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Conflicting alliance

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In Russia, the criticism of the economic dogmatism of the ‘financial bloc’ comes from two currents that mostly overlap. The first is Sergey Glazyev, a patriotic who serves on the Eurasian Economic Commission’s Board of Integration and Macroeconomics. Glazyev, whose influence on the Kremlin is constantly speculated (he was one of Putin’s advisers between 2012 and 2019), could take a left-wing stance so much as acted together with the “Left Front” in the 2017 elections. As recently as 20 April 2022, he accused the Central Bank of not knowing the first thing about the credit system and of acting “according to primitive IMF dogmas relying on foreign investment-hungry citizens of the underdeveloped countries.” In many ways, Glazyev is advocating a new New Economic Policy (NEP). A Just Russia’s far-left deputy Mikhail Delyagin and the Communist Party form the second current. They, too, favor nationalizations and a new “Gosplan” in one form or another.

Sergey Glazyev with Putin

But in addition to crossing each other, these two overlapping currents also interact with the “financial bloc.”

The Central Bank and the Ministry of Finance are the two institutions that make up the “financial bloc.” At the very least, it is clear that the Central Bank has made an unmatched effort to overcome the crisis (within capitalism, of course). In actuality, the praise and even admiration given by European, and US financial institutions demonstrated that its efforts had been somewhat successful. But given that the Central Bank, which prior to February 24 was the “regulator” (i.e., policymaker), is now becoming a “technician” (i.e., practitioner), this inflationist praise and achievement should also be seen as an indication of the breakdown of the conventional “financial bloc”. It was no accident that in early June the attack of economists on the Central Bank for failing to depreciate the ruble was prompted by one of most audacious defenders of the “financial bloc”, RBK, a media conglomerate particularly specializing in economic news.

I have often dwelled on the dogmatism of this bloc. However, at least two instances illustrating the extent of dogmatism should be provided. When we look at these examples, we will also see how internal conflicts work and which factors limit them.

Default

First off, the Ministry of Finance, if not the Central Bank, employed every means to prevent saying that Russia had defaulted, including continuing to pay Eurobonds in foreign currency. Moreover, apart from the irresistible temptation of paying off the creditor, the Ministry had a potent ally: PIMCO (Pacific Investment Management Company). According to data from Tinkoff Investment Advisory, as of mid-May, PIMCO had sold CDS as insurance policies to Russia’s $3.1 billion in foreign debt bonds, demonstrating how confident it was that the country would not go into default. Furthermore, PIMCO had invested roughly $1 billion in credit risk premium (CDS) in Russia last year alone (The seller’s promise to pay the buyer the difference between the nominal price and the market price of these bonds in the event that the issuing nation defaults is known as a “bill” or “derivative”). In order to avert a possible loss, PIMCO was forced to advocate “let them pay”. However, neither the voice of money nor PIMCO’s lobbying efforts were able to prevent it from happening. The bond payments had to halt when the US Treasury Department eventually blocked the OFAC license on May 25. The next installments due on June 24 could not be made, which led to what Medvedev called a “political default.”

However, the world did not come to an end because it was seen that the fixation with default was founded, like all obsessions, on an entirely nonsensical justification. As a matter of fact, payments that were unable to be fulfilled were no longer in the news in the days that followed.

Let’s not forget the other performer on the stage, by the way. PIMCO doesn’t appear to lose money. One of the defining characteristics of the neoliberal period, which worships the financial god, is the use of “derivatives” or risk management coupons, etc. These are ways to extract surplus value through speculation, but more crucially, the forces that drive the market are playing in an echo chamber where the house always wins. The CDS committee, established by the huge businesses that market CDS policies, decides if a nation defaults. Naturally, there was no market left after the US Department of Finance blocked the OFAC license. What should poor PIMCO and poor Golden Sachs do when there is no market, no way to ascertain the market price, and to quantify the difference between the nominal price and the nominal price? How would they determine how much to pay? Thus, the CDS committee asked the US Treasury for permission to auction Russian government bonds and was granted it. As a result, the price of the bonds at the auction shot up by 48 to 56 percent. Coincidentally (!), PIMCO and Golden Sachs purchased the majority of them.

As a result, both the asset owners and the asset insurers are now the same. This implies that as long as Russia continues to declare, “I owe my obligation,” modern alchemists will continue to triumph. They will prevail thanks to 340 billion dollars in reserves, even if Russia writes off their debt. In this situation, individuals who own the bond and furthermore sell its derivative may even find the default to be a seductive opportunity. That is nothing meaningful, even if they lose. When compared to PIMCO’s $2.2 trillion trading volume, which is based on data from late 2021, who cares about a few billion dollars?

Leasing

Another example is the leasing problem; this time, the Ministry of Finance had some success in its struggle to keep making payments at the expense of the Treasury. The issue was whether to keep making the leasing payments to foreign firms that have left the Russian market and, thus, failed to fulfill their contractual obligations (at a cost of 350–400 billion rubles annually) by stopping manufacturing, importing, maintaining, and supplying spare parts and, or to declare moratorium. At the end of October, Prime Minister Mishustin authorized Deputy Prime Minister Manturov and Transport Minister Savelyev to make a decision on this matter. Based on the “expert report,” the Ministry of Transport gave an unfavorable judgment, and the Ministry of Finance seconded it. However, the “expert” committee’s members, who wrote the report, were representatives of foreign firms withdrew from the Russian market. It was such out in the open that Mishustin was forced to step in and partially fix the “issue”. Accordingly, payments are to be reduced. But there is still a problem with the availability of maintenance and supply of spare parts for leased vehicles. For this, robust routes with parallel exports through Turkey and -mostly- Iran are needed. As for leasing payments, the final word has not been said yet. It will be had by the representative of the “import substitutionist bloc,” Deputy Prime Minister D. Manturov.

Denis Manturov

This is a crucial example in terms of demonstrating how determined the ministries are to remain in the global capitalist system. The conflict began when Soviet industry, or economic independence, collapsed in the face of low-cost Western goods. Now they have to rebuild all over again. Either they must find other cheap suppliers, like China (but shifting the supply chain is a difficult task and China, which is equally dependent on the global capitalist system, is not very willing to do this). Or, they have to preserve their dependency in a way that keeps the wolf from the door with the hope of that that the crisis will be resolved soon.

Three options

The three options don’t differ significantly from one another, though. The phases of putting these options into action overlap. If we consider those who advocate for rebuilding to be the most radical, they are partnering with the “import substitutionist bloc” to make the gradual transition since they cannot do it again in a short time and must find a cheap supplier. And import substitutionists who wish to move their supply chain to the east cannot do so in a short time; instead, they must rely on the pro-imperialist system’s supporters who barely hold their end up until the issue is fully resolved.

This contradictory transitivity between the parties and this conflicted unity continues in all aspects of economic life. Consider dividends received by large corporations.

The first group, whether from the political “right” (pro-military) or left (popular), wants to fully halt these payments and keep using the profits of large state corporations to finance the budget. Furthermore, they believe that this situation is unavoidable because oil and natural gas revenues will certainly be threatened by sanctions, at which point they will either appeal to the bourgeoisie or the people for funding.

The second group is also aware of this, but they cannot afford to alter the capital structures of these businesses since their political objective is the ascent of the middle bourgeoisie through the exploitation of other classes, particularly the big bourgeoisie. However, this can only be accomplished within the capitalist system, whereas the first group’s radical solution entails closing one of the channels through which the middle bourgeoisie can rise.

This is where the third group enters the picture. In order for the capitalist system to survive, the stock market must continue to run. This can happen only if the giant state corporations that serve as the driving force behind the Russian economy continues to pay dividends, that is, they should keep feeding their local or international big bourgeois. As a result, a solution is found that keeps the conflict peacefully. Dividend payments are somewhat restricted but not entirely stopped. Due to “overlapping interests,” the second group gains the most from this, but also the other two.

Balance

The balance has been established so that under the terms of the sanctions, those who advocate paving the way for the middle bourgeoisie are in an favorable position. But the others are not desperate, though. Why?

1) Politically, the left is not opposed to a new rise of the middle bourgeoisie, as it may lead to the NEP, the golden age for the leftists. What was the NEP? “A tiny retreat for a big leap”, to quote Lenin. It is the first link in the process of rebuilding the USSR, which was on the verge of economic collapse, after the “war communism” era. It is the emergence of the petty and middle bourgeoisie under complete state control while the large bourgeoisie was suppressed. It is perhaps the most democratic period in Russia since the principality of Kyiv. (The latter leads to a secondary contradiction between the dictatorial “pro-military” wing of the first group and the “popular” wing demanding democracy at the most.)

2) Economically, the right, the “financial bloc”, is not against a new rise of the middle bourgeoisie as long as the interests of the big bourgeoisie are safeguarded. Because the big bourgeoisie will swallow the others anyway if these interests are preserved. Moreover, if the concessions envisioned by the second group are realized, they will be swallowed by a more fattened big bourgeoisie, which is particularly appealing.

Conflict and predictability

At the November 16 Cabinet meeting, Putin inquired as to whether the Ministry of Finance had given its approval before approving Denis Manturov’s request to expand the car loan program to include military personnel and partial mobilization conscripts. This was noteworthy because it demonstrates that the powers of the ministries are split by distinct boundaries and how, in the conflicts between them, the approval of the ministry in charge is sought first rather than the president’s. This is not an isolated instance. The likes frequently happen; especially in the conflicts between finance and industry, and between the “military bloc” and others.

It also points out that one of the most meaningless concepts of bourgeois political science, “totalitarianism”, which has become so fashionable these days, actually has no objective foundation because there is nothing like the application of “total” authority at all. Contrarily, the jurisdictions are established with distinct borders. Unless there are exceptional circumstances, the president does not meddle in these divided powers. The act of establishing boundaries does not result from a situation in which people gather to discuss the best form of “governance”. Rather, the lines are drawn because the conflict aiming at different political and social objectives continues and rules are set to prevent the conflict from spiraling out of control.

For this reason, I have always found absurd the tendency to explain Russia’s state decisions (in any area from militarism to foreign policy, from economic policy to the fate of offshore calculations) with the momentary, unpredictable, surprise decisions of a group of “totalitarian” decision makers. Politics is so determined with clear lines, and the institutions’ authority is so thoroughly defined to avert conflict to lead to war, therefore, few surprises are encountered. As a result, grasping the process only depends on understanding the conflict.

Conflict of authority and temporary retreats

The blocs jealously guard their authority, one another’s meddling is unwanted and repulsed even stingingly.

The “military bloc” and the “financial bloc” came into such a conflict at the end of April. General Secretary of the Security Council “Mr. Siloviki” Patrushev said that they were developing a financial system in which the ruble would be pegged to the currency basket and gold, but Central Bank Governor Nabiullina categorically denied this with almost an off-protocol discourse.

This really is a crucial matter. Suppose that contracts for international trade with Kazakhstan as a “friendly” or even an ally nation can and are made in rubles and tenge, but in any case, a “universal equivalent” (we are forced to use Marxist terminology) is needed by which these sums in rubles or tenge are evaluated. How about this universal equivalent? If “de-dollarisation” in global trade is not (and it is not) just a nice rhetoric, something else must be found. The “finance bloc,” which was still looking for methods to stay within the imperialist system, rejected Patrushev’s plan, which called for this to be a basket of gold and foreign currency, while the “military bloc” withdrew to prevent usurpation. However, this was the inevitable conclusion of the process. The following was reported by RBK on November 19: “One of the sources of RBK claims that even if commerce with Kazakhstan is conducted in national currencies, how many rubles will equal to one tenge is determined by the dollar rate of the tenge. For this reason, banks are collaborating with the Central Bank and the Ministry of Finance on a project that will allow some departure from cross-currency calculations.” The “financial bloc” appears determined to avoid even indirectly returning to the gold (or oil) standard, instead attempting to create a “currency basket” that is nothing but a hybrid dollarization. At least for now, the “financial bloc” assures to include banks, the sacred altar of the neoliberalist age, into this process.

Will it be a hit or a miss? It is doable. Does it mean the liquidation of dollarisation? No. It is inevitable that a new (one!) universal equivalent will be found if they are determined on this issue (and the troika’s sanction terror pushes them to determination, even if they don’t want to). It doesn’t matter if this equivalent is the “evergreen” gold or yuan or “oil of the earth,” or sheepskin.

The sword of balance

Fine, but where is the Kremlin in this picture? As with military-political issues, the Kremlin adopts a pragmatic attitude on political-economic matters, but this pragmatism is not unprincipled in the latter ones, just as it was in the former issues. In the political-economic matters, the Kremlin seeks to strengthen the middle bourgeoisie on the account of the big bourgeoisie, just as it is resolved to continue the battle until it achieves its minimal political objectives in the military-political issues (which means removing the Kyiv regime from being a current or potential threat to Russia in one way or another). The Kremlin’s current position therefore aligns with the second group; yet the Kremlin is already a conflicting alliance in its own image, as the blocs’ positions may shift in line with the balance of power, but they will keep doing so peacefully.

An example: At the November 16 meeting I mentioned above, Putin did not hesitate to attack the banks, the holy altar of the “financial bloc”: “Banks simply and cheerfully offer minor loans (…) but then these people become eternal debtors. Banks, with all due respect to these financial organizations, drain the lifeblood of the population. Obviously, it is needed to put an end to this.”

Although the Kremlin’s perspective is entirely discernible empirically, there remains a theoretical issue in the middle of the room. This is a problem I have touched on many times before: Bonapartism as a particular kind of authority in post-Soviet Russia.

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Can India be a winner in the trade war?

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The repercussions of the new global trade war initiated by Donald Trump continue. In early April, he announced “reciprocal tariffs” on countries worldwide, ranging from 10% to as high as 49%. In this scenario, almost all countries would face a 10% tariff when selling goods to America. However, some specific countries, including India, experienced a special tariff shock. While Trump imposed a 34% tariff on China, for example, he announced tariffs exceeding 40%, almost reaching 50%, for some other Asian countries like Vietnam, Cambodia, Sri Lanka, and Laos. For India, this tariff was 26%. This means that even New Delhi, which had lowered tariffs on thousands of goods, recommended tariff reductions on half of its $23 billion imports, initiated trade talks, increased imports by $3 billion, and created nearly 500,000 job opportunities with over $40 billion in investment, could not escape the 26% (discounted) Trump tariff.

Tariffs are taxes imposed by a country on goods imported from another country. Donald Trump believes that American goods are unfairly tariffed by trade partners, which harms American companies. This is why he announced these controversial new tariffs to level the playing field. He escalated the trade war by increasing customs duties on China, which retaliated with a 125% tariff, to 145% (and announced today – April 16 – that he has raised it to 245%), while giving the rest of the world a 90-day pause. Yes, Trump’s trade war is now a duel between America and China. And now, Chinese President Xi Jinping is on a Southeast Asia tour to take measures against Trump’s tariffs. When elephants fight, the grass gets trampled. Yes, I know; the elephant is a favorite metaphor for India, but in this duel, the question is: Will India be the grass? Or, alternatively: Will it be a winner as a major swing country in the duel between these two? Let me state at the outset what I will conclude with: Frankly, this duel between America and China has opened up many possibilities for all swing countries, but New Delhi is one of the biggest and most important of them. Frankly, Delhi seems to be in a more advantageous position against Beijing, its biggest rival in trade. To be a winner, it needs to recommit itself to that Covid-era reform idea.

While evaluating crises often seems like a facile approach, it is generally a rational strategy in world politics. However, Delhi has not fully capitalized on such opportunities recently. Especially after Covid, many of the promises remained unfulfilled, and there were no tangible results from the proposed agricultural laws and labor codes. For example, Prime Minister Narendra Modi said in 2021 that the government would unconditionally transfer all business areas except strategic ones to the private sector, but there has been no mention of any privatization other than the Air India sale, which has been ongoing since 2017. There is still no word on the long-awaited reforms in the country. The Indian government had proposed a new economic agenda around two ideas: Atmanirbhar (self-reliance) and Make in India (domestic production model). Under this economic agenda, large amounts were allocated to production-linked incentives, and ease of doing business was promised. The first was partially implemented because production stagnated. However, some production-linked incentives were received, the most prominent being for iPhones. In the midst of the US-China trade war, this could strengthen New Delhi’s hand. Apple may now start shifting its production from China to India. This is at least a good example of a “plus one” against China. Taiwanese-based Foxconn has already moved some of its factories in China to India and started iPhone production. When it comes to ease of doing business, yes, India’s ranking has risen, but at a snail’s pace.

At least, given the Trump tariffs, there may be opportunities for New Delhi in American markets where China cannot compete. We mentioned Apple phones as the first example. However, when you look at the list of products Beijing exports to America, it is not difficult to estimate that there will be tens of billions of dollars worth of export possibilities available. The questions are: How quickly can India ramp up new production to turn this duel to its advantage? If customs duties are significantly reduced, is Indian production robust enough to survive? And what does the Indian government plan to do to ensure this? While subsidies are the first thing that comes to mind, they are expensive, and Trump may find them unfair and object. I am quoting the view of the US Trade Representative’s office on this matter verbatim: “India provides a wide range of subsidies and support to the agricultural sector, including credit subsidies, debt waivers, crop insurance, and input subsidies (such as fertilizer, fuel, electricity, and seeds) at both the central government and state government levels. These subsidies, which are a significant cost to the government, reduce the cost of production for India’s producers and have the potential to distort the market where imported products compete.”

Anyway, America was generally a duty-free economy, which provides Delhi with a $45 billion trade surplus. It is also true that America produces very little that it can export to India. The top two items in the export basket are mineral oils and precious stones. Manufactured goods, machinery and appliances, electrical, and optical equipment have a value of less than $8 billion. In contrast, India exports electrical and pharmaceutical products, which are the top two products on the export list, and the value of these products is more than three times higher, at $26.5 billion. Most of the rest that Delhi buys from America are agricultural products. This is exactly what Trump wants to boost. This directly benefits his farmer base as well. Everything Delhi grows on farms, from walnuts to edible oil, is tariffed at significant rates. Fish, meat, and dairy products are taxed so high that it is almost impossible for America to export them. And this is the only thing America produces in exportable surpluses.

The trade issue seems to be almost entirely limited to manufacturing and agricultural products, which means that services, which account for about 40% of India’s exports to America, are not included. Since none of them cross the border, they are not subject to customs duties. Somewhere in the article, I said that Delhi, which lowered tariffs on thousands of goods, could not escape the Trump tariff. Agriculture is critical for Trump, and Delhi must have realized that it cannot conduct trade by neglecting agriculture and lowering taxes on machinery, boilers, electronic devices, and precious stones, I think. If you look at the India section in the US Trade Representative’s report on restrictive practices of different countries, you can see that agricultural products are marked as non-tariff barriers. Also, the idea that India is an important partner and that the personal friendship between Modi and Trump will bring a special exemption to Delhi is often thought or repeated; however, looking at Trump’s attitude towards his other allies, I don’t think he thinks that way at all. Trump is playing hardball and is very likely to continue playing hardball. Lowering customs duties on non-agricultural goods was the easy part. However, considering Delhi’s traditional insecurities and protectionism, can India open up to milk and meat imports, for example? Furthermore, is milk and dairy production or meat production self-sufficient? Considering Delhi’s production protectionism and historical hesitations regarding agriculture, its task seems difficult. Perhaps the opportunity for agricultural reforms missed during the Covid crisis deserves a second chance for Delhi, and perhaps this superpower trade war, where its best friend and worst rival are showing their hands, is telling it that now is the perfect time.

Rhetoric such as being the fastest-growing major economy or the fifth largest and soon to be third, surpassing Japan and Germany, and the discourse of a manufacturing revolution that has been said to be coming for the last decade but has not yet materialized – or even gone backward – is certainly noteworthy. However, New Delhi, which seems to have moved away from the hard-won economic freedoms of the early 90s, appears to have returned to the belief that growth can be achieved through top-down methods. Higher tariffs have been seen returning in the last decade. You might be buying the world’s most expensive steel from India, for example. In the late 90s, the finance minister of the time said he had brought tariffs down to almost ASEAN levels. Increasingly powerful oligarchs are dividing market share and sectors. Does it work? Is the idea that state patronage will lead India to a manufacturing and export utopia coming to fruition? Take a look at government data: Despite the Make in India domestic production model, where Delhi invested over $26 billion in strategically important sectors to benefit from the exodus from China, the share of manufacturing in the Indian economy has declined compared to the service and agricultural sectors. Or, after the 10-year period of the Make in India initiative, you see that the share of manufacturing in India’s GDP in 2023-24 is exactly the same as in 2013-14: 17.3%. And it tends to be even lower this year. The contribution of manufacturing to job creation was slightly lower in 2022-23 compared to 2013-14; it was 10.6% in 2022-23 while it was 11.6% in 2013-14. Furthermore, while the real success in smartphone production may deserve celebration, the share of exports in its GDP has fallen from 25% in 2013-14 to 22.7% currently. Consequently, the growth rate of Delhi’s share in global exports has also slowed down.

Praveen Khandelwal, a Delhi-based businessman and ruling party member of parliament known for his lobbying activities, may be saying that the high tariff imposed on imports from China to America presents a significant opportunity for India’s trade and industry, and that they want to use this advantage against Beijing in most sectors, including electronics, auto parts, textiles, and chemicals. However, Delhi is dependent on Beijing for parts and equipment, lacks skilled labor, and incentive programs are also insufficient in many sectors where Delhi is competing with Beijing. The Chinese economy, which is five times larger than the Indian economy, is still a formidable competitor. In India’s case, Trump’s tariffs could be softened, or perhaps even completely removed (?); but in return, Delhi may need to offer more than the “tiny concessions” I mentioned in a previous article. It is clear that America expects more than “tiny gains.” While other countries that experienced a special tariff shock are trying to enter into negotiations for reciprocal tariff reductions during the 90-day grace period, New Delhi has already been at the negotiating table with America for some time, but this time Trump is a tough friend. The scale of Indian strategic vulnerability will be revealed by time.

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Notes from Antalya: At least there’s dialogue!

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After spending three days at the Antalya Diplomacy Forum (ADF) as part of the Harici team, I returned with critical impressions regarding both the direction of Turkish foreign policy and the state of the world. Beyond Jeffrey Sachs’s headline-grabbing statement that “Syria was a US-Israel project,” the forum’s most crucial aspect, rather than sensational statements stirring things up, was that global and regional actors – who often struggle to come together or find environments for dialogue – saw Türkiye as a hub in this multipolar world where they could exchange a few words. The number and level of participants helped us better understand the countries Türkiye wants to do business with, and those that want to do business with Türkiye. Ministers and even heads of state from many countries – from the Balkans to the Caucasus, from Africa to Asia – found themselves having tea with counterparts not necessarily considered to be “on the same side.” This sets the ADF apart from similar global diplomatic summits.

A new hub in multipolarity

Whichever panel we attended, the main theme was clearly “multipolarity.” From economic policies to artificial intelligence, from war to the search for trade partners, all discussions revolved around the dissolution of the unipolar world that persisted since the end of the Cold War, and how 19th-century-style geopolitically-driven foreign policy finds resonance today. However, unlike Davos or a BRICS summit, many states that have chosen different paths found a voice at this forum.

For instance, Georgian Prime Minister Irakli Kobakhidze, who made headlines with the “foreign agent” law and faced protests for allegedly steering his country away from the European Union, was sitting side-by-side with Montenegrin President Jakov Milatović, who was explaining how wonderful and easy joining the EU would be. While we were downstairs requesting an interview with the Iranian delegation, whose militias fought alongside Assad in the Syrian Civil War, Ahmed al-Shara [also known as Abu Mohammad al-Jolani, a key figure aiming to overthrow Assad in Syria] walked right past us just a few steps away. Russian Foreign Minister Sergey Lavrov spoke in an opposite room just a few hours after his Ukrainian counterpart. Even the Foreign Ministers of Armenia and Azerbaijan held a panel discussion together.

Such a scene is not something you encounter in many parts of the world. In this period where the world faces the risk of trade or military conflicts, being recognized as a place where anyone can initiate dialogue when needed is a significant advantage for Turkish diplomacy. When we discuss our regional and global interests with other states, the potential cost of alienating Türkiye —losing access to such a diplomatic middle ground— will score points in our favor in all consultations.

Furthermore, the high level of participation primarily from the Balkans, Africa, the Caucasus, and Central Asia indicates Türkiye’s ambition to become one of the smaller poles that could form outside the Western or BRICS axes. While Türkiye’s early recognition of multipolarity and its positioning accordingly – unlike many Western states – is a plus, not everything is so positive. Although Türkiye’s relationship with the EU gains significant importance during this period of serious security vulnerabilities for the bloc, it was both saddening and surprising that during the forum, Turkic states other than Azerbaijan and Türkiye bowed to the EU’s wishes regarding the TRNC [Turkish Republic of Northern Cyprus]. EU states, facing energy shortages and watching their industries shrink after their conflict with Russia, have sought solutions by focusing on Central Asia. Despite their somewhat desperate position, they managed, merely with the promise of investment, to get Kazakhstan to open an embassy in the Republic of Cyprus, and Turkmenistan and Uzbekistan to declare their respect for its territorial integrity. Türkiye “conceding such a goal” [suffering a diplomatic setback] to the EU during a period when its geopolitical hand is strong has opened up debate on how effectively we are leveraging our advantages.

Of course, alongside this, there is the Gaza issue. Netanyahu’s claim that some major powers could be persuaded by Trump’s alleged plan to expel Palestinians from Gaza had turned eyes towards Türkiye before the forum. However, the Gaza issue became one of the most discussed topics throughout the forum. While keeping the issue on the agenda is hopeful, uncertainty remains about whether Trump and Netanyahu can carry out their potentially disastrous plan for Gazans.

One notable detail was the relatively low participation from Western Europeans or Americans at the ADF. Although Stephen Doughty, the UK’s Shadow Minister responsible for Europe and North America, attended, it’s fair to say that the bloc we know as the collective West wasn’t particularly enthusiastic about the ADF. Of course, they have quite a bit on their plate. The Trump tariffs, which stirred things up before the forum, also became one of the main topics at the ADF. The tariffs announced almost hourly on a reciprocal basis put participating ministers and heads of state in a rather difficult position. While many hoped their countries wouldn’t suffer severe damage from the tariffs, they stressed that global trade could grind to a halt.

Jeffrey Sachs was also among those heavily criticizing Trump’s tariff policy. I asked Sachs whether Trump’s policy could succeed in bringing back the industries the US had sent abroad years ago under the pretext of globalization. Sachs replied that the way to bring back industries is not to impose tariffs on 150 countries, but to take steps within the country to motivate companies. He also stated that the US does not have to fight countries like China. Perhaps Sachs delivered his most crucial line here:

“Fortunately, diplomacy is cheap. That’s why we are at the Antalya Diplomacy Forum, not the Antalya Military Forum!”

Between Israel’s massacres in Gaza, Trump’s tariffs, and the uncertainty over whether the Ukraine War will end, a bleak picture emerges regarding the direction of the world. However, not everything is so pessimistic. In his speech, Sergey Lavrov replaced the usual phrase collective West with “Europe and the UK.” Except for a couple of jabs at Biden and Obama, Lavrov avoided harsh rhetoric towards the US. Unlike last year, this time he spoke in English, not Russian. Apparently, Russia now sees a need to communicate its position to the English-speaking world. And this shows us the following: even as trade wars, regional crises, and Israel’s genocidal actions continue to grow worldwide, perhaps there’s a positive shift compared to the last few years dominated by global fears of nuclear war; at least now, there is dialogue!

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The U.S. pressure on Iran: Bow drawn but not yet fully pulled

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On April 9, U.S. President Donald Trump announced to the media at the White House that he had set a final deadline for Iran to reach a new nuclear deal with the U.S. If Iran does not abandon its nuclear weapons program, the U.S. will “definitely” take military action, and Israel will be deeply involved and become a “leader” in this. Clearly, “Trump 2.0” has added more military threat to Iran, but overall, this pressure resembles drawing a bow without fully pulling it—extreme pressure that may reignite the “Pompeo 12 Conditions” set seven years ago.

Trump met with visiting Israeli Prime Minister Netanyahu, after which the U.S. announced it was holding direct negotiations with Iran. Iran’s Foreign Minister Araghchi confirmed on April 8 that indirect high-level talks would take place on April 12 in Oman, but denied any direct talks as claimed by the U.S.

Analysts believe the summit focused not only on bilateral trade tariffs and the Gaza situation, but also on coordinating a unified stance on the Iranian nuclear crisis. Based on Trump’s statements, Israel is expected to strike Iran if it crosses the nuclear threshold—i.e., acquires actual nuclear weapons—by targeting its nuclear facilities. The U.S. seems to want to keep military action as “Plan B,” exerting heavy pressure through negotiations first and resorting to military means only if talks fail, possibly in coordination with Israel.

Iran, long accustomed to U.S.-Israeli military threats, seems unfazed by this war intimidation. Iranian President Pezeshkian reiterated that Iran “does not seek nuclear weapons,” emphasizing the country’s long-term need for nuclear science and energy. On April 10, Ali Shamkhani, an advisor to Iran’s Supreme Leader Khamenei, stated on platform X that if external threats persist, Iran may suspend cooperation with the IAEA, expel inspectors, and consider relocating enriched materials to secure domestic sites.

Less than 100 days into “Trump 2.0,” the administration is in full attack mode, waging economic war on all trade partners in the name of “Make America Great Again.” By attempting to open the “Pandora’s box”of disrupting the global trade system, he seeks to force all trading partners back into a corner. While global attention is focused on avoiding U.S. economic coercion and “public robbery,” geopolitical conflicts are momentarily overshadowed.

From a geopolitical standpoint, Trump’s return focuses on two major battlefields: the Russia-Ukraine war and the Middle East, with the latter’s key goal being the subjugation of Iran—a goal unfulfilled in his first term. Thus, the new U.S. Iran policy under Trump centers on threats and coercion, supplemented by engagement and negotiation, with gradually increasing pressure and strategic encirclement, avoiding military action unless absolutely necessary.

Currently, the Trump administration is “riding the momentum,” fully cooperating with Israel to weaken and dismantle the “Axis of Resistance.” Following actions against Syria, Hamas, Hezbollah, and resistance forces in Iraq, efforts now focus on resolving the Gaza issue, with military strikes targeting Yemen’s Houthis, while maintaining pressure on Iran to achieve “Middle East peace under Trump”: expanding Arab-Israeli normalization and isolating Iran—the region’s long-standing anti-U.S. and anti-Israel force.

For some time, the Trump administration has unconditionally supported Israel, using transactional strategies like promoting “clearing Gaza” or “taking over Gaza” to pressure Arab states into aiding Israel. It aims to usher in a “post-Hamas era” and reshape the political and geopolitical ecology of the Israeli-Palestinian conflict. At the same time, it strikes Yemen’s Houthis under the pretense of protecting Red Sea routes and portrays Iran not just as a partner but as the master of the Houthis, seeking justification for continued suppression of Iran.

Regarding the Iranian nuclear issue, Trump is displaying a more aggressive war stance than during his first term, publicly declaring “if talks fail, we will strike,” openly supporting Israel in bringing war to the Persian Gulf. The U.S., in collaboration with Israel, is exerting high pressure on Iran, and clearly enjoys three advantages:

First, Iran has suffered major setbacks in over a year of the “Sixth Middle East War,” and its bottom line of avoiding full-scale war has been thoroughly exposed. The “Axis of Resistance” is also scattered and fragmented.

Second, U.S.-Russia relations have drastically reversed. After suffering a strategic diplomatic failure in the Middle East, Russia is now focusing on dividing up Ukraine’s land and mineral resources with the U.S.

Third, although Russia and Iran still maintain good relations, Russia has openly stated that it has no intention of intervening if Iran is attacked.

When Trump first took office in 2017, after half a year of observation and bargaining, he announced the U.S. withdrawal from the Iran nuclear deal. At that time, I wrote that Trump didn’t withdraw just for the sake of it. Unlike other withdrawal actions rooted in isolationism, America-first ideology, and anti-globalization/multilateralism, Trump’s move was strategic — “retreating in order to advance.” By dismantling the nuclear agreement, he aimed to start anew or add terms, in an attempt to solve the broader Middle East issue in one go and serve America’s core interests and Middle East policy.

On May 21, 2018, the U.S. State Department proposed a complete “Plan B,” not only to eliminate Iran’s nuclear threat but also to bury Iran’s painstaking geopolitical achievements in the Middle East and reshape regional dynamics and U.S.-Iran/Israel-Iran relations. This plan was essentially a replica of the U.S. strategy toward North Korea — a typical “carrot and stick” approach. However, compared to U.S. demands on North Korea, this plan was stricter, more comprehensive, and far-reaching — aiming to resolve historical and current contradictions in the Middle East and return the region to a relatively balanced framework.

Therefore, Trump’s renewed focus on Iran’s nuclear issue is merely a rehash of old issues, and hasn’t yet reached the high-pressure levels or demands of seven years ago. At that time, the U.S. policy toward Iran was a well-prepared, strategic combination — probably now forgotten by many — known as the “Pompeo 12 Conditions.” It is thus worthwhile to revisit this list in evaluating today’s Trump-style Iran policy.

Pompeo’ 12 Conditions

 In his speech at the Heritage Foundation, Pompeo emphasized that Iran must meet 12 demands in exchange for the lifting of all U.S. sanctions and a full restoration of bilateral relations. Otherwise, Iran would face “the most severe sanctions in history.” These 12 conditions fall into categories, urging Iran to completely abandon nuclear weapons and ballistic missiles, release detained individuals, stop supporting terrorism, and halt interference in the internal affairs and security of regional countries.

The four demands related to nuclear weapons and ballistic missiles were:

-Iran must declare all military nuclear activities to the IAEA and permanently and verifiably abandon them.

-Cease all uranium enrichment, never pursue plutonium reprocessing, and shut down heavy water reactors.

-Allow unconditional IAEA inspections at any site.

-End the development and launch of ballistic missiles, and halt development of nuclear-capable missile systems.

Even from a nuclear non-proliferation standpoint, these conditions go far beyond those in the Iran nuclear deal and aim to completely strip Iran of its ability to acquire nuclear weapons or deliver them via long-range missiles.

The Remaining Eight of the “Pompeo 12 Conditions” and Their Implications

Three of the conditions relate to non-state actors. They require Iran to:

-Immediately cease support for so-called “terrorist organizations” in the Middle East, including Hezbollah, Hamas, and Islamic Jihad;

-Stop supporting “terrorist forces” such as the Taliban in Afghanistan and surrounding areas, and cease sheltering senior al-Qaeda leaders;

-End the Islamic Revolutionary Guard Corps (especially the Quds Force)’s support for “terrorists” and “armed groups” around the world.

The U.S. believes Iran is the patron or ally of various extremist organizations in the Middle East, especially a stumbling block and root cause preventing Palestinian and Arab concessions to Israel. It sees Iran as a troublemaker hindering peace in the region. Thus, resolving the Middle East issue thoroughly must start with Iran.

Four conditions relate to Iran’s relations with regional states:

-Respect Iraq’s sovereignty, allow Iranian-backed Shia militias to disarm, demobilize, and reintegrate into society;

-End military support for Yemen’s Houthi rebels and work toward a political solution for the Yemen conflict;

-Withdraw all Iranian military forces from Syria;

-Cease threats to destroy Israel, missile launches at Saudi Arabia and the UAE, threats to international shipping, and cyberattacks.

Additionally, the U.S. demanded Iran release all “detained” American citizens and those of its allies and partners.

These eight conditions, unrelated to nuclear weapons or missile programs, go far beyond nuclear issues. They show the U.S.’s intent to comprehensively constrain and curb Iran’s military and diplomatic activities in the Middle East and globally. This is a strategic countermeasure against Iran’s regional expansion, which threatens U.S. allies like Israel and Gulf states and intensifies sectarian and ethnic conflicts. It aims to pressure Iran to halt foreign influence and give up the gains it made during its expansion.

As a “reward” for complying with these 12 conditions, the U.S. promised to sign a new nuclear agreement with Iran if it made real, visible, and sustainable changes. It would also lift all sanctions, gradually restore diplomatic and economic ties, allow Iran access to advanced technologies, and support its economic modernization and integration into the global economy.

Clearly, this is the Trump administration’s new Iran strategy—a roadmap to comprehensively resolve the U.S.-Iran and Iran-Israel hostilities and reshape the geopolitical landscape. It includes both the “spiked club” of pressure and the tempting “carrot” of incentives. The aim is to downgrade Iran from a “regional superpower” back to a normal state, as it was before the Islamic Revolution, to eliminate all of the U.S. and its allies’ security concerns.

Iran completely rejected the “Pompeo 12 Conditions,” seeing them as an ultimatum demanding total surrender. To accept them would mean abandoning the grand vision and sacrifices of the Islamic Revolution and returning to a submissive, ordinary state. The Trump administration followed up with more sanctions. But Iran endured until Biden took office—and now again under Trump’s return.

From “Trump 1.0” to “Trump 2.0,” eight years have passed. The nuclear deal hasn’t been revived, and the nuclear crisis hasn’t escalated into war. But the current geopolitical and security landscape is clearly more unfavorable to Iran: it suffered military defeat in the Eastern Mediterranean, lost the strategic western flank of the “Shia Crescent” due to Hezbollah’s defeat and the fall of the Damascus regime.

In Israel’s large-scale raid in October 2024, it successfully opened an aerial corridor from the Mediterranean to the Persian Gulf, launched warning strikes deep into Iranian territory, and exposed Iran’s weak bottom line of lacking will to retaliate symmetrically. Now, as “Trump 2.0” begins, Iraq—the key node of the “Shia Crescent”—faces diplomatic pressure to break away from Iran and rejoin the Arab world. Overall, Iran’s geopolitical environment is deteriorating, while U.S.-Israeli control of Eastern Mediterranean airspace increases the risk of military escalation. The pressure Iran faces now exceeds that of “Trump 1.0.”

Although Pompeo is no longer on the “Trump 1.0 chariot,” the “Pompeo 12 Conditions” reflect the core thinking of Trump’s national security team regarding the Middle East and remain the foundation of U.S. policy toward Iran. Far from being discarded, these conditions may be gradually revived under “Trump 2.0,” tightening the strategic bowstring to pressure Iran toward compromise.

Prof. Ma is the Dean of the Institute of Mediterranean Studies (ISMR) at Zhejiang International Studies University in Hangzhou. He specializes in international politics, particularly Islam and Middle Eastern affairs. He previously worked as a senior Xinhua correspondent in Kuwait, Palestine, and Iraq.

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