekmati’s family says he was charged under an Iranian law that bans Iranian citizens from visiting Israel within the last 10 years. But they maintain his last trip to Israel was 13 years ago — prior to the passage of the law — for his son’s bar mitzvah.

“Mr. Hekmati did nothing wrong,” said US Rep. Thomas Suozzi, a Long Island Democrat who advocated for the State Department to officially designate Hekmati as wrongfully detained earlier this year. “We cannot rest until he is reunited with his family.”

The State Department similarly called on Iran to lift its so-called exit ban so Hekmati can return to the US It also said the country should “immediately release” Iranian American journalist Reza Valizadeh and other Americans “unjustly detained in Iran.”

Valizadeh and Hekmati are the two Americans so far officially designated as wrongfully detained in Iran, while up to eight others who have not been publicly named are prohibited from leaving the country, according to Ramsey.

Valizadeh’s lawyer, Ryan Fayhee, declined to comment Friday, citing the risks his client could face behind bars.

But in recent months, the journalist has sent voice messages describing conditions inside Evin prison, a high-security facility that holds many of the Islamic Republic’s political prisoners.

In an August recording, Valizadeh, who has been imprisoned since 2024, said prison officials have not allowed his family to visit for the past five months. He also said medical care is “almost non-existent,” save for the most basic medications.

“Diseases that were eradicated decades ago have returned inside the prison, including pulmonary and gastrointestinal tuberculosis,” he said in the voice message, which was shared by CBS.

Valizadeh also said that prior to his release, Hekmati had been granted a medical furlough for cancer treatment but was ordered back to prison after about a month, rather than being allowed to begin chemotherapy.

Valizadeh is among at least nine reporters currently jailed in Iran, according to the Committee to Protect Journalists.

He was arrested after returning to Iran to visit his elderly parents and charged with collaborating with the US government.

Valizadeh obtained US citizenship in 2022 while working in Washington, D.C., for Radio Farda, the Persian-language arm of Radio Free Europe, which receives US government funding.

The US-China G-2 concept is both normatively exclusionary and strategically constraining. The inherent limits of a G-2 framework—hierarchy, power structure, and systematic constraints—make it a non-starter in a multipolar reality. Here, I completely agree; the concept of a G2 is unworkable and constitutes a strategic exclusion of many international actors in a multipolar world order characterized by a complex distribution of power and multiple centers of decision-making. The Structural and Political Constraints, represented in:

· Unacceptable Hierarchy: This framework attempts to impose a bipolarity that ignores the rise of major regional and international powers such as the European Union, India, and Russia.

· Lack of Methodological Flexibility: This framework fails to accommodate global issues that transcend borders and require broad collective cooperation, not just bilateral understandings.

· Conflicting Interests: The current strategic and geopolitical competition between Washington and Beijing makes it impossible to manage the international system through joint governance. The structural conflict of interests between Washington and Beijing renders joint management of the international system impossible, amidst a fierce struggle for technological leadership, economic dominance, and the reshaping of national security rules. This manifests itself in:

– First: The Roots of the Strategic Conflict

A) The Challenge to Hegemony: China seeks to reshape international rules and challenge absolute American supremacy.

B) The American Shift: Washington adopts a strategy of confrontation and containment to reduce Chinese influence and supply chains.

– Second: Arenas of International Conflict

A) Technology and Trade: The chip war, tariffs, and control over advanced technology.

B) Regional Sovereignty: The escalating competition in the South China Sea and the Taiwan issue.

Trump’s China policy has shifted from confrontation to accommodation. If we wonder how true that is, to claim that Donald Trump’s policy toward China has completely shifted from confrontation to accommodation is inaccurate. It is merely a superficial shift toward de-escalation and managing disputes through deals, while the underlying geopolitical and structural competition remains intense.

– Manifestations of De-escalation and Deals (Tactical Accommodation)

· Diplomatic Summits: A state visit to Beijing in mid-May 2026 and frequent summits with President Xi Jinping to reduce escalating tensions.

· Trade Settlements: Temporarily reducing some reciprocal tariffs and concluding major deals, such as Boeing aircraft orders and easing chip restrictions for major companies.

· Regional Crisis Management: Seeking cautious coordination or neutralizing China’s role in some global energy and shipping crises.

– Constants of Conflict and Confrontation (Ongoing Competition)

· Technological Restrictions and Economic Structure: The complex core of the conflict over intellectual property and control of advanced technology remains unresolved.

· Legal and Institutional Pressures: Reciprocal restrictions and legislation continue, with China activating its blocking statute to counter extraterritorial US sanctions.

· The Taiwan file and military strategy: Divergent major strategic interests and military deterrence in the Indo-Pacific region.

China wants to be seen on par with Washington. The Chinese gave Trump everything he wanted but nothing of substance. Taiwan was off the table at the Beijing May 2026 meet. Here, political assessments of the Beijing summit held in May 2016 vary. Some believe China successfully established itself as a rival to Washington, while others consider the results to have ranged from symbolic gains to continued ambiguity regarding issues such as Taiwan and trade deals. The summit’s dimensions and outstanding issues can be summarized as follows:

· International parity: Beijing sought to solidify its image as a major power capable of competing with and managing the power struggle with the United States.

· Taiwan’s position: Taiwan was naturally absent from the direct bilateral talks between the two leaders, amidst strong Chinese warnings to Washington about the dangers of arms sales to the island.

· Mutual gains: Opinions differed regarding the extent of concessions. Analysts believe the Trump administration did not secure any decisive, substantive commitments on certain regional issues in exchange for a temporary easing of trade tensions.

Beijing has sought to solidify its image as a major power capable of rivaling and managing the struggle for influence with the United States. It aims to establish itself as a major power on par with Washington through a variety of economic, technological, and military tools, skillfully managed through a policy of gradual retaliation and the management of international competition. This is achieved through:

– First: Economic and Technological Tools

• Rare Earth Minerals: Controlling the production of raw materials vital to advanced technologies and imposing export restrictions on them.

• Trade War: Reciprocal and gradual retaliation against US tariffs to mitigate the effects of economic pressure.

• Supply Chains: Leveraging the Belt and Road Initiative to enhance global trade routes.

– Second: Geopolitical and Diplomatic Presence

• Multipolarity: Supporting a new international order that limits unilateral US hegemony.

• Partnerships and Alliances: Expanding diplomatic and economic influence in vital regions such as Africa and Latin America.

There were some raised questions related to whether US-China friendship is bad for India and whether their infighting is bad for India too. Here, I partially agree with this view, as the interaction between Washington and Beijing presents both gains and risks for India. The conflict grants New Delhi strategic room for maneuver and security alignment with the US, but sharp conflicts or a sudden rapprochement between the two giants could exert economic and political pressure on India’s interests.

– First: Risks of US-China Conflict and Friendship for India

· Bilateral Accords Between Washington and Beijing: If the two powers reach trade agreements or strategic stability without India’s involvement, it could diminish New Delhi’s importance as a crucial ally for containing China.

· Economic and Trade Pressure: Global conflicts, tensions, and reciprocal tariffs affect the stability of markets and supply chains upon which India depends.

· Regional Military Escalation: Direct conflict increases the likelihood of India’s regional involvement due to its direct border disputes with China.

– Second: Opportunities and Gains for India from Competition

· Strengthening Strategic Partnerships: US-China competition is driving Washington and Western countries to deepen military and technological cooperation with India to counterbalance Beijing’s influence.

· The strategy of multiple independence: India benefits from competition by implementing a policy of multiple alignment, protecting its decision-making independence without being completely dependent on any party.

The interaction between Washington and Beijing presents India with both opportunities and risks, most notably strategic room for maneuver, security cooperation with the US, and potential economic pressures. In terms of gains and risks, these can be assessed as follows:

– Strategic Gains

· Role for Maneuvering: New Delhi skillfully balances its relations between the two powers.

· Security Cooperation: Stronger cooperation with the US and the Quad countries to counter China’s influence.

· Economic Gains: Global companies are seeking to relocate their factories from China to India.

– Risks and Threats

· Military Escalation: A direct confrontation could force India to choose sides.

· Sudden Rapprochement: Any major deal between the US and China could marginalize India’s regional role.

· Economic Pressures: Markets and supply chains could be affected by any trade tensions between the two giants.

Beyond the US and China, India and others are building a G Minus Two for Indo-Pacific. Here, the fundamental error in the statement lies in describing India and other countries as building a G-2 alliance with the United States and China. The G-2 concept actually refers to a potential bipolar hegemony or joint management of the world solely by Washington and Beijing, while India and other regional powers are pursuing a strategy known as G-Minus Two to expand their options for independence. This can be understood through:

– Rejection of Bipolar Hegemony:

India adopts a policy of strategic independence and rejects any bipolar system or joint US-China hegemony that diminishes the role of emerging powers.

– The G-Minus Two Strategy:

New Delhi is working with partners such as Japan’s Ministry of Foreign Affairs, Australia, and Indonesia to build a network of flexible partnerships that balance influence and protect regional interests.

Here, the statement of Beyond US and China, India, and others building a G Minus Two for Indo-Pacific, accurately describes the shift of major regional powers like India towards building a network of independent strategic partnerships, moving away from the bipolar hegemony of the US and China. This is achieved through:

– Concepts of International Alliances

• The G2 concept refers to a shared global management or potential bipolar hegemony confined exclusively to Washington and Beijing.

• The G-Minus Two concept: expresses the middle power strategy of expanding its economic and defense cooperation with countries such as Australia, Japan, Indonesia, and South Korea to safeguard its strategic independence.

– Dimensions of the G-Minus Two strategy

• Diversifying partnerships: avoiding the trap of bipolar polarization between the two superpowers.

• Securing sea lanes and supply chains: building flexible regional blocs to enhance Asian stability.

Published on
11/09/2026 – 15:25 GMT+2

The last major data point before the Fed meets has arrived, and it arrived while Americans were paying record prices at the pump.

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The US Bureau of Labor Statistics reported on Friday afternoon that the annual rate held steady, with core inflation, which strips out food and energy, easing to 2.4% from 2.5%.

Every figure matched the consensus of economists and the monthly number is where the pressure shows.

Prices rose 0.4% in August against 0.1% in July, a fourfold acceleration and the fastest pace in three months. The annual rate stayed flat only because it is measured against the strong summer of 2025.

What it means for the Fed meeting

Markets had largely made up their minds before the figures landed.

CME’s FedWatch tool put the probability of a quarter-point increase at the 16 September meeting at 67.4%, up sharply from around 40% before Chairman Warsh’s Jackson Hole address in late August.

Following the inflation data release, those odds moved to 91.6%.

Warsh’s first keynote as chair was the turning point as he argued the American economy had strengthened rather than weakened, that the labour market was consistent with full employment, and that he “would be hard pressed to describe broad financial conditions as restrictive.”

On inflation Warsh was blunt by stating that “we must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do.”

By that test, Friday’s numbers are ambiguous.

Core inflation has now fallen for a second month and sits within half a point of the 2% target, which is underlying inflation moving in the right direction. The monthly acceleration points the other way.

Warsh also refused to say what would trigger a move, rejecting forward guidance as a practice that “has overstayed its welcome”. The Fed has held its benchmark rate at 3.50% to 3.75% since December, though three regional presidents dissented in July in favour of an increase, the most in one direction since 2016.

A fuel shock with no obvious end

The pressure is coming from energy, and it is intensifying.

US crude futures topped $100 a barrel this week as fighting between American and Iranian forces escalated around the Strait of Hormuz, with Washington striking five Iranian tankers after attempted missile attacks on a US Navy warship.

Diesel is where it bites hardest.

The US national average crossed $6 a gallon on Friday for the first time in the country’s history, at least in nominal terms, according to the American Automobile Association, and leaving truckers and farmers paying around 63% more than a year ago.

In California the average is close to $8. As for petrol, it is averaging $4.22 nationwide, against $2.98 before the war began.

Ukraine’s strikes on Russian refineries prompted Moscow to ban diesel exports, removing roughly 800,000 barrels a day, while disruption around Hormuz has cost another 1.2 million.

Refineries representing about 5 million barrels a day of capacity have been shut by the two wars, and close to 8% of global diesel supply is currently disrupted.

Some retailers have already added delivery surcharges, and the effect on grocery prices tends to arrive with a lag, which means the energy shock in Friday’s numbers may not yet be the whole of it.

World War Two continues to shape relations between Russia, China, Taiwan and Japan, with competing interpretations of the conflict increasingly intersecting with present day geopolitical tensions.

The issue resurfaced last week when Russian diplomats in Taiwan screened a film about Japanese militarism and World War Two. The screening raised concerns in Taiwan that Moscow was helping Beijing promote a narrative of a rising Japanese military threat while also creating divisions between Taipei, Tokyo and their Western partners.

The disagreement reflects fundamentally different interpretations of who fought Japan, who ultimately defeated Japanese forces in East Asia and which governments have the right to claim that legacy.

What’s Happening

Russia’s presentation of Japan’s wartime history comes against the backdrop of its own unresolved dispute with Tokyo over territory captured at the end of World War Two.

Soviet forces entered the war in East Asia only during its final weeks, when the Red Army moved into Japanese occupied northeastern China. Soviet forces withdrew from most of the region in 1946 and transferred many captured Japanese weapons to Mao Zedong’s communist forces.

The Soviet Union quickly recognized Mao’s government after the People’s Republic of China was established in October 1949 following the communist victory over Chiang Kai shek’s Republic of China.

Soviet forces also seized four islands off Japan’s Hokkaido at the end of the war. Russia calls them part of the Kurils, while Japan refers to them as the Northern Territories. Moscow continues to control the islands.

Russia and Japan have never signed a formal World War Two peace treaty, with the territorial dispute remaining a major obstacle.

China’s View of World War Two

Beijing presents the history of the war as a central part of China’s national narrative.

The Chinese government says China sacrificed 35 million people during its struggle against Japan, which Beijing dates back to Japan’s 1931 invasion of Manchuria.

China officially refers to the conflict as the Chinese People’s War of Resistance Against Japanese Aggression and describes World War Two as the World Anti Fascist War.

Beijing argues that China and the Soviet Union were the mainstays of resistance against Japan and Germany, while Chinese communist guerrilla forces formed the backbone of the resistance inside China.

This interpretation gives the wartime struggle an important role in China’s broader political narrative and its portrayal of Japan’s contemporary military posture.

Taiwan’s View

Taiwan strongly disputes Beijing’s interpretation.

Taiwan’s government argues that the People’s Republic of China cannot claim credit for a war fought before the PRC was established in 1949.

During World War Two, the Republic of China under Chiang Kai shek was China’s government, while Taiwan itself was under Japanese colonial rule. Republican forces carried out much of the fighting against Japan.

The Chinese civil war was temporarily suspended during the conflict as Chiang’s forces and Mao’s communists formed an uneasy alliance against Japan.

Taiwan also points to the formal Japanese surrender at the end of the war. The Republic of China, represented by Chiang’s government, signed the surrender alongside the other Allied powers, including the Soviet Union.

From Taipei’s perspective, Mao’s communist forces used the war to strengthen themselves and subsequently benefited from the civil war that resumed after Japan’s defeat.

Why It Matters

The competing historical narratives are not simply disagreements about the past. They influence how the governments involved portray present day security threats and diplomatic relationships.

For China, Japan’s wartime history remains an important element of its criticism of Japanese military development. For Taiwan, however, Beijing’s use of that history is also connected to its claim over Taiwan and its attempt to define the historical legitimacy of the Chinese state.

Russia’s involvement adds another layer because Moscow has its own unresolved territorial dispute with Japan stemming directly from the final stages of World War Two.

The screening of a film about Japanese militarism in Taiwan therefore carries significance beyond historical commemoration. Taipei sees the issue through the lens of its current relations with Japan and the West, while Russia and China share interests in challenging what they portray as a resurgence of Japanese military power.

Key Stakeholders

Russia retains control of the disputed islands off Hokkaido and has never concluded a formal World War Two peace treaty with Japan.

China presents itself as a central force in the wartime resistance against Japan and emphasizes the enormous Chinese sacrifice during the conflict.

Taiwan argues that the Republic of China, rather than the People’s Republic of China, represented China during World War Two and carried out much of the fighting against Japan.

Japan remains directly affected by the competing historical narratives, particularly because of its territorial dispute with Russia and its increasingly important relationship with Taiwan.

What’s Next

The dispute over World War Two history is likely to remain intertwined with current tensions in East Asia.

For Taiwan, the concern is that Russia and China could use wartime history to portray Japan as an emerging military threat and undermine Taipei’s growing ties with Tokyo and other Western partners.

For Japan, historical disputes remain connected to its relationships with both Russia and China.

For Russia and China, emphasizing their wartime resistance against Japan provides a historical framework through which they can criticize what they see as a revival of Japanese military power.

Analysis

The significance of the dispute lies in how history is being used as a tool of contemporary geopolitics. The same war produces fundamentally different political narratives depending on which government is telling the story.

Beijing emphasizes China’s enormous wartime sacrifice and the role of communist forces. Taipei emphasizes the Republic of China’s role as the government that fought Japan and signed the Japanese surrender. Moscow emphasizes the Soviet Union’s final campaign against Japan and retains territory captured during that period.

These competing narratives matter because they provide historical legitimacy for present day political positions. As Japan strengthens its security relationships with Taiwan and Western partners, wartime memory can be used to frame those developments not simply as responses to current security concerns, but as part of a longer historical confrontation.

The dispute therefore shows how the legacy of World War Two remains an active element of East Asian power politics rather than simply a question of historical interpretation.

With information from Reuters.

The Caitlin Clark–Angel Reese connection has been strong during the women’s FIBA World Cup.

The college rivals turned teammates on the U.S. national team showed off their growing chemistry in Team USA’s blowout victory against Hungary on Thursday in Berlin. The Americans knocked out their quarterfinal opponents 108-56, notching the team’s 34th consecutive win in World Cup play since 2006.

“We’ve played against each other so many times, so I’m sure we know each other’s game like the back of each other’s hand,” Reese said when asked after the game about playing with Clark. “Just easily dishing it off to her. She dishes it off to me. She knows my spots. I got one to her today, maybe two. So it’s fun. We just continue to build chemistry because we know we’re gonna be USA teammates for a while.”

The strength of Clark and Reese’s two-person game was on full display Thursday. Clark assisted on six of Reese’s nine points, and Reese returned the favor during the third quarter. After securing a steal, she hit Clark for an easy transition layup.

Reese ended the game with nine points, six rebounds, three assists and two steals. Clark finished just shy of a double-double with 10 points, nine assists, three rebounds and two steals.

Clark also has complimented Reese as a competitor and teammate during the tournament.

“We’re both fiery, fiery competitors and we want to win and it’s one of the things I really admire about her game,” Clark told the Associated Press in an interview published Wednesday. “She’s competitive and she has a tremendous motor; like, she has one of the best motors in the league. She works just as hard as anybody on the court. So, it’s been fun to to be able to play with her.”

Clark, who set records at Iowa, and Reese, who won an NCAA championship at Louisiana State, have been household names since their college matchups. Thanks to their intensely loyal — and often vocal — fan bases, that rivalry has been carried into their WNBA careers, where every matchup and interaction invites heightened scrutiny, especially online.

Clark told the AP that many of these stories about her and Reese’s relationship are “false takes.”

“No matter what, there’s always going to be people that create those narratives and say whatever they want to say,” Clark said. “There’s definitely no stopping that and they’re always going to be there.”

Reese and Clark are among Team USA’s young core, dubbed the “young and turnt” crew by teammate Paige Bueckers during training camp in December. The World Cup marks the first major international competition for six of those players: Bueckers, Clark, Reese, Aliyah Boston, Sonia Citron and Kiki Iriafen.

Team USA is set to play Spain in the semifinals on Saturday.

The Strait of Hormuz has become the central pressure point in the escalating confrontation between the United States and Iran. Before the conflict, roughly 20 million barrels of oil moved through the narrow waterway each day, equivalent to about one fifth of global oil consumption. For years, traders could therefore rely on relatively consistent estimates of the volumes passing through one of the world’s most important energy corridors.

That certainty has now disappeared.

The use of “dark crossings,” in which tankers switch off their identification and navigation systems, has made vessel movements increasingly difficult to monitor. Satellite imagery, port records, tanker drafts, loading schedules and shipping data are being used to reconstruct movements, but the information remains incomplete. Recent estimates of Hormuz flows have differed dramatically, leaving traders and governments uncertain about the true scale of oil moving through the waterway.

The uncertainty comes as Brent crude has moved above the $100 a barrel threshold for the first time since July, driven by renewed military escalation and concerns over Middle Eastern oil supplies.

The Hormuz Information Gap

The most unusual feature of the current oil crisis is not simply that supplies may have fallen. It is that markets cannot confidently determine how much oil is actually moving.

U.S. Energy Secretary Chris Wright said more than 17 million barrels crossed the strait on August 31 under U.S. Navy supervision. Shipping intelligence firm Kpler, however, estimated that only around 6 million barrels crossed that day. Kpler put average August flows at approximately 4.3 million barrels per day, with flows rising to nearly 5 million barrels per day during the first days of September.

The difference could partly reflect different methodologies, including whether shipments using alternative routes outside Hormuz are included. Tankers that remain invisible to tracking systems for days or even weeks make the picture even harder to reconstruct.

This means that traders are attempting to price global oil supplies without reliable visibility over one of the world’s most important supply arteries.

Why the Strait of Hormuz Matters

Hormuz is strategically important because of the enormous concentration of energy exports that normally pass through it. Any sustained disruption can affect crude supplies, tanker availability, insurance costs and shipping times, eventually feeding into fuel prices and broader inflation.

The current situation is different from a straightforward blockade. The strait has not necessarily become completely impassable. Instead, its reliability has been severely compromised.

That distinction matters because a tanker does not have to be physically prevented from crossing for markets to react. The possibility that vessels may be delayed, attacked or unable to cross safely is enough to increase the cost of transporting oil.

As a result, the market is responding not only to actual supply losses but also to the risk of future disruption.

Iran’s Strategic Leverage

Iran’s ability to disrupt maritime traffic remains an important source of leverage despite indications that its military capabilities around Hormuz have been weakened.

U.S. demining operations and a growing U.S.-protected shipping corridor along Oman’s coast have allowed more vessels to enter and leave the Gulf. At the same time, Iran-linked forces continue to threaten commercial shipping, meaning Tehran retains the ability to create uncertainty even if it cannot completely shut down the waterway.

This gives Iran a form of asymmetric leverage. Tehran does not necessarily need to close Hormuz completely to impose economic costs. Sporadic attacks, warnings or restrictions can increase insurance premiums, delay shipments and encourage traders to price in a greater possibility of supply disruption.

The renewed attacks on Saudi energy infrastructure have added another layer of risk by threatening alternative routes that have become increasingly important as traffic through Hormuz has declined.

Impact on Global Oil Markets

The immediate consequence is a higher geopolitical risk premium on crude.

Oil prices normally respond to measurable fundamentals such as production, consumption, inventories and transportation. But when the market cannot establish how much oil is moving through Hormuz, uncertainty itself becomes part of the fundamental picture.

This can keep prices elevated even if actual physical supply losses are smaller than feared.

Brent has already moved above $100 a barrel, while analysts and major financial institutions have raised their oil price forecasts as concerns about prolonged disruption increase.

For oil-importing countries, sustained high crude prices could translate into higher fuel and transportation costs, increased inflationary pressure and greater economic uncertainty. Airlines, manufacturers and businesses dependent on energy-intensive supply chains would also face higher operating costs.

Economic and Geopolitical Implications

The crisis demonstrates how vulnerable the global energy system remains to a single strategic chokepoint.

For the United States, maintaining freedom of navigation through Hormuz is not simply a military objective. It is also essential to preventing a regional conflict from becoming a wider global energy crisis.

For Gulf producers, the challenge is equally significant. Even countries with substantial production capacity cannot fully compensate for disrupted shipping if export routes remain vulnerable.

For major Asian importers, the risks are particularly serious because much of the energy normally passing through Hormuz is destined for Asian markets. A prolonged disruption could therefore create significant pressure on import bills, currencies and inflation across energy-dependent economies.

The crisis also highlights the limits of alternative routes. Pipelines and routes outside Hormuz can reduce some of the pressure, but they cannot immediately replace the enormous volumes that normally pass through the waterway.

What’s Next?

The key variable is whether the confrontation between Washington and Tehran moves toward negotiations or further escalation.

A diplomatic breakthrough could rapidly reduce the geopolitical risk premium by restoring confidence in shipping and improving visibility over oil flows. A further escalation, however, could produce additional attacks on tankers, restrictions around the Gulf or renewed pressure on alternative shipping routes.

The oil market will therefore be watching tanker movements as closely as military developments.

If shipping activity becomes more visible and flows recover, some of the current premium could disappear. If the information blackout continues, traders may continue pricing the possibility of a much larger supply disruption.

Analysis

The deeper significance of the Hormuz crisis is that information itself has become a strategic commodity.

Modern energy markets have traditionally depended on the ability to monitor ships, cargoes and supply chains with increasing precision. Satellite imagery, tracking systems and port data created an assumption that physical oil flows could be observed and measured with reasonable accuracy.

That assumption is now being challenged.

The result is a market where perception can influence prices almost as powerfully as physical shortages. If traders believe Hormuz is becoming less reliable, they will pay more for crude today even without definitive evidence of a catastrophic supply loss.

This gives Iran an important form of strategic leverage. The threat of disruption can generate economic consequences even when actual disruption remains limited.

At the same time, Washington faces a difficult calculation. Greater military protection may help keep shipping moving, but prolonged confrontation can also increase the geopolitical risk premium that the United States is trying to contain.

The central question, therefore, is no longer simply how much oil is passing through the Strait of Hormuz. It is how long the global market can function without knowing the answer.

If that uncertainty persists, the oil market could continue carrying a substantial security premium even if physical supplies prove higher than current estimates suggest. The longer the uncertainty lasts, the more deeply it can become embedded in prices, inflation expectations and global economic planning.

With information from Reuters.

BEIRUT: Since a ceasefire went into effect between Israel and Hezbollah more than two months ago, fighting has stopped in much of Lebanon, but not on a strategic hill overlooking parts of a main southern city.

In recent weeks, Ali Taher hill has been the scene of daily shelling and airstrikes by Israel’s military. Hezbollah, a militant group backed by Iran, has repeatedly attacked Israeli forces in the area with drones.

The United States, which is mediating talks between Lebanon and Israel, had wanted Hezbollah to hand over the hill to the Lebanese army as part of larger plan to disarm the militant group and dismantle its infrastructure. But Hezbollah has refused.

Lebanon and Israel reached a framework agreement in June stating Israel will withdraw from Lebanon as Hezbollah is disarmed. The militant group was not a party to the negotiations and has rejected calls to disarm in areas north of the Litani river, which is where Ali Taher is located.

A full-on battle over this hill near the city of Nabatiyeh could escalate fighting across the country, and unrest in Lebanon complicates efforts to resolve the war in Iran.

On Thursday night, Israel’s military announced it had taken “operational control” of Ali Taher and a network of tunnels beneath it that Hezbollah uses to shelter its fighters and weapons. It is unclear how far Israel’s control extends. Just before Israel’s announcement, its air force was still targeting the hill, according to Lebanese state media.

There has been no official statement from Hezbollah since Israel’s announcement.

US pushes Lebanon to pressure Hezbollah

Hezbollah firmly rejected a proposal from the Lebanese government to hand over Ali Taher to the country’s army. It fears Israel would then seize control of the hill from the Lebanese army and then demand the handover of more territory.

Israel had occupied Ali Taher for 18 years before it withdrew from Lebanon in 2000.

The hill has a strategic location overlooking several villages as well as main roads leading to Nabatiyeh. Losing full control of it would disrupt Hezbollah’s presence and supply lines in the area.

The Israeli military says the site is also important to Hezbollah because of tunnels it built there, with funding from Iran.

Israel said in its statement Thursday that the hill housed underground command centers, weapons storage rooms, generators, living quarters, showers and a kitchen. Israel said it cleared Ali Taher of Hezbollah fighters and was working to “neutralize underground infrastructure sites.”

Hezbollah legislator Ihab Hamadeh questioned why the Israeli military was still attacking the hill if it was really in control of the area, according to the Arabic-language version of Russia’s state-funded news outlet Sputnik. An Associated Press photographer who visited the nearby village of Kfar Rumman on Friday saw no sign of Israeli military presence on the hill.

The hill, topped with a shrine to a Muslim scholar, sits north of the Litani river, which has become the de facto boundary of the area captured by Israel since its latest war with Hezbollah began in early March.

Fighting in the area has heated up in recent weeks

Israel has been conducting military operations around Ali Taher since July, said Nasser Khdour, a Middle East researcher at the Armed Conflict Location & Event Data Project, or ACLED, a US-based group that tracks conflicts around the world.

Hezbollah official Mahmoud Qamati told a Lebanese podcaster in late August that the group’s fighters were repelling attempts by Israeli troops to take Ali Taher. But he, and others, downplayed the significance of the site should Israel take it.

“Ali Taher is important, but if it is lost it does not mean the end of Hezbollah,” Qamati said.

In mid-August, Israel carried out a series of airstrikes on southern Lebanon that it described as retaliation for a Hezbollah drone attack on Ali Taher that seriously wounded three soldiers. The Israeli strikes, which killed 11 people, including women and children, were the deadliest since the US-brokered ceasefire went into effect in late June.

On Aug. 27, Israel carried out a series of airstrikes, killing one person and wounding six, after the military said Hezbollah fired two explosive drones at Israeli troops in the area. Hezbollah did not claim responsibility for any of the attacks.

Lebanon says Israel is hindering its army

Lebanon’s Deputy Prime Minister Tarek Mitri told an Arab TV station in late August that the Lebanese army was ready to take over Ali Taher.

He accused Israel of blocking the army due to its own political considerations ahead of Israeli national elections on Oct. 27.

“The problem is not in the Lebanese army’s readiness but in Israel’s stance,” he said.

Lebanese and Israeli officials are set to meet for negotiations in Rome later this month. Meanwhile, Hezbollah, which has always refused to speak directly to the US, appears to be changing its policy after the major setbacks it has suffered during its wars with Israel since 2024.

A Lebanese official told The Associated Press that indirect contacts are going on between the US and Hezbollah, but refused to give any details. He spoke on condition of anonymity in line with regulations.

The US ambassador to Lebanon, Michel Issa, said recently that Washington is ready to speak with Hezbollah if the group agrees to disarm.

Still, Hezbollah is not likely to take any move forward regarding talks with the US without a green light from its main backer, Iran. While talks with the US over their war have stalled, Iran has sought guarantees that Israel will halt its attacks on Hezbollah as part of any permanent deal.

Capture of Ali Taher could lead Israel to other Hezbollah strongholds

The capture of Ali Taher would open the way to Nabatiyeh and also lead to the nearby Apple Province and Rihan Mountain, where Hezbollah has been building up its presence since the late 1990s.

Israeli leaders have repeatedly pledged to leave troops in Lebanon and threatened to escalate military pressure until Hezbollah disarms.

“Israeli control of the area is an operational and military setback for Hezbollah,” said Khdour of ACLED. He said clearing these sites helps Israel protect towns in the northern part of its country, and increases pressure on Hezbollah.

“This will strengthen Israel’s position in any future negotiations over its withdrawal,” said Khdour.

TEHRAN: Iran said Sunday that its forces attacked a US naval drone trying to enter the Strait of Hormuz, hours after targeting ships in retaliation for American strikes on three oil tankers.

The latest round of clashes, which began with US raids last week, comes amid a deadlock in their six-month war.

Iran has maintained its stranglehold on the strategic Strait of Hormuz while Washington continues a counter-blockade of Iranian ports.

Washington is also seeking to choke Iran’s economy, rolling out sanctions on entities with financial links to the Islamic republic in a bid to force it into submission.

The Islamic Revolutionary Guard Corps, the ideological arm of Iran’s military, said Sunday it “attacked an American military unmanned surface vessel” attempting to enter the strait, according to a statement carried by state television.

Hours earlier, the IRGC said its naval forces “targeted three oil tankers on the unauthorised route of the Strait of Hormuz and three vessels affiliated with the child-killing America in other areas”.

Iran’s top negotiator Mohammad Bagher Ghalibaf threatened on Sunday to launch swifter and more forceful responses to US attacks.

“The Americans must have understood that the era of proportionate responses has come to an end,” said Ghalibaf in a speech carried by state media, adding that “any aggression against Iran’s interests and security will receive a faster, more intense and more painful response”.

It warned ships not to attempt to transit by unapproved routes.

On Saturday, US Central Command (CENTCOM), which oversees American military operations in the region, said it struck tankers linked to the Iranian Guards, accusing the most powerful arm of the Iranian military of unsuccessfully firing at American warships.

“Following Iran’s failed attacks, CENTCOM permanently disabled the IRGC crude oil carriers M/T Downy off the coast of Kharg Island and M/T Stark 1 near Jask,” it said.

“American forces also completely destroyed the unladen crude oil carrier M/T Kylo… in the Gulf of Oman, striking the vessel in multiple critical locations to render it inoperable after the crew was directed to abandon ship.”

Video posted by CENTCOM showed large fireballs and billowing flames after projectiles slammed into the ships.

The three vessels were “part of a multibillion-dollar shadow network that funds the IRGC and its regional proxies”, it said.

‘Higher economic cost’

The Guards meanwhile claimed the two American warships they targeted had been “forced to retreat” after “suffering damage”, but CENTCOM said those ships successfully evaded Iranian attacks.

CENTCOM commander Admiral Brad Cooper said after the operation: “If you shoot at two of our ships, we will impose an even higher economic cost — taking out three of yours.”

The Iranian foreign ministry hit out at Washington over the strikes on oil tankers, calling them “illegal and aggressive actions”.

A correspondent for Iranian state TV in Jask in the southern province of Hormozgan said one of the tankers was empty and the second was carrying oil. The crews were transported to shore on lifeboats, they said.

Another state TV correspondent on Kharg Island said the attack there caused no casualties.

Iran’s Khatam-al Anbiya central military command warned that if the US continued its attacks, then Tehran’s retaliation against US warships would be “more severe than before, and there is a possibility of their expansion”.

The administration of US President Donald Trump has tried to downplay the significance of the six-month conflict, which has proven increasingly unpopular at home as midterm elections near.

US Vice President JD Vance went so far as to say that he “wouldn’t call it a war”.

Trump reiterated that view on Friday, calling the war “small potatoes” for Washington.

Iran’s Security Chief Mohsen Rezaei warned this week that the Islamic republic had adopted a “new strategy” against Washington that “will shatter your foundations”.

The US has been trying to step up pressure on Tehran in a bid to wrestle control of the Hormuz strait, through which one-fifth of world oil supplies previously flowed.

A fragile ceasefire between the two sides collapsed in July after attacks on commercial ships in the strategic waterway.

Trump has in recent weeks repeatedly threatened to claim sovereignty over the strait, even posting a map showing it as “new US territory”.

Vance has insisted the US will not reopen talks with Iran until it ends attacks on commercial shipping in Hormuz.

If there’s one thing Jed Wheeler and Marcus Ruiz Evans agree on, it’s that things in California need to change.

The state sends too much money to Washington, they say, and is both politically and culturally out of step with a country that lacks its openness and vitality.

“We can solve our own problems and don’t need to wait on a government 3,000 miles away,” said Wheeler, echoing Evans’ suggestion that Democratic-leaning California would be far better off going it alone as a separate country.

They sharply disagree, though, on the matter of how and precisely when California should seek a divorce from the other 49 states.

Evans is pushing a ballot measure that would put the question of secession before voters in 2018, believing the time has never been so ripe to form a breakaway nation. Wheeler is working to create a pro-secession political party, looking a dozen or more years down the road when its candidates hold office, and fears that a premature vote would undermine the effort.

In short, the effort to cleave California faces a crackup of its own.

At least four proposals are floating about to reshape the state in some fashion, including two that would split up California along different axes. All work at cross-purposes, and the result is varied degrees of hostility among proponents; none of the plans seems likely to reach fruition anytime soon, if ever.

That is something they have in common.

Since 1849, when the state was remade in a rush of greed and ambition, there have been more than 200 efforts to split apart, pull away or otherwise reimagine the vast empire known as California. Not one has succeeded.

The latest, most conspicuous attempt, a proposed ballot initiative fueled by anti-Trump sentiments and titillated national media coverage (those wacky Californians!) seems destined to fall short of qualifying for the ballot, barring a sudden change in fortune.

Supporters of the measure, led by Evans, have until July 25 to collect nearly 600,000 valid signatures to place an independence measure before voters in November 2018. The group, which received the go-ahead to collect signatures at the end of January, has yet to reach a quarter of that number, according to the California secretary of state’s office.

The group has also not reported raising any campaign contributions, according to the secretary’s office, which oversees elections.

Evans, 40, a former government affairs consultant now working full-time on the “Calexit” campaign, insisted a robust signature-gathering process was underway, engaging thousands of volunteers in 82 chapters across the state. However, the precise number collected was unknown, he said, because of the loose structure of his pro-secession group, Yes California.

“Some are mailing them in. Some are holding them. Some are taking them directly to their county registrar of voters,” he said. Asked to assess the odds of making the ballot, Evans responded, “Good. I won’t say great.”

The effort, uphill from the start, has not been helped, he said, by reports linking the Calexit movement to Russia, which Evans called preposterous and unfair. The co-leader of Yes California is Louis Marinelli, a former San Diego-area Assembly candidate now teaching English in Russia, where, among promotional activities, he appeared last fall at a Kremlin-backed pro-secession conference in Moscow.

“It has definitely been damaging to us getting big donors and hurting our ability to bring on new members because of clouding the issue without accurately reporting all the facts,” Evans said, citing the organization’s 44,000 “likes” on Facebook as just one example.

Nor, he said, was it beneficial when Nigel Farage, a leading proponent of Britain’s exit from the European Union and prominent Trump supporter, recently flitted into California to talk up a vague plan to split the state down the middle, creating a coastal “West California” and interior “East California.”

“They’re trying to confuse people,” Evans huffed. “Classic Trump.”

It seems Evans and his pro-secession movement might have found an ally in Wheeler and others working to form a political party dedicated to achieving state independence. Many tenets of the left-leaning California National Party — the state needs to keep more of the money it sends to Washington and establish home-grown policies on issues such as immigration and healthcare — echo those propounded by Yes California.

The nascent party has taken no official position on the 2018 secession drive. But Wheeler, the party’s vice chairman, believes the initiative would lose, damaging the independence movement. Better, he said, to elect sympathetic lawmakers under the National Party banner who could then work to bring about California’s eventual departure.

“We’re trying to be very pragmatic and realistic where we are as a movement,” said Wheeler, 36, who works for a digital media company in San Francisco.

While “the idea of having a ballot initiative is seductive and appeals to a lot of people,” he said, “you can’t harvest the crop without the work of planting the seeds, then tilling the soil and all that stuff first.”

In California’s far north, a determined group of dissenters have done that labor for decades — so far to no avail.

Efforts have been underway since before World War II to break off more than a dozen rural counties and combine them with a chunk of southern Oregon to form Jefferson, the nation’s 51^st state.

The impetus is the same that drives backers of secession: the notion of a far-off government (in this case, Sacramento) ignoring local sentiments and a sense of being outnumbered and outvoted by a population whose social and political views are at odds with the prevailing (in this instance, conservative) culture. The proposed flag — a pair of Xs, or double cross — captures the animating sentiment.

“We really don’t have fair representation,” said Terry Rapoza, 67, a leader of the Jefferson movement in Shasta County, where he sells T-shirts and other souvenir clothing in Redding.

He cited recent passage of a 10-year, $52-billion road repair and transportation bill; the hike in gas taxes, he said, will have much less impact in urban California than in rural stretches, where people might drive 20 miles to the grocery store, or a dozen miles to pick up their mail.

But he has little use for secession, which strikes him as bizarre — would the new California nation have its own nuclear arsenal and U.N. representative, he wonders — and fruitless in ending the urban-rural divide he blames for persistently short-changing his part of the state.

There’s something wrong and even vaguely un-American, he suggested, about trying to break the country apart. “We want to add a star to the flag,” Rapoza said. “Not take one off.”

mark.barabak@latimes.com

@markzbarabak on Twitter

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China is buying ninety percent of Iran’s oil exports, settling transactions in renminbi, and hiding the rest beneath layers of shell companies. This is not defiance. It is a demonstration, conducted in plain sight, of exactly how far American economic reach actually extends.

Scott Bessent promised, when he launched Operation Economic Outcast last week, that no one would be above the reach of US sanctions. China’s foreign ministry responded by saying Beijing would do everything necessary to safeguard its own rights and interests. That exchange, watched by the rest of the world, is not really about Iran. It is about whether the threat of American secondary sanctions can force a country that has already fought several trade wars with Washington to a standstill into changing its economic behaviour. The answer, which China has been demonstrating methodically for months, is no.

How China Made Itself Immune to US Secondary Sanctions

The architecture of Chinese-Iranian trade has been specifically designed to sit outside dollar-system jurisdiction. Chinese banks and companies that buy Iranian oil settle transactions in renminbi or through barter arrangements, making them effectively immune to American extraterritorial authority. The handful of Chinese entities that still touch dollar-denominated transactions do so through shell companies that can be discarded and replaced faster than Washington can identify and sanction them. The result is the regulatory whack-a-mole problem that American Treasury officials privately acknowledge, eliminate one entity, and three more appear in its place, each more obscured than the last.

Washington could escalate by sanctioning major Chinese banks and companies that have no Iran ties at all, using them as leverage to pressure Beijing to rein in those that do. That option exists on paper. In practice, it would constitute a declaration of economic war against China’s financial system at a moment when the US economy is already strained by six months of conflict with Iran, oil prices are elevated, and midterm elections are eight weeks away. The Trump administration knows this, which is why Bessent’s ultimatum came with no major Chinese institution on the sanctions list. The threat was real. The enforcement mechanism was not.

What a US Victory in Iran Would Cost Beijing

China sources roughly forty percent of its oil imports from the Gulf, with Iran accounting for ten percent of that total. If the US wins this war convincingly, meaning Iran’s government collapses or capitulates and Washington reinstalls itself as the dominant security guarantor across the Gulf, the energy architecture that China has spent two decades building becomes dependent on American goodwill. Every barrel of Gulf oil that China buys would effectively pass through a security framework Washington controls.

The regional knock-on effects compound that problem. The Mecca pact between Saudi Arabia, Turkey and Pakistan, the SCO’s deepening trade and financial architecture, the China-brokered Saudi-Iran normalisation of 2023: all of these represent years of Chinese diplomatic investment in a Middle East that is gradually reducing its security dependence on the United States. An Iranian defeat that pushes regional states back under the American umbrella undoes that investment at a stroke. From Beijing’s perspective, the cost of buying Iranian oil at a discount and absorbing American secondary sanctions is considerably lower than the cost of losing the regional influence that Iran’s survival helps sustain.

Neither Ally Nor Bystander

The SCO summit in Bishkek last week illustrated Beijing’s position with more precision than any official statement. Xi met Putin and Modi bilaterally. Iran’s President Pezeshkian attended the summit and held consultations at foreign minister level. He was not invited to Beijing. He did not get a Xi bilateral. That calibrated distance is deliberate, and it reflects a Chinese calculation that is more sophisticated than either alliance or abandonment.

Beijing does not want Iran to lose. It also does not want Iran to win so completely that Tehran’s regional hegemony destabilises the Gulf relationships China has been cultivating. The Chinese position, buying Iranian oil, refusing to arm Iran, keeping diplomatic engagement at arm’s length, is designed to keep Iran functional without making China responsible for Iranian behaviour. It is the foreign policy equivalent of keeping a fire burning without touching it.

Xi’s scheduled visit to Washington later this month, coming directly after the Bishkek summit, reinforces this reading. Beijing is simultaneously demonstrating to Iran that it has economic backing and demonstrating to Washington that it has strategic restraint. Both demonstrations serve Chinese interests. Neither requires China to choose a side.

Five Things Worth Watching

• Whether Xi’s Washington visit produces any concrete understanding on Iran-related secondary sanctions. If the two sides agree on a framework that gives China cover to quietly reduce Iranian oil purchases over time, the sanctions architecture gains traction it currently lacks. If the summit produces only standard language about constructive competition, Operation Economic Outcast’s China problem remains unresolved.
• The SCO Development Bank’s progress toward implementation. If the bank moves from agreement to operational institution in the coming months, it creates dollar-independent financing infrastructure that makes secondary sanctions significantly less effective not just for China-Iran trade but for the broader Eurasian trade network the SCO is building.
• Whether any Chinese entity on the August sanctions list is large enough that its designation produces real disruption rather than being absorbed and routed around. The signal from August’s first wave was that Washington sanctioned deliberately small targets. The size and visibility of the next wave’s targets will tell you how seriously Washington is willing to press China.
• India’s position on renminbi settlement for its own Iranian oil purchases. If Delhi follows Beijing’s approach and expands non-dollar settlement for energy trade, the secondary sanctions architecture faces a second major exemption that Washington is even less able to address given how carefully it has been courting India.
• Iran’s currency trajectory. The rial has hit record lows despite Chinese oil purchases continuing. If the currency continues to deteriorate even with Chinese demand stable, it suggests Operation Economic Outcast is landing on Iran’s non-oil economy in ways that the Chinese lifeline cannot fully offset which changes the pressure calculus regardless of whether Beijing complies.

The Bottom Line

Washington designed Operation Economic Outcast to isolate Iran. What it has demonstrated is the outer boundary of American economic jurisdiction in a world where China has spent a decade building the infrastructure to sit outside it. Renminbi settlement, dark fleet shipping, teapot refineries, shell company networks, these are not improvised workarounds. They are a parallel financial architecture, constructed precisely for this contingency, and it works well enough to keep Iranian oil flowing at volumes Washington cannot stop.

The deeper problem for the Trump administration is not that China is defying its sanctions. It is that China is proving, transaction by transaction, that the sanctions cannot be enforced against a country of sufficient size and sufficient preparation. That demonstration has an audience well beyond Beijing and Tehran. Every country currently watching whether to comply with American secondary sanctions is learning the same lesson: the reach of US economic power has a ceiling, and China has found it.

The Iran conflict and disruption to the Strait of Hormuz are forcing major oil importing countries to rethink how they source crude. Countries that once relied heavily on nearby Middle Eastern suppliers are increasingly turning to producers in the Americas and Africa, accepting longer voyages and higher shipping costs in exchange for greater energy security.

Japan Diversifies Its Oil Supplies

Japan is among the clearest examples of this shift. Before the conflict, more than 90% of its crude came from the Middle East, benefiting from short and relatively inexpensive shipping routes.

Since Gulf exports were disrupted, Japanese imports from the United States have surged. Between March and June, Japan imported more than 4.5 million metric tons of US crude, compared with less than 1 million tons during the same period in 2025.

The alternative comes with a cost. US crude takes roughly nine days longer to reach Japan, increasing freight expenses and requiring refiners to adjust their delivery schedules.

Asia Looks Beyond the Middle East

Japan is not alone. South Korea and India are also increasing purchases from suppliers in the Americas and Africa as Middle Eastern shipments decline.

China, the world’s largest crude importer, has relied heavily on strategic reserves to cushion the impact of the conflict. As those reserves are drawn down, Chinese buyers could return to international markets and intensify competition for crude from alternative producers.

The Americas Emerge as Major Suppliers

The disruption has created a major opportunity for oil exporters outside the Middle East.

US crude exports reached a record 61.6 million metric tons in the second quarter of 2026, up 43% from a year earlier. Brazil, Argentina and Guyana have also recorded strong export growth.

Brazilian shipments to India, for example, were three times higher in the first half of 2026 than during the same period in 2025.

Longer Routes, Higher Costs

The new trade patterns are considerably less efficient.

A tanker travelling from major Gulf terminals to India’s western coast can take only three to five days. A shipment from Brazil to the same destination can take around 25 days.

Longer journeys mean higher tanker demand, greater freight costs and more complicated logistics. Yet importers are increasingly willing to absorb those costs because dependence on a single vulnerable supply corridor carries its own risks.

Avoiding Strategic Chokepoints

The shift is also about reducing exposure to vulnerable maritime routes.

The Strait of Hormuz remains a major risk, while geopolitical tensions have reduced traffic through the Suez Canal. Drought has also constrained the Panama Canal.

As a result, importers are increasingly valuing suppliers whose shipping routes can bypass these chokepoints.

A New Global Energy Map

The emerging pattern is creating a more geographically dispersed oil market.

Middle Eastern producers will remain crucial because of their enormous reserves, low production costs and established infrastructure. But Asian buyers are unlikely to forget the disruption caused by the Hormuz crisis.

Regular purchases from new suppliers can therefore become a form of insurance, even after Gulf exports recover.

Analysis

The most important change is that energy security is beginning to outweigh pure economic efficiency.

For decades, Asian refiners benefited from buying Middle Eastern crude because geography made it cheaper and faster. The Iran conflict has exposed the vulnerability of that model. A short shipping route is of limited value if a single geopolitical crisis can disrupt it.

The result could be a lasting diversification of global oil trade. Importers are unlikely to completely abandon Middle Eastern crude, but they may maintain larger relationships with US, Latin American and African suppliers to create alternative sources of supply.

This means the cost of energy security will increasingly be reflected in the global oil market. Longer voyages, higher freight rates and more complex supply chains may become the price importers are willing to pay for resilience.

The broader shift is therefore from an oil market designed primarily around efficiency to one increasingly designed around redundancy and geopolitical risk.

With information from Reuters.

THE HOOK

Late Monday, Donald Trump signaled the ceasefire with Iran was effectively over, threatening fresh strikes and casting doubt on the reopening of the Strait of Hormuz. Brent crude jumped past $90 a barrel. By Wednesday morning, the US Dollar Index had climbed to 99.73 — its highest in nearly three weeks — and the 10-year Treasury yield touched 4.81%, just shy of a 52-week high. The reason: traders now put the odds of a September Fed rate hike near 65–70%, not a cut.

THE MECHANISM

The chain runs cleanly enough to name. Iran’s conflict with the US raises the odds of a shipping disruption through Hormuz, which carries roughly a fifth of global oil supply; oil-price risk feeds straight into headline inflation; and a Fed under Chair Kevin Warsh — already fighting credibility questions after an ambiguous hold in July — cannot afford to look soft on prices while a war pushes them up. That is why futures markets have swung from pricing no move in 2026 to pricing a hike at the September 15–16 meeting.

Higher US rates make dollar assets pay more relative to everywhere else, which is the direct channel behind both the stronger DXY and the 4.81% ten-year. The winners are near-term and narrow: holders of short-dated Treasury bills, whose yields rise with the policy rate; US money-market funds; and, oddly, the stablecoin issuers whose reserves sit almost entirely in T-bills and now earn more for holding them. The losers are broader and slower-moving: emerging markets carrying dollar-denominated debt face a double bill, since a stronger dollar raises the local-currency cost of repayment at the same moment their own borrowing costs rise in sympathy with Washington’s. Oil-importing economies — India, Turkey, Japan, the eurozone — take a second hit, paying more for crude in a currency that is simultaneously getting more expensive to buy. Gold, meanwhile, is caught between two forces: safe-haven demand from the war pulls it up, rate-hike expectations pull it down, which is why it sits near $4,304, off its recent peak but still up 21% over the year.

WHY IT MATTERS

The apparent contradiction — dollar strong this week, dollar weaker for the decade — is really two different clocks running at once. Reserve managers make multi-year diversification bets; traders react to a war in hours. The IMF’s COFER data put the dollar at 57.13% of allocated reserves in the first quarter of 2026, down from 72% in 2000, and a recent survey of reserve managers found roughly three-quarters expect that share to keep falling over the next five years. None of that is undone by one hawkish week from Kevin Warsh.

What is new is where the dollar’s reach is actually growing: not in central bank vaults but in stablecoins. The GENIUS Act framework — now the subject of a Treasury rulemaking comment period that closes in October — has pushed issuers to back their tokens almost entirely with short-dated Treasuries, and forecasts from Standard Chartered and Senator Bill Hagerty put potential T-bill demand from stablecoins as high as $2–2.3 trillion. That is dollarization happening retail-first, in emerging-market wallets and crypto exchanges, invisible to COFER. For Washington, a Fed hike timed to a war raises borrowing costs precisely when the deficit needs cheap financing, and when the countries least able to absorb dearer dollars — many of them US partners, not adversaries — get hit hardest. That is a form of collateral leverage no sanctions list ever names.

WATCH FOR

The September 15–16 FOMC meeting is the date that resolves this. A 25-basis-point hike would confirm markets are right to treat this as an inflation fight, not a growth scare, and would likely push the dollar and yields higher still. A hold — especially if Hormuz tensions ease and oil retreats from $90 — would suggest Warsh blinked, and could send gold back toward its highs faster than the dollar can catch up. Either way, watch the Fed funds futures curve shift in the two weeks before the meeting.