Projecting confidence
Iran, Germany, NATO, Ukraine, Russia, Canada, the EU, Taiwan, and China.
Hello,
Here are the five things you need to know today:
IRAN. Markets react coolly to Trump’s ‘Project Freedom’.
GERMANY. NATO. The Pentagon begins a painful extraction.
UKRAINE. RUSSIA. The war pivots further to the Baltic.
CANADA. EUROPE. Carney joins a confab, but the EU seems remote.
TAIWAN. CHINA. Lai reaches Eswatini, but more important trips await.
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IRAN. Ship may safely grouse
Markets react coolly to Trump's 'Project Freedom'.
Oil prices fluctuated in Asian trade despite Donald Trump promising to "guide" ships safely out of Hormuz as a "humanitarian" gesture "with" Iran. Tehran said such a mission would violate the ceasefire. A tanker was hit off Fujairah.
INTELLIGENCE. “Project Freedom”, due to start today, may simply end up allowing certain vessels, which have already escaped the strait, or paid Iran tolls, to pass through the US maritime blockade. This could be a tacit acknowledgment that some ships are already evading both chokepoints, including an oil supertanker and a very large gas carrier in recent days. But Iran’s alleged strikes off Fujairah, and another near Sirik, inside Hormuz, will keep most ships at bay.
FOR BUSINESS. If Project Freedom was an attempt to jawbone the market, the gambit has failed. Yet another ray of hope may materialise as Trump considers a 14-point proposal sent via Pakistan. So far, the president says he’s unimpressed. Iran’s plan seems a variation of previous offers (i.e., to allow its nuclear program to continue, or at least not be dismantled). But between resuming strikes or surrendering, fruitless talks may be the best near-term outcome.
GERMANY. NATO. Auf Wiedersehen, Pete
The Pentagon begins a painful extraction.
Pete Hegseth ordered 5,000 troops to withdraw from Germany over the next six to 12 months. The Pentagon said the decision followed a “thorough” force posture review, even if it came days after a spat between Trump and Friedrich Merz.
INTELLIGENCE. Merz has sought to downplay this latest transatlantic rift. Yet irrespective of the decision’s causality, and the fact that another 30,000 US troops will likely continue to stay, Merz will bear the political cost. Germany continues to double down on its own defence spending, and integrate with other European NATO members, but the move will be read as a further signal by adversaries that the US is wavering in its commitment to European defence.
FOR BUSINESS. Amid reports that other allies are having their arms purchases delayed on account of US constraints in the Middle East, the withdrawal seems alarming. Yet a lot can happen over a year, and there is plenty of scope for the troops to simply be sent closer to NATO’s eastern flank (e.g., Poland or Romania). And as Trump, Hegseth and JD Vance continue to criticise NATO partners, Marco Rubio will visit Europe this week on a “bridge-building” tour.
UKRAINE. RUSSIA. Balts and braces
The war pivots further to the Baltic.
Drones were reported over Estonia’s Russian-majority city of Narva Sunday as Ukraine hit the nearby port of Primorsk. Kyiv earlier hit oil two tankers in Russia’s Black Sea port of Novorossiysk. Sweden seized a suspected false-flag tanker.
INTELLIGENCE. Ukrainian strikes on Russian export facilities have distracted Moscow and crimped windfall profits, but overall volumes have remained steady throughout April, at around 3.5 million barrels per day. Moreover, more exports are now going through Pacific ports, and as summer nears, Arctic waters will be able to carry extra cargoes. The ultimate effect of strikes on Primorsk and Ust-Luga is they may give cause for Russia to test NATO in the Baltic.
FOR BUSINESS. A grey-zone attack on Narva is one of the scenarios NATO planners have long theorised, alongside a seizure of Sweden’s Gotland, or – beyond the Baltic – the arrival of Russian forces on Norway’s Svalbard (the territory’s governing treaty only prohibits its use for “war-like” purposes). US equivocation makes such scenarios slightly more plausible, particularly if Russia can claim just cause, such as the arrival of drones via NATO territories.
CANADA. EUROPE. Neither Armenia nor elbow
Carney joins a confab, but the EU seems remote.
Mark Carney visited Yerevan for the European Political Community summit Monday, the first time a non-European had attended. Montreal was last week selected as host for a new NATO-adjacent Defence, Security and Resilience Bank.
INTELLIGENCE. Alongside the launch of a Canadian sovereign fund, the DSRB is another symbol of Ottawa’s emergence from underneath the US umbrella. But speculation that Carney’s visit to the EPC represents a step toward joining the EU is unfounded. The EPC, if anything, is a foil against EU integration. Its current host has little chance of EU accession in the short-to-medium term. The host from the first half of last year, Albania, has similarly little chance.
FOR BUSINESS. As symbolism goes, Carney’s visit is important, but economically, geographically and strategically, Canada will stay North American. Stronger EU and multilateral ties can hedge Canada’s bets, but US dominance is overwhelming. Ongoing twice-yearly EPC attendance may, however, let Carney keep up with his peers if NATO cancels its own 2027 summit, as reported, on account of its European members wanting to avoid another Trump showdown.
TAIWAN. CHINA. Rat and mouse
Lai reaches Eswatini, but more important trips await.
Taiwanese President Lai Ching-te arrived in Eswatini on a visit that was earlier cancelled due to nearby states refusing overflight permission. Beijing said Lai was "a rat scurrying across the street". Taipei said this was "fishwife's gutter talk".
INTELLIGENCE. Sledging aside, the real visits to watch will be those of Paraguay’s president to Taipei on Thursday, and Trump’s visit to Beijing next week. A planned visit to Washington next month by the chair of the opposition Kuomintang also bears watching, particularly if she lands a requested meeting with Trump. But irrespective of the US president’s engagements, if all Taiwan can count on are Eswatini, Paraguay and ten more, it’s diplomatic catmeat.
FOR BUSINESS. China is unlikely to invade Taiwan for as long as its own military purge continues, and Ukraine and Iran prove the risks of asymmetric warfare. Yet China can achieve its long-term integration goals by wearing down Taiwan’s political and economic independence. In Trump, Xi Jinping may have found a leader with whom to strike a “grand bargain” to accelerate that trend, including via reduced US arms sales and treatment of Taiwanese technology.
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Best,
Michael Feller, Chief Strategist