Welcome to The Geopolity’s What We’re Watching (3W), where we will be our daily look at the interconnected worlds of Geopolitics, Economics and Energy. Curated from the world’s leading sources of information, our analysis and commentary is designed to help you make sense of the events driving the major developments in the world.
In this roundup, we look at:
- The thousands of people who have gone missing in Gaza, as a result of the US – Israel Alliance attack on the area
- The indications of progress in the Gaza ceasefire negotiations in Egypt
- The confirmation that the US is trying to achieve regime change in Venezuela through its “anti-drugs” military operation in the Caribbean
- The US’s additional trade deal demands from Europe; which appear to target in particular the EU’s CSRD and CSDDD regulations; where 3W notes additional US demands are a predictable outcome considering the EU gave the US everything it demanded during the first phase of trade negotiations
- The absolute crash in German industrial output
- Gold’s breaking of the $4,000 an ounce, for the first time in modern history
- China rapid development towards self-sufficiency in silicon wafers for chipmaking
- The view that the “green agenda” in aviation is dead
- The outlook for a global, Paris Accord-type agreement on plastics pollution, which after the failed negotiations over August has now further soured, as the chair of talks has resigned
- Tesla’s competitive challenges in Europe, which indicates how rapidly the Chinese EV manufacturers are improving the quality of their products
Geopolitics
As to Venezuela, some top aides to US president Trump want him to approve a military operation to remove Mr. Maduro from power, writes The New York Times. The proponents of a regime-change push include Marco Rubio, the secretary of state and national security adviser; John Ratcliffe, the CIA director; and Stephen Miller, Trump’s chief domestic policy and homeland security policy aide. In our previous analysis of the subject 3W explained why we believe regime change in Venezuela has been the intended aim of the US military operation in the Caribbean from the start. The US should be expected to utilize a gradual escalation approach to eventually get to the position where it believes it can justify a military operation directly targeting the Venezuelan leadership. The first phase of this plan featured the attacks against Venezuelans in international waters, on the accusation they were transporting drugs to the US. The Trump administration is now weighing strikes inside Venezuela based on the same accusation, NYT adds in its reporting. Meanwhile, the Trump administration is speaking to figures in Venezuela’s opposition to make plans should Venezuelan president Maduro be ousted by the US.
As to Gaza, while most people are familiar with the over 66,000 dead since the start of the US – Israel Alliance attack on the area, in reality this number only scratches the surfaces of the true number of people killed in the indiscriminate bombings as it only includes bodies that were recovered following a strike. Some 6,000 people have been reported by relatives as still buried under rubble, writes The Associated Press. That number is likely thousands higher because in some cases entire families were killed in a single bombing, leaving no one to report the missing. Separately, reports from families indicate some 3,600 further people have simply gone missing since the start of the hostilities. Most of these people are assumed killed, although the Israeli human rights group Hamoked obtained records showing that, as of September, 2,662 Palestinians from Gaza were held in Israeli prisons, in addition to a few hundred others detained in army facilities where rights groups, the UN and detainees have reported routine abuse and torture.
Meanwhile, Hamas and Israel voiced cautious optimism about the prospects of ending the two-year war in Gaza, as top mediators arrived in Egypt for a third day of negotiations, writes Bloomberg. Encouraged by the apparent progress toward implementing the 20-point proposal unveiled by Trump early last week, Washington sent special envoy Steve Witkoff and Trump adviser and son-in-law Jared Kushner to the talks, Israel dispatched its senior negotiator Strategic Affairs Minister Ron Dermer, to take part as of Wednesday. Hamas said Tuesday an agreement should include the unconditional entry of humanitarian aid into Gaza, an assurance that refugees can return and immediate permission to begin reconstruction under a Palestinian committee.
Macroeconomics
After the EU agreed to everything US president Trump demanded as part of Tariff War, with EU policy makers happily patting each other on the back as they believed this was a great outcome for them, which 3W notes was of course not the case (the best indicator of a deal not being a good deal is when one side gets everything it demands…), the US has come back and demanded the EU give even more, writes Bloomberg. Apparently, earlier this month, US president Trump’s administration sent the EU a fresh proposal for implementing “reciprocal, fair and balanced” trade with additional demands. EU officials view the requests as maximalist and the concessions as significant, but decline to disclose specifics regarding the demands.
According to The Financial Times, among the US demands is that the EU dismantle its green regulations. Specifically, Washington has asked Brussels to scrap requirements for non-EU companies to provide “climate transition plans”. It has also demanded that the bloc change environmental legislation on supply chains to exclude US companies and others from “countries with high-quality corporate due diligence”. 3W notes this clearly targets the EU’s CSRD and CSDDD regulations.
German industrial production fell back to 2005 levels in August as output in the country’s all-important car industry cratered by 18.5 per cent compared with the previous month, writes The Financial Times. Overall, industrial production fell 4.3 per cent in August compared with the previous month. It is now almost 20 per cent below its pre-pandemic peak. Car production outside of the Global Financial Crisis and COVID is now at the lowest level since 2000. Germany’s economy has been stuck in stagnation for more than three years. And 3W would add the most recent data does not instill confidence that anything is about to change positively.
Meanwhile, gold raced past $4,000 an ounce for the first time on Wednesday as investors piled into a record-breaking rally in the safe-haven asset to hedge against global economic uncertainty, writes Reuters. Spot gold was up 1.3% at $4,036.22 per ounce by 1154 GMT. U.S. gold futures for December delivery gained 1.3% to $4,058. Spot gold is up about 54% year-to-date, after gaining 27% in 2024. Axios writes that gold’s rally indicates in particular the loss of investor confidence in the US.
Technology
Silicon wafers are the base on which the majority of chips are fabricated. Their production has long been dominated by a handful of global leaders: Shin-Etsu Chemical and Sumco of Japan, Taiwan’s GlobalWafers, Siltronic of Germany and SK Siltron of South Korea, writes Nikkei Asia. But as a result of the US sanctions on the sale of semiconductor related technologies to China, NA notes its pace of achieving self-sufficiency in silicon wafers is picking up faster than many outsiders had expected, especially for more mature, or older generation, chips. The country’s self-sufficiency in 12-inch wafers has already reached more than 50% when looking only at supplies to local Chinese chipmakers and excluding foreign chipmakers, such as Samsung, TSMC or SK Hynix, that operate plants in China. For 8-inch wafers, self-sufficiency rates are already 80%. In memory chipmaking cases, the percentage is even higher. Many Chinese electronics manufacturers are now encouraging their chip suppliers to adopt more domestically produced silicon wafer materials, to further support the growth of China’s domestic industry.
Other
“The green agenda [in aviation] is dead,” says Michael O’Leary, chief executive of Ryanair, writes The Financial Times. Passenger numbers in the EU are set to double by the middle of the century. In other regions of the world they are set to rise even faster as emerging middle classes embrace air travel. Meanwhile, hydrogen-powered planes are decades away from commercial viability, sustainable aviation fuel (SAF) remains in its infancy. Government policy now is key. Either policies to significantly support alternative fuels production, or to limit or even reduce air traffic. But, most politicians around the world take the view that more air travel results in more economic growth, bringing in tourism, and creating jobs, FT notes. Consequently, jet fuel is not taxed in many countries, in effect subsidising aviation relative to other forms of transport. Consequently, Corsia, the aviation industry designed scheme to achieve decarbonization, which is favoured by airlines, is now rejected by the US, while India, China and Russia have declined to say whether they will compel airlines to participate in it or not.
In August, global talks at the UN headquarters in Geneva to agree on a treaty to deal with accelerating plastic pollution collapsed after three years of negotiations. There is currently no deal and the future of the agreement is unclear. Now, the outlook for a global, Paris Accord-type agreement on plastics pollution appears to be further souring, as the chair of talks, Luis Vayas Valdivieso, has confirmed to The Guardian he is resigning from his post.
Tesla has in traduced lower-priced versions of its staple Model Y SUV and Model 3 sedan in Europe, in an attempt to remain competitive in the market, writes Reuters. The new $39,990 Model Y Standard and $36,990 Model 3 will however join a European market already crowded with budget EVs, with European and Chinese brands offering more than a dozen models below $30,000 – and more to come. Nevertheless, Tesla hopes the cheaper cars will revive sales after global deliveries fell in 2024 for the first time and are forecast to drop another 10% this year. But In Europe, Tesla is up against many cheaper rivals, including the BYD Dolphin Surf that starts at 23,000 euros ($26,830), the Dacia Spring at 16,800 euros and the Citroen e-C3 SUV at 23,300 euros. Last month, Volkswagen said it planned an ID.Polo compact hatchback EV for under 25,000 euros next year. In the 3W assessment, this indicates just how rapidly the Chinese EV manufacturers are improving the quality of their products.