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CWA # 1591, 16 February 2025
The World This Week
AI Summit in France, Trump’s Tariff Threats, and China’s DeepSeek

  GP Team

The World This Week #296, 297 & 298 Vol. 6 Nos. 50, 51 & 52, 17 February 2025
 

Padmashree Anandhan, Abhiruchi Chowdhury and Vaishak Sreekumar

The Paris AI Action Summit: The global divide
Padmashree Anandhan

What happened?
During 10 and 11 February, France’s government held the AI Action Summit co-hosted with India bringing stakeholders from all levels and sizes to achieve a collective progress for a sustainable AI. The leaders focused on creating a “diverse and inclusive AI ecosystem,” which would be ethical, safe and trustworthy.

The declaration titled “Statement on Inclusive and Sustainable Artificial Intelligence for People and the Planet” was signed by 60 countries to ensure AI development technology to benefit humanity. The top priorities of the declaration includes: “Promoting AI accessibility to reduce digital divides; Ensuring AI is open, inclusive, transparent, ethical, safe, secure and trustworthy, taking into account international frameworks for all;Making AI innovation thrive by enabling conditions for its development.”

In a joint statement released by France’s President Emmanuel Macron and India’s Prime Minister Narendra Modi assured: To take concrete actions to ensure that the global AI sector can drive beneficial social, economic and environmental outcomes in the public interest.”

In a statement released by India’s Ministry of external affairs on Modi’s speech in the summit: “The world was at the dawn of the AI age where this technology was fast writing the code for humanity and re-shaping our polity, economy, security and society. Emphasizing that AI was very different from other technological milestones in human history in terms of impact.” 

During his speech in the summit, US Vice President JD Vance said: “Stringent regulations could “kill a transformative industry” and criticized European regulatory frameworks for imposing “massive regulations” and creating “endless legal compliance costs” for companies.” He also condemned the moderation attempt as a step to “authoritarian censorship.” Whereas, UK’s spokesperson for Prime Minister Keir Starmer said: “We felt that the declaration didn’t provide enough practical clarity on global governance.”

What is the background?
First, AI in geopolitics. In the Summit, France and India recognised the influence of AI in the big power dynamics which could play critical in shaping future alliances and conflicts. Both stressed on opting a balanced approach to deter the AI arms race and encourage global stability. The summit showcased AI as a shaping tool of geopolitics and not as technology. It also brought out the need for cautious management and regulation. At the big power level, several have begun to develop AI technologies, especially the US, China and the EU to dominate the field and strengthen defence capabilities mainly for economic leverage. This has led to competition over intellectual property and trade. It has also sparked debate on global governance frameworks to keep AI innovative, open and ethical.
 
Second, strengthening France-India partnership on AI development. One of the key outcomes of the summit is closer cooperation between France and India in AI. Both have recognised the benefit of AI as a drive to economic and bilateral partnership. This can be applied through collaboration of France’s advanced technological infrastructure and India’s tech workforce to address the global challenges via AI. The summit also witnessed several agreements between both fostering AI research initiatives and solution focusing on public welfare, including healthcare and education. Some examples to the partnership would be AI innovation centres where France aims to create a conducive ecosystem for innovation in healthcare, agriculture and building smart cities. Both are also involved in projects relating to disaster management, building AI talent through workshops, education and training to promote researchers and policy makers.
 
Third, ethical and inclusive AI at the prime focus of the summit. Major discussion in the summit revolved around ethical implications, and international regulations. France and India called for global framework to address the issues relating to privacy, bias, and the potential misuse of AI. Two AI acts by the EU and India focused on AI governance mechanisms which were highlighted in the summit. It also promoted interests of humanity, fairness and accountability. Apart from this, technological developments was the second most focused issue with stress on ensuring the equal distribution of AI benefits. India’s stance in the summit indicated the importance of ensuring the accessibility of AI to developing stated and addressing challenges through “cutting-edge innovations.”

Fourth, strategic positioning of the US. The summit was led by France and India, however the role of the US in the global AI ecosystem was under focus. The US was viewed as a technological powerhouse with advanced AI, but it’s stance on the international front was seen as cautious. Although US did make significant advances in the AI research, it had put forward concerns, over global regulation, which could hinder innovation or its national security interests. In the summit, France and India called for an inclusive approach to AI governance and urge the US to take part in setting international standards. However, US’s stance stressed on the competitive component, and the risk of China. This was also reflected in Vance’s speech. He warned over China’s rapid developments in AI and how it could threaten economic and national interest of the US. He argued on the AI regulation to be promoting innovation, ensuring national security without over regulation. The stance of the US also shows the complexity in establishing a united global AI framework.
 
Fifth, China’s participation and signing of the AI declaration. In the AI summit, China did not have a key roll in the discussions. It’s signing of the declaration was symbolic calling for a shared approach to AI governance. However, China’s participation was was viewed with scepticism as its AI policies, focus on its national security and surveillance, which clashes with principles of transparency and ethics. By signing, China can be observed to be positioning itself as a country with interest in global AI governance, but it’s adherence to global expectations especially on data, privacy, surveillance, and military applications remain unknown.

What does this mean?
Divide among the big powers in global AI governance. The AI summit was successful in recognising the importance for an inclusive and transparent AI ecosystem. However, it also reflects the deep divide among the developed countries or the AI advanced countries over regulating and harnessing the AI technology. Although 60 countries signed the declaration for an ethical AI development, the US and the UK chose not to be part of it. This was mainly over concerns relating to restrictive regulations and larger geopolitical tensions which where predicted to increase as AI shapes, the economic competition, global influence and mainly national security. The AI summit not only brought out the gaps in AI development, but also give glimpse of its significant role in the big power dynamics.

Trump’s tariff threats: Fallouts on America and Europe
Abhiruchi Chowdhury

What happened?
On 13 February, US President Donald Trump authorized a Presidential memorandum as per which overarching plans are to be formulated for confronting non-reciprocal tariffs applied by other countries on US exports. The plans known by “Fair and Reciprocal” would aim to bring fairness in US’s trade equations with other countries and address the prevailing trade deficits. 

On 10 February, Trump increased the import duties on steel and aluminum by 25 per cent. The tariffs would apply to imports from all the countries and would not extend any special privilege.  

What is the background?
First, the US trade with Canada, Mexico, China and the EU. In 2024, the trade between US and Canada amounted USD 762.1 billion. US had a trade deficit worth USD 63.3 billion with Canada in the same year. US primarily exported trucks and motor vehicles. Canada, on the other hand exported, crude petroleum, cars and petroleum gas. With Mexico, the total trade of US amounted USD 839.9 billion in 2024. US had a trade deficit worth USD 171.8 billion. Mexico mainly imports refined petroleum, parts and accessories of automobiles and petroleum gas from the US whereas it exports cars, delivery trucks and spare parts and accessories of motor vehicles to the US. In 2024, the total trade of goods between EU and US amounted USD 975.9 billion. US incurred a trade deficit worth USD 235.6 billion in terms of goods trade with the EU. The EU primarily exports medicines, motor vehicles and pharmaceutical products to the US. On the other hand, it mainly imports oil products, natural gas and pharmaceutical products from the US.
 
With China, US shares a trade relationship which was worth USD 582.4 billion in 2024. The total trade deficit in that year with China remained at USD 295.4 billion. China primarily exports broadcasting equipment, computers and office machine parts whereas it imports soyabeans, crude petroleum and petroleum gas from the US. 

Second, Trump’s idea of reciprocal tariffs. For Trump, despite US keeping its market open to foreign players, its own exports do not have the same level of access in the foreign markets. This has resulted in continuation of massive trade deficits and has impacted the competitiveness of US made products. In 2024, the US’s total trade deficit was more than USD 1 trillion. Thus, Trump intends to introduce reciprocal tariffs which would be imposed on countries that impose “unfair” duties such as value-added taxes on US exports. He wants to maintain reciprocal trade relations with each country instead of choosing to maintain overall reciprocity with all the trading partners. The reciprocal tariffs are set to come into play from April 2025.  

Third, the tariffs on steel and aluminum. Trump’s proposition of imposing tariffs on steel and aluminum imports could be viewed as continuation of Section 232 of Trade Expansion Act in which steel and aluminum imports were made liable for 25 per cent and 10 percent import duties respectively. Initiated in 2018, under Donald Trump’s first term of Presidency, Mexico and Canada remained exempted from the tariffs. In 2021, Biden administration struck a deal with the EU, granting the bloc tariff-rate quota. The tariffs were levied to ensure that US steel and aluminum industries are safeguarded from the challenge posed by foreign players. With the recent measure, tariffs on aluminum imports have further increased by 15 per cent.

Fourth, tariffs as countermeasure to drug trafficking and immigration. US President Donald Trump views tariffs as an important countermeasure to solve problems related to illegal immigration and drug trafficking. Trump alleges that Mexican government tacitly supports the drug traffickers and their relationship is detrimental to US’s national security.  

What does it mean?
First, the impact of reciprocal tariffs on world economy. Economists around the world are fearful that Trump’s proposition of reciprocal tariffs might result in beginning of intense trade war. The tariffs are set to impact the South and South East Asian countries as US has large trade deficits with the countries in the region. 

Second, domestic impact of tariffs on US economy. Without considering, that the three countries – China, Mexico and Canada would impose tit for tat measure, the economic output in US is likely to come down by 0.4 per cent. The tariffs are also likely to affect the value of dollar. As the value of dollar rises, it would become more challenging for the US based companies to sell their goods in other foreign markets. 

Third, the impact of tariffs on Canada and Mexico. The tariffs are expected to impact Canada’s Ontario and Quebec province the most. US’s construction, automotive and aerospace firms that rely on Canada’s steel and aluminum exports would witness a surge in costs of production. The tariffs would affect 75 per cent of Mexico’s steel exports. Further, it would also have an impact on the supply chains across the continent. Mexico’s steel chamber has demanded to impose tariffs on imports from US steel. 

Deepseek R1: China's new breakthrough AI
Vaishak Sreekumar
 
What happened?
On 20 January, Deepseek released Deepseek R1, a new free AI Tool with open-source software. On 27 January, Nvidia Stock plummets 17 per cent, causing panic in the US tech industry. 

On 28 January, Deepseek reported a cyberattack that made them pause their services. On 29 January, Deepseek's data was exposed through a back-end database that contained sensitive user information. 

On 30 January, Microsoft and OpenAI accused Deepseek of infringing on their proprietary data through a process known as distilling. On 1 February, Deepseek became the number 1 app in the Play Store and App Store, with India leading in downloads.

What is the background?
First, a brief note on Deepseek. It is a startup based in Hangzhou, China, and its controlling shareholder is Liang Wenfeng, the co-founder of the quantitative hedge fund High-Flyer. High-Flyer announced in March 2023 that it would pivot from trading to focusing resources on creating a "new and independent research group" to explore artificial general intelligence (AGI). DeepSeek was founded later that same year. High-Flyer also owns patents for chip clusters used to train AI models based on Chinese corporate records. DeepSeek's first model debuted in November 2023, and the company has reiterated its core language model (LLM) several times, releasing various versions. However, it wasn't until January 2025 that DeepSeek gained global attention by releasing its R1 reasoning model.

Second, technological advancement and cost disparity. Deepseek uses different methodologies to train its R1 models compared to OpenAI, Meta, or other major US-based AI companies. This training involves less time, fewer AI accelerators, and lower costs. In a research paper published along with RI, DeepSeek highlights several innovations in its model, such as reinforcement learning, reward engineering, distillation, and emergent behavior networks. The company claims it was able to develop its open-source R1 model using just 2,048 Nvidia H800 chips, which were designed to comply with U.S. export restrictions in 2022. It is far fewer than the computing resources typically required for such projects. DeepSeek's R1 model was developed for less than USD 6 million, a fraction of what it typically costs to develop similar models. The low development cost threatens to undermine the business models of major U.S. tech companies that have poured billions into AI. Additionally, depending on the specific task, DeepSeek's R1 model is 20 to 50 times cheaper than OpenAI's GPT-4. While the $6 million figure refers only to chip usage during the final training phase and does not account for the entire development cost, it still signals a significant shift in AI development economics.

Third, the International AI Market. The Global AI market has its roots in San Francisco. Referred to the moniker "The Magnificent Seven" for their stock market performance. The companies of Alphabet, Amazon, Apple, Meta, Microsoft, Tesla, and Nvidia have been the global leaders in AI. , with Microsoft owning 49 per cent of OPEN AI. While there are startups and innovations in different parts of the world, they have been held back by the extremely large investments required to develop independent models. Moreover, citing national security, the US since 2022 has employed numerous restrictions on the quality and quantity of Semiconductor chips required to train Large Language Models. These restrictions were primarily directed towards China. Cited 7 October 2022, the "Commerce Implements New Export Controls on Advanced Computing and Semiconductor Manufacturing Items to the People's Republic of China (PRC)" details the large bracket of restrictions.

Fourth, security concerns. On 29 January 2025, Wiz Research, a team from cloud security firm Wiz Inc., reported that a publicly accessible back-end database exposed sensitive information about DeepSeek. This data included chat histories, API keys, log streams, and operational details. DeepSeek took the database offline shortly after being notified, but the duration of the exposure remains unclear. Concerns around security have mounted, especially as DeepSeek's app has been banned by the U.S. Navy on "security and ethical" grounds. It was also removed from both the App Store and Play Store in Italy due to its privacy policies, which include extensive data collection that may involve sending user information to China and storing it indefinitely. This has prompted widespread scrutiny, with many pointing to privacy concerns, such as the app's ability to record users' "keystroke patterns or rhythms."

What does it mean?
DeepSeek's rapid rise could pose a substantial challenge to the U.S. dominance in AI, especially with massive investments such as the $500 billion "Stargate" project underway. With the pricing that Deepseek can offer, it is becoming harder for U.S. companies to justify the significant investments they require for GPT development. As more users turn to DeepSeek and claims emerge that Deepseek could not be developed without illegally obtaining Nvidia's top-of-the-line chips, the US will likely respond with stricter sanctions on the export of microchips to China. 

TWTW Regional Roundups

News from around the world
Padmashree Anandhan, Sayeka Ghosh, Rohini Reenum, Anu Maria Joseph, Nuha Amina, Ayan Datta, Kumari Krishna, C Shraddha, Nova Karun K and Vaishak Sreekumar

CHINA THIS WEEK
China: Brunei issues a joint statement for “Strategic cooperative partnership”
On 06 February, China and Brunei issued a joint statement about the strategic cooperative partnership between communities of both countries. This came after China’s President Xi Jinping met with the Brunei President Sultan Haji Hassanal Bolkiah Mu’izzaddin Waddaulah. Both countries looked back at their history of bilateral ties which started in 1991, and noted that it is a time-tested friendship. They also agreed to further advance Joint Steering Committee with relevant working groups. Both leaders further agreed to enhance economic cooperation by engaging in BRI with projects like the Brunei-Guangxi Economic Corridor, and further FDIs. Brunei also welcomes China’s plans to look for investment opportunities in sectors of clean technology and to fund the building of Pulau Muara Besar Industrial Park. 

China: President Xi meets Thailand’s Prime Minister
On 06 February, China’s President Xi Jinping met Thailand’s Prime Minister Paetongtarn Shinawatra. Xi stated that both countries share millennia of history and friendship and adhered to mutual respect and interest. Xi noted that 2025 marks 50 years of diplomatic cooperation. Xi also called to further the building of the China-Thailand community of a shared future. Xi said: “China is willing to work with the Thai side to strengthen the synergy of development strategies, expand mutually beneficial cooperation, implement flagship projects such as the China-Thailand Railway, and realize the development vision of China-Laos-Thailand connectivity at an early date.” Xi also appreciated the measures taken by Thailand to crack down on online gambling and telecom fraud. He also extended support to Lacang-Mekong Cooperation and congratulated Thailand for joining BRICS.

China: Imposes counter-measures against US tariffs 
On 04 February, New York Times reported that China State Council Tariff Commission initiated countermeasures against Trump's 10 per cent tariffs on Chinese goods. The measures focus on targeting American firms and imports of critical minerals. This comes after Trump’s executive order on the imposition of tariffs came into full effect. The Chinese countermeasures include tariffs on natural gas, farm machinery, coal, and other imports China gets from the US. They also put restrictions on the export of some minerals used for the production of critical technology. Tax Commission Announcement officially instated a 15 per cent tariff on coal and LNG, 10 per cent on crude oil, agricultural machinery, and large displacement cars. Additionally, China’s State Administration for Market Regulation launched an antimonopoly investigation against Google. China will look into if and how Google has violated its anti-trust laws. Currently, Goggle’s services are not used in China, but the company has a presence in Beijing, Shanghai, and Shenzhen dealing with sales and engineering of its advertising business. 

China: Kyrgyzstan sign social security agreement
On 06 February, as per China’s Ministry of Human Resources and Social Security, China and Kyrgyzstan have signed a bilateral social security agreement. The agreement was signed between China’s Minister of Human Resources and Social Security, Wang Xiaoping, and Kyrgyzstan’s Chairman of Social Funds, Baktiyar Aliyev. As part of the agreement Chinese employees working in Kyrgyzstan won't have to contribute to basic pension insurance and the same treatment will be given to Kyrgyzstan’s employees in China. It is estimated that currently in Kyrgyzstan there are 70 China-funded firms and 3,000 Chinese employees.

China: EU plans to blacklist 25 Chinese firms
On 08 February, SCMP reported that the European Union planned to add 25 Chinese firms to their blacklist. This list includes companies that have helped Russia circumvent sanctions. These  include entities from China and Hong Kong, noting that they will be banned from getting goods from the EU. This is because the EU believes that 70 percent of high-tech and sensitive data are reaching Russia with China’s help. China’s Foreign Ministry noted that: “We strongly deplore and firmly oppose the EU’s unjustified sanctions against and listing of Chinese companies and individuals. We have lodged serious representations with the EU over this issue.”

China: Netherlands looks to deepen cooperation in green development and open economy
On 23 January, Global Times, reported that the Chinese Vice Premier Ding Xuexiang held meetings with Dutch leaders in Hague, underlining common commitment to an open world economy and green development. Ding visited King Willem-Alexander, Prime Minister Dick Schoof, and Deputy Prime Minister Sophie Hermans of the Netherlands, emphasizing China's commitment to strengthen bilateral cooperation in various fields. Both sides agreed to increase mutual trust, promote free trade, and expand cooperation in areas such as clean energy and climate adaptation. Ding stated that 50 years of China-EU relations called for deeper dialogue and cooperation, and that Netherlands played a constructive role in fostering stable and prosperous China-EU relations.

China: White House to review trade ties with Beijing
On 24 January, the White House announced that they would conduct a “compliance review” of the “Economic and Trade Agreement” between China and the United States. In a statement released by the office of the US Trade Representatives (USTR), they stated that the review intended to ensure that China acted in accordance with the trade commitments. In line with the America First Policy, the Trump administration is contemplating on imposing a 10 per cent tariff on Chinese goods, from 01 February.

China: US “does not support” separation of Taiwan from China, states US Secretary of State
On 24 January, US Secretary of State Marco Rubio conveyed US's stance on Taiwan independence to China's Foreign Minister Wang Yi. Rubio stated that the US "does not support" Taiwan's independence and hoped that the issue would be resolved peacefully in an acceptable way to both sides. This stance of President Trump reflects the long-held stance of the US and eases Chinese concerns towards the new administration.

China: Ships with missile propellant to go to Iran
On 22 January, Two Iranian ships loaded with missile propellant will sail from China to Iran. The Two Iranian-flagged cargo ships are named the Golbon and the Jairan. They carry more than 1000 tonnes of sodium perchlorate which can fuel 260 mid-range Iranian missiles. The chemical is controlled by the Missile Technology Export Control Regime, which is an international anti-proliferation body. The chemical is being shipped to the Islamic Revolutionary Guard Corps and destined for Bandar Abbas on the Persian Gulf. Golbon departed from Daishan on Tuesday, and Jairan is expected to leave in early February.

EAST ASIA THIS WEEK
South Korea: Blocks use of DeepSeek due to data concerns
On 07 February, Korea’s data protection regulator cautioned against using China’s AI DeepSeek, citing security concerns. This move comes after the Personal Information Protection Commission (PIPC) advised many ministries of the Republic of Korea to block access to DeepSeek. The concern was over DeepSeek’s data management practices, especially where the data was being sent. According to the PIPC, an inquiry was sent in January for detailed information on its personal data collection policy through multiple channels, including Britain's Information Commissioner's Office. 

South Korea: President Yoon gets indicted over charges of insurrection
On 26 January, former President Yoon Suk Yeol was indicted over the charge of insurrection by South Korean prosecutors after Prosecutor General Shim Woo-Jung convened a meeting. "Concerns about destruction of evidence remain unresolved" was stated as the reason for this indictment. With the arrest warrant set to expire, the prosecutors had to either release or indict him with arrest to keep him in custody. On 25 January, the prosecution's request to extend Yoon’s detention period till 06 February was rejected by the Seoul Central District Court. The indictment of Yoon means that his trial will commence without any further prosecutorial investigation

South Korea: Severe weather forces cancellation of travel across South Korea
On 28 January, Korea Herald reported, snow and inclement weather caused disruptions in transport throughout South Korea as millions journey back home during Seollal holidays. Trains face massive setbacks after safety measures in places with snow caused delays. Furthermore, highway traffic is at a standstill, with numerous flights being cancelled. The travel chaos, which started during the long weekend, is worsening because the weather remains challenging, affecting commuters nationwide.

North Korea: Tests strategic cruise-guided missiles
On 26 January, The Korea Herald reported on North Korea's testing of  sea-to-surface strategic cruise-guided missiles. This is North Korea's first missile fired since Trump administration took charge. The missiles flew 1500 kilometres along their flight trajectories for 7507 to 7511 seconds before precisely hitting their targets. "War deterrence means of the armed forces of the DPRK are being perfected more thoroughly," stated Kim Jong-un as he oversaw the test

Japan: Hiroshima, Nagasaki Mayors urge US President Trump to work towards nuclear disarmament
On 28 January, the mayors of Hiroshima and Nagasaki cities have called on US President Donald Trump to come to the respective cities in 2025 to mark the 80th anniversary since their atomic bombings brought into close a disastrous way for World War II. They mentioned the urgency of nuclear disarmament citing a global threat as long as nuclear weapons are in use. The mayors called on Trump to lead efforts toward reducing nuclear arsenals, citing increasing tensions with Russia, China, and North Korea. This invitation comes after past U.S. presidential visits to Hiroshima but none to Nagasaki

Australia: Exemption to Youtube from social media ban
On 03 February, Australia’s government exempted Youtube from the social media ban for children under 16. The initial ban included Youtube but after hearing from company’s executives and children's content creators who use the site, the government decided to exempt it. The landmark legislation passed in November sets some of the world's most stringent social media limits. Surveys show YouTube is the country's most popular social media website among teenagers, used by 9 in 10 Australians aged 12-17.

Australia: Ban on DeepSeek from government systems citing security concerns
On 05 February, Australia banned DeepSeek from all government systems and devices on national security grounds. Australia is among the first few countries to take direct action against DeepSeek. Home Affairs Minister Tony Burkesaid “A threat assessment by the country’s intelligence agencies found the technology posed an unacceptable risk,” The use of the app by private citizens is however, not banned.

Australia: PM Albanese's approval rating takes a hit, ahead of election
On 27 January, a Newspoll survey has found Prime Minister Anthony Albanese's approval rating at its lowest level since the 2022 election. Albanese's approval fell six points to -20, while opposition leader Peter Dutton saw a surge in his approval ratings. Voter sentiment shifted, with 53% predicting the opposition will win the upcoming election. Despite its efforts to ease living costs and boost jobs, the Albanese government is struggling to hold on to power

Fiji: The US halts aid to Pacific Island countries
On 04 January, Fiji’s Prime minister Sitiveni Rabuka announced he would attend a presidential prayer meeting in the US in hopes of US resuming aid to the Pacific island countries. The Pacific Islands is one of the world's most aid reliant regions, where Australia is the largest donor followed by China. Documents from the US State Department revealed that the islands received USD 1.5 million from the US for “energy programs targeting women.” According to women’s groups across the Pacific, the lack of aids would have a massive impact on the region. US soft power will also be severely impacted as competition from the China would increase. Fiji is indebted to China due to decades of infrastructure lending. The closure of the U S Agency for International Development (USAID) by Elon Musk would severely impact the role of US in the region.

SOUTH  AND SOUTHEAST ASIA THIS WEEK
Bhutan: First South Asian country to get Starlink connectivity
On 12 February, Bhutan became the first country in the South Asian region to enter the Starlink footprint. The announcement was made by the Starlink company after it joined the footprint. Bhutan became the 121st country in the world to join the footprint. This comes as Starlink's director of global licensing, Rebecca Hunt held talks with Prime Minister Tshering Tobgay in Thimphu in July 2024. The move is expected to help Bhutan to overcome the digital divide in remote mountainous areas, where traditional internet infrastructure cannot be set up. Commenting on this development, the Chief Executive of Druk Holding and Investments Limited, Ujjwal Deep said that it would benefit Bhutan, a landlocked country. In this regard, the country requires alternative technologies and channels to enable connectivity on a global level. He added: "Starlink opens that possibility to be globally connected and we are excited to have the Starlink connection in Bhutan.” On the other hand, it has also raised concerns of the competition posed to domestic businesses if Starlink is set up. 

India: Plans to advance cooperation with Israel under India-Middle East-Europe Economic Corridor
On 11 February, at a summit organized in collaboration between the Department for Promotion of Industry and Internal Trade and the Confederation of Indian Industry, Israel's Minister of Economy and Industry, Nir Barkat said that the Israeli government was willing to turn the India-Middle East-Europe Economic Corridor (IMEC) into reality. One area of collaboration between both countries is rapid transit systems. Azar highlighted how 1,000 kilometres of "top-notch metro" was constructed by India. Tel Aviv can also benefit from a 100-kilometer metro from Indian companies. He further pointed out how the investment agreement could be aligned with the Make-in-India initiative. Moreover, the Ambassador underscored the existing partnership between India and Israel in agriculture and irrigation and how it has reaped positive benefits. However, both countries can gain from the high-tech sector. He said: " “Israel exports innovation. India can give all the benefits in the entire economic chain – R&D, sourcing, manufacturing, commercialization, everything.” 

Nepal: Investment modality inked for 400 kilovolts transmission lines with India
On 12 February, an investment modality was agreed upon between the energy secretaries of India and Nepal. This will facilitate the construction of two 400-kilovolt cross-border transmission lines. With a target completion date of 2030, one transmission line will connect Duhabi to Bihar, the other will link Lamki to Uttar Pradesh. The joint venture entails a set of agreements and understandings that will help facilitate the export of 16,000 megawatts of energy by 2035. Once the construction has been initiated, the Nepal Electricity Authority will take care of 51 per cent of the expenses required to cover the proposed transmission lines. On the other hand, the Power Grid Cooperation of India is set to shell out 49 per cent of the costs incurred within its territory.

Bhutan: 39 percent cent foreign aid to be sourced from India in 2025-26
On 3 February, Kuensel reported that Bhutan is set to receive financial assistance of INR 21.5 billion from India in fiscal 2025-2026. The package will consist of grants worth INR 17.75 billion and loans worth 3.75 billion. This makes Bhutan the largest recipient of monetary aid from India, followed by Nepal and Mauritius.  India has also revised its current foreign aid assistance by increasing it by 23 per cent, from INR 20.69 billion to INR 25.43 billion in the current fiscal of 2024-2025. 

India: 104 illegal immigrants deported from US
On 5 February, a US plane carrying 104 illegal Indian immigrants touched down in Amritsar, Punjab. This comes as the newly elected President of the US, Donald Trump, enforced his immigration policy. It also took place a week ahead of Prime Minister Narendra Modi's visit to Washington. There have been similar instances where previous US administrations have repatriated immigrants. However, this one is different as for the first time a military aircraft was used instead of a civilian aircraft to deport illegal immigrants. Of the 104, the Punjab police stated that 33 were from Gujarat and Haryana, and 30 were from Punjab.

Nepal: Former Deputy PM Lamichhane gets bail in embezzlement case
On 6 February, the Chitwan District Court granted a bail of NPR 5.4 million for the release of Former Deputy Prime Minister and President of the Rashtriya Swatantrata Party Rabi Lamichhane. The bail is linked to the Sahara Chitwan Multipurpose Cooperative Limited court reference. Lamichhane has been accused of embezzling funds from the cooperative. In this regard, District Judge Dayaram Shakal directed the deposit of the bail amount under Section 68 of the National Criminal Procedure Code, 2074 BS. The court order outlined: "The defendant is to be released upon depositing the required bail amount, providing surety, or securing a bank guarantee."

Nepal: RSP's Lamichchane calls for lifting of his suspension in legislature
On 31 January, Rastriya Swantantra Party (RSP) President, Rabi Lamichchane shared an application to Speaker Devraj Ghirmire seeking an end to his suspension as a lawmaker. He along with 15 other party members asserted that the suspension was not legitimate and requested the speaker to revoke the same as soon as possible. He argued that since he was not placed under judicial custody for trial he could be exempted from the suspension. In this regard, the speaker questioned whether he was not being trialled in an ongoing case and sought clarification for the same from judicial experts. This comes after the Parliament Secretariat announced a charge sheet declaring Lamichhane's suspension. The charge sheet accused him of being involved in money laundering. However, he was released after a bail was accepted.. 

Nepal: PM Oli pushes for government’s ordinance plans to promote investment, governance and overcome bureaucratic issues.
On 31 January, while addressing a meeting of the House of Representatives, Prime Minister KP Oli Sharma justified government's plans to carry out 29 amendments via ordinances. He believed that it was required to promote investment, governance and overcome bureaucratic issues. He explained that the private sector had to be promoted and citizens have to be relieved of legal complications. He endorsed the decision as the government could no longer wait for the next parliamentary session since other critical reforms were pending and Nepal needed "urgent reforms." He said: “Some have questioned the process rather than the content of the ordinances. But ordinances are issued only when Parliament is not in session. That is exactly what the constitution allows.” 

India: MEA seeks Iran's assistance in retrieving missing Indian nationals
On 31 January, Ministry of External Affairs spokesman, Randhir Jaiswal announced that three Indian nationals who travelled to Iran on a business trip went missing. He stated that they went missing not long after arrival. In this regard, the MEA has sought the Iranian Embassy in Delhi and the Ministry of Foreign Affairs in Tehran's assistance to address the matter. 

Muhammad Yunus expresses hope for stronger Pakistan-Bangladesh ties, says Foreign Minister
On 31 January, The News International reported that Nobel Laureate Dr Muhammad Yunus expressed his intent to strengthen Pakistan-Bangladesh relations, particularly in trade and economic sectors. Yunus met Pakistan’s Finance Minister Muhammad Aurangzeb during the World Economic Forum (WEF) in Davos and discussed leveraging the sector for public benefit.

Furthermore, Aurangzeb described his meeting with Yunus as pleasant and beneficial. However, he avoided commenting on the possibility of implementing a Grameen-style banking model in Pakistan. Furthermore, Aurangzeb hinted at future high-level exchanges between the Pakistan and Bangladesh

On US suspending the aid: Spokesperson says Pakistan is reviewing it
On 30 January, The Express Tribune reported that the Foreign Ministry Spokesperson Shafqat Ali Khan stated that Pakistan is currently reviewing the US aid suspension and is in dialogue with the US officials. He further pointed out Pakistan’s long-standing collaboration with the US and its commitment to strengthening economic ties. Khan also made it clear that the aid freeze is a 90-day measure which is affecting all countries. He also confirmed Pakistan’s participation in upcoming naval exercises with 60 nations. Khan further addressed concerns over US weapons being used in terrorism from Afghanistan. Additionally, he highlighted the 770 Pakistani prisoners in Indian jails and announced a Pakistan-Qatar political consultation on 5 February 2025. Furthermore, Pakistan condemned Israeli aggression and attacks on Saudi hospitals in Sweden.

Pakistan: President Zardari embarks five-day state visit to China
On 4 February, President Asif Ali Zardari embarked on a five-day visit to China. This would be his very first “official visit” to China since he became President. As per the Foreign Office, President Zardari is expected to hold discussions with China’s President Xi Jinping and Premier Li Qiang. The state visit was initially scheduled for November 2024; however, it was postponed due to the President’s foot incurring fracture. The two sides are anticipated to deliberate on bilateral economic and trade issues. The two sides would also be discussing on how to enhance bilateral “security cooperation.” It is also expected that CPEC would remain as one of the key points of discussion. Also, President Zardari would be present at the “inaugural ceremony of the 9th Asian Winter Games” scheduled to take place in Harbin. The visit comes amid Pakistan witnessing a surge in militant attacks comprising those which are directed towards Chinese citizens working in the country. 

Pakistan: PM Sharif pushes for making Gwadar port functional for commercial purposes
On 4 February, PM Sharif adjured the formation of a of a committee to take prompt steps for making Gwadar port functional so that it could be used for commercial purposes. Ahsan Iqbal who is Minister for Planning Development would be leading the constitution of this committee. PM Sharif also urged for convening an “international conference” to spread information regarding the significance of Gwadar port. He said “there should be better marketing and awareness strategy and making diplomatic efforts to create awareness about the effectiveness of Gwadar port.” Ahsan Iqbal informed in a cabinet meeting that Gwadar port would bring down the cost and time required for the goods to reach “Persian Gulf for vessels less than 50,000 deadweight tonnage.” Gwadar port would also prove to be beneficial for China and Central Asian countries. He further informed that there would be no taxes imposed in Gwadar free zone. He recommended that AI must be utilized in improving the “inspection facility” present at the port. 

Pakistan: COAS dismisses Indian Army Chief’s remarks on presence of Pakistani origin militants in Jammu and Kashmir
On 4 February, Chief of Army Staff (COAS) General Asim Munir dismissed Indian Army Chief General Upendra Dwivedi’s assertion that 80 per cent of the militants who have taken refuge in Jammu and Kashmir are of “Pakistani origin.” COAS termed the Indian Army Chief‘s remarks as “irresponsible and detrimental to regional stability.” As per the Inter-Services Public Relations (ISPR), COAS stated that the remarks made by India’s Army Chief was an attempt to shift the focus of the international community and people of India from internal problems and “human rights violations” in the valley. COAS further stated that the army is ready to counter India’s aggression at the border and that any “misadventure” would be answered with “full and resolute force of the state.” Separately, he also stated that the army would not allow miscreants to hamper peace in Balochistan. He further warned that any attempt made my foreign powers to “mislead and radicalize the youth of Balochistan” would foil. 

Pakistan: Suspension of aid from the US to affect health centres
On 6 February, Dawn reported on the impacts of the termination of US aid to Pakistan. The US tops the list of countries that provides “development assistance.” Donald Trump, after assuming the presidency, had instructed to carry out an evaluation of “US foreign aid.” He had assigned the responsibility to Elon Musk who had earlier alleged that USAID is a “criminal organization.” In this regard, more than 60 health centres in the country have to be shut down that would alienate roughly 1.7 million people from accessing “life-saving reproductive health services.” This number also includes 1.2 million refugees from Afghanistan. The health centres operating in the country were being managed by the United Nations Population Fund (UNFPA). Pio Smith who is UNFPA’s Director for Asia and Pacific stated “millions of women and girls now face life-threatening risks due to lack of access to UNFPA’s crucial services.” He further confirmed that UNFPA’s initiatives which depended on aid from the US have been halted. He informed that UNFPA needs more than USD 308 million for continuing its operations in Pakistan, Bangladesh and Afghanistan.

Pakistan owes 92 per cent in external debt
On 7 February, The News International outlined major sources of Pakistan’s external debt. About 92 per cent of the debt includes multilateral and bilateral lenders and international bonds. It reported that the external debt and liabilities had risen to USD 133 billion. Further, an increase of USD 88.7 billion external debt was recorded by the end of September 2024, under the Fiscal Responsibility and Debt Limitation Act (FRDLA). The major sources of debt include the World Bank, the Asia Development Bank and the International Monetary Fund among other multilateral lenders. According to estimates from September 2024, they make up for 56 per cent of the debt. While China is the largest bilateral creditor, the second major lender is the Paris Club. The latter has a 28 per cent share of debt. Besides, 8 per cent is sourced from international Bond issues, 6 per cent and 14 per cent from commercial banks and sources, respectively.

Pakistan: Development projects to be halted amid uncertainty over USAID
On 11 February, The News International reported on the unpredictability of Pakistan continuing to receive USAID after US’s new administration’s scepticism towards it. As per The News, discontinuing USAID might result in Islamabad losing “millions of dollars.” Pakistan received more than USD 1.2 billion in form of grants between 2011-2024. The grants were provided by the United States for a number of “development projects” across the country. USAID to Pakistan was USD 126 million in 2011-2012. Following year, the grant amount decreased to USD 102 million. With the PML-N government coming to power in 2013, this amount surged to USD 128 million. During the PTI government, the grant amount was USD 75 million in 2019-2020. This amount came down to USD 70 million during PTI’s last year in power (2020-2021). Nevertheless, the grant amount has substantially decreased over the past few years. In the financial year 2022-2023, the grant from the US amounted to USD 31 million and was increased to USD 41 million for the financial year 2023-2024. The new administration’s scepticism towards USAID is anticipated to decrease the US hold over “policymaking in developing countries” like Pakistan. Cutting off USAID would lead to a halt in a number of development projects across the country in addition to a number of people losing their jobs.

Pakistan: Pakistan slides two spots on Corruption Perception Index
On 11 February, according to a report released by the Transparency International Berlin, Pakistan’s ranking on the Corruption Perception Index (CPI) has slid by 2 points to 135 in 2024 from 133 in 2023. This ranking is out of a total of 180 countries. The countries are ranked on the basis of the perceived levels of corruption existing within the public sector on a scale of zero to 100, with the former signifying “highly corrupt” and the latter “highly clean.” Dawn reported that Pakistan’s score has ranged between 27 and 33 over the last ten years. Ever since the scale changed from 10 to 100, Pakistan’s score rose to 33 in 2018. Additionally, it is worth noting that Pakistan ranked second last of 54 countries in 1996 under the zero-10 scale. Drawing comparison with countries within the Asian region, Pakistan hasn’t experienced a significant drop, compared to Oman, China, Turkey and Mongolia. 

Pakistan: Pakistan and US flag terrorism emanating from Afghanistan
On 12 February, Dawn reported on Pakistan and US’s concern regarding the menace of terrorism emanating from Afghanistan. Munir Akram who is Pakistan’s envoy to the UN advocated in front of the UN Security Council for viewing terrorists emanating from Afghanistan with the same lens as that from the Islamic State and Al-Qaida. US’s ambassador to the UN highlighted the alleged connection between Islamic State and terror groups operating in Afghanistan. She voiced US’s distress regarding Islamic State-Khorasan’s capacity to carry out terrorist attacks in Pakistan and Afghanistan. She also pointed out that Islamic State-Khorasan could find potential recruits from Pakistan. The same was, however, dismissed by Munir Akram. Munir Akram stated that the terrorist organizations which have found refuge in Afghanistan act as a potential source of recruitment for Islamic State-Khorasan. He, however, agreed with the US ambassador that terrorist groups that have found safe havens in Afghanistan are a potential threat to all the countries. Highlighting about Pakistan’s commitment towards eliminating terrorism on its land, he said “after successfully decimating Al-Qaida and other terrorist groups within our borders, Pakistan continues to confront terrorist threats such as the TTP, IS and the Majeed Brigade.” 

Pakistan: 16 Pakistani nationals confirmed dead in boat tragedy near Libya
On 11 February, Foreign Office informed that 16 Pakistanis have lost their lives in a boat mishap near Libya. Their identities were established from their retrieved passports. A team was sent to Zawiya by the Pakistani embassy in Libya after which Foreign Office could confirm about the deaths. As per the Foreign Office, the whereabouts of 10 Pakistani nationals remains unknown. The Foreign Office reckons that 63 Pakistani nationals were present on the vessel when it got knocked off. As per the Foreign Office, 37 people managed to survive the mishap and 33 out of them remain in detention at the police station. One of the survivors is wounded and is in hospital. The three others are in Libya’s capital Tripoli and are being looked after by the embassy. Previously, on 13 January, Pakistanis lost their lives in the boat mishap that took place near Morocco. In December 2024, the boat tragedy near Greece had 47 Pakistani survivors. PM Sharif expressed regret for the loss of lives and directed the concerned authorities to take prompt “action” and give remuneration to the families who have lost their loved ones. He also urged the authorities to initiate stringent action against people indulged in human trafficking.

Pakistan: PM Sharif reaffirms commitment to enhancing cooperation with the IAEA
On 12 February, PM Sharif reaffirmed Pakistan’s resolve to increase cooperation with the International Atomic Energy Agency (IAEA). Pakistan is looking towards using “nuclear technology” at its highest “potential” for civilian purposes. PM Sharif had a discussion with Director General of IAEA Rafael Mariano Grossi regarding use of nuclear energy. PM Sharif is confident that the cooperation with IAEA would be beneficial for “Pakistan and the global community.” The two dignitaries discussed the use of nuclear technology in “cancer diagnosis and treatment, agriculture food preservation, water management and industry.” PM Sharif appreciated the director of IAEA for encouraging the use of nuclear energy to fight “climate change.” Director of IAEA acknowledged Pakistan’s “constructive engagement” with the organization.

Pakistan: Turkish President Erdogan visits Pakistan; 24 MoUs inked
On 14 February, Radio Pakistan as quoted in Dawn reported that President Tayyip Erdogan of Turkey and Prime Minister Shehbaz Sharif have entered into 24 memorandums of understanding (MoUs). In a high-level meeting held between both sides; President Erdogan stated that they have deliberated on ways to expand their current goods trade agreement. They have also committed to enhancing the bilateral trade to a volume of USD 5 billion.  MoUs were agreed to in areas of trade, water resources, agriculture, energy, culture, family, and social services, along with science, banking, education, defence, and health. In this regard, in a media statement Erdogan maintained that Turkish investors will be encouraged to invest in Pakistan and its flagship projects. He further highlighted how Pakistan and Turkey’s militaries  had increased cooperation “exponentially.” Speaking on the matter, PM Sharif expressed regret over inconvenience caused to Turkish businessmen. He further added that “In that respect, I will act as a CEO of Pakistan as far as Turkish businessmen are concerned.” Separately, President Erdogan also met his counterpart President Asif Ali Zardari. According to a statement from the President’s office, both sides expressed the need to enhance their bilateral relations, particularly in the area of investment. According to a Foreign Office statement, leaders of both states will also discuss the humanitarian situation in Gaza, regional security concerns as well as coordination on international forums. President Erdogan also highlighted that Turkey has supported Pakistan’s fight against all forms of terrorism and acknowledged Pakistan’s support against the same. This comes amidst the growing regional influence of Turkey after the fall of the Bashar Al Assad government in Syria. Additionally, both states have also sought to expand their Strategic Economic Framework. Hence, the visit is set to advance negotiations pertaining to digital trade and trade liberalization and more concessions under the Trade in Goods Agreement.

Pakistan has the seventh most powerful air force in the world, reports Global Firepower
On 27 January, The Express Tribune reported on Pakistan Airforce appearing in the list of top 10 “most powerful air forces.”  The ranking which is based on the number of aircrafts was published by Global Firepower. The US air force was ranked as the most powerful in the world. The second position was occupied by the Russian air force followed by China and India. South Korea and Japan occupied the fifth and sixth position respectively. Pakistan air force was ranked as the seventh most powerful air force in the world. Report by Global Firepower highlighted the supremacy of US air force. The number of aircrafts possessed by the US air force is more than what Russia, China, India, South Korea and Japan have all together. The US air force has “5737 helicopters and 1854 fighter planes.” The yearly budget of the US air force amounts to USD 800 billion. This number is “40 per cent of global military spending.” 

MIDDLE-EAST THIS WEEK
Saudi Arabia: Economy Minister considering BRICS economic bloc membership
On 12 February, Saudi Arabia’s Minister of Economy and Planning, Faisal Alibrahim, stated that the Kingdom was evaluating the benefits of joining the BRICS economic bloc. Speaking at the World Governments Summit, Alibrahim reiterated the Kingdom’s commitment to engage in global dialogue while navigating today’s post-globalisation world. The Minister noted that the hyper-globalisation of the 1990s and early 2000s is ending, with governments resorting to protectionist barriers. This, Alibrahim noted, necessitated greater economic integration. Given this context, the economy minister said, Riyadh was undertaking a “rigorous process” of evaluating the costs and benefits of joining BRICS. However, the Minister quickly hedged his assertion, adding that potential “engagement (with BRICS) does not mean endorsement. It’s about sharing perspectives to address global challenges.”

Syria: Prime Minister thanks KSrelief’s humanitarian efforts
On 12 February, Syria’s Prime Minister Mohammed Al-Bashir met a team of volunteers from Saudi Arabia’s state-affiliated aid agency KSrelief. During the meeting, held in Damascus, Al-Bashir expressed his gratitude to the Kingdom for its generous humanitarian contributions via KSrelief and the Amal Volunteer Programme. In return, the KSrelief team, led by Director Dr Ali bin Saad Al-Qarni, thanked the Syrian government for facilitating the aid efforts. KSrelief has been involved in extensive humanitarian aid delivery in Syria. 60 of its trucks crossed into Syria on 11 February alone, supplying war-affected Syrians with food, relief supplies and shelter materials. Additionally, the Amal Volunteer Programme also supports ordinary Syrians by providing medical services. Since the Hayat Tahrir al-Sham (HTS) came to power, the aid group has been running 104 campaigns involving medical and surgical specialties, education, training and economic empowerment.

Jordan: Foreign Minister says Arab States preparing Gaza plan, but Jordan cannot accept more Palestinians
On 14 February, Jordan’s Minister of Foreign Affairs, Ayman Safadi, stated that Arab States were jointly formulating a plan for rebuilding Gaza without displacing the Palestinians . Addressing the Munich Security Conference, Safadi insisted “unequivocally” that since 35 per cent of Jordan’s population already comprised of Palestinian refugees, the Kingdom could not afford to take any more of them. Moreover, Safadi stressed, “They (Palestinians) don’t want to come to Jordan, and we don’t want them to come to Jordan.” Additionally, two highly placed European diplomatic sources revealed that Jordan’s King Abdullah had framed the Arab proposal as a counter to Trump’s plan of emptying Gaza of Palestinians. The King allegedly appealed to Trump’s business acumen by presenting the plan as a “cheaper and faster” alternative to the latter’s plans. Safadi claimed that the plan would “guarantee security and governance.” However, the Jordanian Minister highlighted that for the plan to work, “Israelis also have to think long-term. For it to live in peace and security, its neighbours need to live in peace and security.” Additionally, Safadi warned that despite the global focus on Gaza, the real danger of security escalation came from the West Bank. With mounting settler violence and Israeli security operations, the western enclave had become “a powder keg that could explode,” Safadi said. Separately, multiple sources informed Reuters that Saudi Arabia was spearheading Arab States’ efforts to develop the Gaza plan. This marked a departure from the Kingdom’s earlier policy, which saw Crown Prince Mohammed bin Salman refuse any support to reconstruction efforts until a Palestinian State was promised. Trump’s outlandish position appeared to have forced Riyadh to concede its earlier position.

Israel: Hamas agrees to release three hostages after Trump’s threat
On 14 February, Hamas revealed the names of the three hostages it would release on 15 February in exchange for Palestinian prisoners in Israel. The three hostages are Russian-Israeli Alexander Troufanov, Argentine-Israeli Yair Horn, and US-Israeli Sagui Dekel-Chen. Hamas’ announcement followed US President Donald Trump’s 11 February warning. Speaking to reporters in his Oval Office, Trump had threatened, “If all of the hostages aren’t returned by Saturday at 12 o’clock… cancel it (the ceasefire framework) and all bets are off and let hell break out.” Trump’s ultimatum was a response to Hamas’ 9 February announcement, where the Palestinian group said it would stop releasing Israeli hostages. Hamas Spokesperson Abu Ubaida had justified the decision, alleging that Israeli troops had violated the ceasefire by delaying the return of Palestinians to their homes in northern Gaza, firing upon Palestinians and stopping humanitarian aid from entering the Gaza strip.. In response, Israel’s Minister of Defence had instructed Israel’s security forces to be on alert and threatened to resume bombing Gaza if Hamas did not continue releasing hostages.

Israel: Poll finds 61 per cent of Israelis support continuing the Hamas ceasefire
On 14 February, a poll conducted by the Israeli Public Broadcasting Corporation (popularly known as Kan) revealed that as many as 61 per cent of Israelis were in favour of taking the present arrangement with Hamas to the second stage. Out of a sample of 600 individuals, only 18 per cent supported the far-right position of returning to war. Additionally, 21 per cent remained unsure about the next course of action. With the future of the ceasefire remaining in limbo, public views could impact Prime Minister Netanyahu’s political prospects.

Syria: Ahmed al-Sharaa declared President for transitional phase
On 29 January, Syria’s de-facto leader, Ahmed al-Sharaa (previously known by his battlefield alias, Mohammed Abu al-Jol

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