Ireland’s prime minister Micheál Martin was the first leader from the EU to visit Donald Trump after the bust-up with Volodymyr Zelensky in the oval office, on St Patrick’s day, just when the EU enacted its retaliatory tariffs on the US. As an Irishman, Martin just knew how to create a good vibe despite tensions by focussing on the long and positive history of the US-Ireland relationship. He commended Trump for his unrelenting focus and energy in bringing peace to Ukraine and the Middle East. Martin also strikes a conciliatory tone on the trade front, assuring that there is room to negotiate a deal that brings investment back into the US.

In that sense, Martin is on his own peace mission, to find a solution that keeps US companies in Ireland, and as a mediator between the EU and the US.

Trump has a problem with Ireland's massive trade surplus against the US, €72bn in 2024 and the fourth largest the US has against any country. But, as John McManus pointed out in his column for the Irish Times, the focus on tariffs hides a more subtle reading. Because for Ireland, the more important goal is to keep US companies in Ireland.

The trade surplus relates to physical goods, which is more than counterbalanced by imports of services, with a deficit of €149bn resulting in an overall trade deficit. Much of the trade surplus comes from US-owned companies supplying chemicals, drugs, and medical devices back to the US. It is Ireland’s guaranteed access to the European single market that makes shipping drugs back to the US profitable.

Getting those US companies back to producing at home would not be difficult for the US administration. Trump could change the intellectual property rights laws that makes it profitable for the IT companies to stay there. Or he could pull off something similar to the Chips act, just for drugs. Would Trump do that? This could be politically and fiscally costly. The Irish are part of the DNA that makes up the US society. If he were to drain Ireland of US companies, he may lose Irish-American votes in the US. Martin’s red line is that he cannot compromise his country’s membership of the single market, as this is one of the main selling points for international companies to move to Ireland. A compromise will have to be worked out, which may have to include some outside the box thinking. The pharmaceutical US companies already started to increase their investments in the US, assured Martin. Maybe, this is the way to go.

The massacres in the coastal region of Syria last week were a warning shot and a turning point for the new regime. Authorities moved quickly to contain the fallout by setting up one independent committee to investigate the violence, and another to rebuild civil peace with members of the region, including Alawites. Within 24 hours of the events, the integration of autonomous regions into the new state apparatus was also suddenly possible. Ahmed Al-Sharaa, Syria's new president, signed an agreement with the commander of the Kurdish forces to integrate them into the central state institutions. A similar agreement has reportedly has been reached with the Druze in Al-Suwayda, though no details have yet emerged.

According to Muhsen al-Mustafa, the attacks were the first organised and large-scale insurgency led by a former pro-Assad military leader, Brigadier General Ghiath Dalla. He was allegedly seeking to impose a reality similar to the autonomous Suwayda in the coastal region for the Alawites. In his interview with Diwan, al-Mustafa also suggested that the insurgency was supported by Iran, with whom Dalla had worked closely in the past. This will probably not be the last attempt to disrupt the nation building in post-Assad Syria. Several other big geopolitical players, such as Russia, Israel and Turkey, play a key role here.

Last week’s sectarian violence is a reminder of the difficulties of integrating diverse communities and ensuring transitional justice. Nearly five months since the Assad regime fell, Syria cannot afford a weak government. The Europeans also have an interest in supporting state-building there as much as they can to improve conditions for Syrians at home. Germany seems to be on the ball. Within 24 hours of the committees being announced, the German envoy Stefan Schneck met with one of the seven judges, who are to investigate the events in the coastal region. According to analyst Benjamin Fève, Germany is setting the pace for European efforts in Syria. The question is: will this continue under Friedrich Merz?

In the commentary about the rapprochement between the US and Russia, China represents the large negative space of this relationship. China does not need to be part of this media blitz, but behind closed doors, China is gently reminding Russia that there are three powers at the table, not two.

To see the US-Russian relationship solely in its historical context would be a mistake. China had no major role to play in the Cold War, but it does hold many cards in its hand today. For Russia, an exclusive focus on the relationship with the US would make no sense in the current situation. And China has its own interests.

China backed Russia when the western world slapped sanctions on it after its invasion in Ukraine. Its bilateral relations increased on the economic and military front since then. Why would Vladimir Putin put all his might behind a fickle US partner across the oceans, when China turned out to be a reliable neighbour?

The joint military drill by Iran, Russia and China in the Gulf of Oman is a reminder that nothing has substantially changed on the ground. This is the fifth year of this kind of drill in a strategic location that links the Indian Ocean and the Strait of Hormuz, through which more than one-quarter of the world’s seaborne traded oil passes. A show of strength and a practice in cooperation between three autocratic nations.

A lot depends on what the US administration hopes to achieve in the long term. If it is serious about reconnecting with Russia not only for the sake of a Ukraine peace deal but also economically, trust will slowly have to be nurtured over time. This is not achieved by a couple of phone calls between Donald Trump and Vladimir Putin. And it would to involve Xi Jinping in some form.

The Middle East is heating up again, and big players are moving their positions in the region.

The Syrian government is struggling to contain violence against Assad’s Alawite minority, where hundreds have been killed over the past few days. New violence also means a new wave of refugees towards Lebanon, far from being in a stable position, and perhaps further to Europe over the Mediterranean sea. The Europeans are not ready for another wave of refuges, nor do they have the means or foreign politics to prevent such an outcome.

Syria’s troubles put the spotlight on Turkey and its superimposed patronage role in Syria. This is already irking the Arab nations in the region and Israel. Will the EU try to pay Lebanon and Turkey to hold back migrants again? This would not solve, but could instead potentially aggravate, the instability in the region. At home the threat of more migrants could also make it easier for far-right parties to exploit.  

There are also shifts in the hostage deal. Donald Trump’s administration started to talk directly with Hamas about the hostages, a move inconceivable in Israel’s political establishment. US hostage envoy Adam Boehler defended the move in the press saying that the US is not an agent of Israel and has its own particular interests. In other words the US is its own boss. Will Israel’s government speak up against it? After the scene with Volodymyr Zelensky in the oval office and the cut-off in intelligence and aid to Ukraine afterwards, Benjamin Netanyahu won’t do to Trump what he so often did to the three Democratic presidents before him.

And then there is Europe. Last Saturday, foreign ministers from France, Germany, Italy and the UK  came out in support for Egypt’s Gaza reconstruction plan, which is backed by the Arab League.

The proposal envisages a five year reconstruction effort for $53bn without displacing Palestinians from Gaza, a technocratic governance during the transition period without Hamas, and a two state solution clearly on the horizon. It is still too early to tell what the European backing means in concrete terms, but it is the first time they openly endorse a proposal that is rejected by the US and Israel.

The humanitarian situation in Gaza, meanwhile, is getting worse, as no aid gets through for a week now. Israel also decided to cut electricity that is essential for desalination plants in Gaza for drinking water. The pressure from Israel is part of the plan to make the place as uninhabitable as possible to get people to move out. Trump’s Riviera plan is still on the table. And the geopolitics behind this is shifting, with the US playing its Trump cards in the Middle East and Ukraine.

One of the major developments in modern warfare has been the emergence of drones as a potent military tool, which has changed modern battlefields. Drones provide a much cheaper way to conduct reconnaissance, and attack targets, at a large scale. One of the most recognisable faces of this shift has been the Turkish Bayraktar TB2 drone. It has also helped make Turkey a significant exporter of drones.

Baykar, the firm that makes the TB2, will now be making more significant inroads into Europe. Yesterday, it agreed on a joint venture with the Italian defence firm Leonardo. The two companies will produce drones for the European market together in Italy. They estimate that this market will be worth about $100bn over the course of a decade.

The Leonardo-Baykar tie-up points to another geostrategic question for Europe as it tries to figure out how to do without the US. There is a lot of talk of, and engagement with, the UK as a key European non-EU ally. But Turkey will also be important to any future European security architecture. Aside from the drones, and other aspects of the country’s defence industry, it currently has Nato’s second-largest army. Not to mention its key geographic position, controlling the Bosphorus and straddling both the Black Sea and Mediterranean.

When dealing with Russia, Turkey has often taken a different approach to its western neighbours. It has used a combination of dialogue and confrontation to manage its relationship with Russia where the two have overlapping interests, both in the Caucuses and in Syria. Now, however, Turkey seems genuinely alarmed at Russia’s sphere of influence growing larger if it ultimately wins in Ukraine. Recep Tayyip Erdogan has put his backing behind Ukraine, and has said that the country’s territorial integrity is paramount.

This alignment might make it easier for Turkey and Europe to work more closely together, either formally or through one-offs like the Leonardo-Baykar joint venture. But there are various other geopolitical barriers to further cooperation too. The most significant is Turkey’s strained relationship with Greece and Cyprus. It still has extant maritime territorial disputes with both, and the frozen conflict that has split Cyprus in two is further from being resolved than ever. Just last year, Erdogan once again dismissed the idea of Cyprus being reunified.

Then there is Turkey’s involvement elsewhere, most notably in Syria. At the moment, its presence there is arguably beneficial to the EU’s own interests. The new Turkey-backed government provides more stability, whilst potentially facilitating the return of Syrian refugees to the country. But this may not always necessarily be the case. Turkey’s backing for Azerbaijan in its various wars with Armenia has also proven politically contentious in some European countries.

As political and economic analysts, we have had our fair share of misjudgements. Forecasting is difficult, especially of the future, as Niels Bohr once said. The sentence is not as trivial as it sounds. It is not easy at all to forecast the position of the current economy – or the position of an electron for that matter. And the economic models used by central banks and market participants often cannot even forecast the past.

The best we can do under the circumstances is remove bias and noise. With Donald Trump this is very difficult. But it is the only way to remain sane. People have very strong views about Trump, and there is a lot of noise, much of it generated by himself and his administration. For example, on tariffs. He threatens a tariff. He announces a tariff. He suspends it pending negotiations. The deadline expires, and the tariffs are back. His commerce secretary then goes on TV to say that there will probably be a friendly agreement. Then Trump tells Congress to indicate that there will not. He says he had a friendly conversation with Justin Trudeau. We have to be careful with such words. A grin is not a smile. A friendly conversation with Trump is different from the friendly conversations we have with our friends.

In a situation like this, it is best to rely on revealed, as opposed to stated preference. We know, for a fact, that the reciprocal tariffs will come. Trading partners should take into account when formulating their responses. The US will auto-respond to anything we throw at them. If you run a large and persistent trade surplus against the US, like the EU does, you will run out of things to tariff before they do. Don’t do it.

On cars, the revealed preference is that Trump cares about sudden supply chain disruptions, but he does not respect supply chain arrangements. In his call with the US auto makers, which included Stellantis due its ownership of Chrysler, he agreed to a one-month reprieve, so that they could start re-organising their cross-border supply arrangements. Some components criss-cross the US-Canada and US-Mexico borders several times. A month is not a lot of time to unpick this, but enough to get the ball rolling and to start making immediate changes to a few highly exposed flows.

A tariff does not work like VAT. It’s 25% flat on everything that crosses the border. The biggest victims of this tariff are not the Europeans or Asians who export finished goods to the US, but those with highly integrated supply chains inside of the USMCA area.

The revealed preference of month one of Trump's second term is that they are much more strategic than Trump'm first term, and more strategic than we are. Trump withdrew intelligence services to Ukraine so that we cannot say No to a peace deal. Yesterday we heard it from the Danish prime minister - that victory was more important than peace. The more we say this, the worse it gets for us. We Europeans are used to state positions of principle, but we are not well versed in the art of strategic thinking. Strategic thinking is not a quality that is rewarded in Europe.

The same goes for trade policy. We take no views on the economic consequences of Donald Trump for the US, but we do believe that they will be negative for us. We are not only dependent on the US for security, but also as an absorber of our savings and export surpluses. This is a problem we are not going to fix through more public spending. It would require deep structural reforms to the way the economy is working.

The best way to respond to Trump is to do the exact opposite of what Justin Trudeau just did, and what the European Commission is about to do. Don’t engage with the guy on his terms. Don’t hit back. Neither the EU nor Canada will win a trade war with the US. They will end up blinking first, just as they are now starting to blink in the stand off over Ukraine. We can hyperventilate as much as we like about the Trump-Zelensky standoff. But we are clearly in the weaker position – not because of Trump but because of our own complacency. The solution is to fix our underlying dependency problems. 

Arab League countries endorsed the Egyptian plan to rebuild Gaza keeping the Palestinians on site governed under a temporary technocratic Palestinian government. This is their counterproposal to Donald Trump’s plan for a US owned and build Riviera-style Gaza, where reconstruction involves moving Palestinians out to other countries.

The White House was quick to dismiss the Arab League proposal as not addressing the realities of an uninhabitable Gaza where people cannot humanely live. Does Trump’s plan sound more realistic and humane given that most Palestinians are determined to stay?

The Arab League proposal sets out a reconstruction plan over a five-year period of clearing the site and rebuilding housing and infrastructure as well as recovering agricultural land and industrial facilities, according to details outlined in The National News. The initial cost estimate is $53bn.

The plan would be accompanied by a political path towards a two-state solution. The Palestinian representation is to be unified under the Palestine Liberation Organisation, an umbrella group where the Palestinian Authority is dominant and that excludes Hamas.

So now we have two plans for the future Gaza and still no strategy of how to even get there. The US administration leaves it largely to Israel to decide what to do about the current ceasefire deal, whether they want to resume the war or not. Reconstruction is still far away.

The two plans for a future Gaza are incompatible on land ownership, displacement, and Palestinian statehood. The Trump administration threatened under their plan that they would withhold aid towards Jordan and Egypt if they refuse to accept Palestinians on their territory. But history have taught neighbouring countries that displacing Palestinians only increases security risks, rather than mitigating them.

The two plans also highlight the old divide over the two-state solution. Saudi Arabia insisted already before this plan there would be no normalisation with Israel without a path towards a two-state solution. Its position had been much softer when Trump negotiated the Abraham accords during his first term. But the stakes for Arab nations in the region has changed since the war that followed the 7 October attack. And so did they change for Israel. Netanyahu sees a two-state solution as a concession to Hamas and thus a threat to its own existence. Without a credible strategy to address both security concerns, there will not be solution any time soon.

From a US perspective, the Middle East plans are also fading next to the Ukraine/Russia efforts, where Trump does have a strategy that seems to be working out for him. The Middle East is much more complicated. It hardly featured in Trump’s speech to Congress yesterday despite some of the hostages and their families present.

A disinterested Trump might turn his attention away towards something more rewarding for him and the US. Would Trump drop the ball and leave the decisions all to Israel? Not quite. There are also various media reports that Trump had asked Russia to mediate between the US and Iran. Trump may just play it on a different plane rather than getting involved into the details on the ground. By connecting the two conflicts with each other he may even get out some more leverage in the region.

Donald Trump’s coming tariffs in April might spell disaster for Europe’s car industry. In the meantime, they have gotten a sweetener from the European Commission. It recently outlined its auto industry proposals. These include an extension of the compliance period for new emissions rules that were supposed to come into place this year.

Now car companies will be able to show compliance over the course of three years, rather than just this year. Another significant change was moving a planned review of EU car emissions rules from next year to this year. This, we think, could be a precursor to significantly changing the 2035 internal combustion engine ban, something that has already been under discussion.

It might be the case that this ends up including other options, like plug-in hybrid cars. Some European carmakers are already adjusting their own strategies to incorporate fewer all-electric cars and more plug-in hybrids. These can run electric-only, but use an internal combustion engine to extend their ranges.

While we can see why the Commission has proposed this, there are some downsides. The most obvious is moral hazard. Companies had some time to comply with this, and there are some all-electric carmakers active in Europe. They could have arranged emissions pooling, and in some cases did, with these carmakers to try and avoid the fines. Doing this disadvantages the all-electric players, who did prepare, at the expense of those who didn’t.

It also makes one wonder what the point of the targets really are. If the industry, thanks to its importance to the European economy, can basically put pressure on the Commission to u-turn via the member states, where is the incentive to follow them? Our impression is that the auto industry is now, at least politically, too big to fail, and that any targets or materially serious constraints on it should be taken with a pinch of salt.

Speaking of too big to fail, this also doesn’t solve the most serious problem the industry has. It is being outcompeted, mainly by Chinese automakers, who can bring often better and cheaper electric cars and plug-in hybrids to the market. Then the US is also putting tariffs on us at the same time. Neither is something we have much control over at the moment, and there are negatives to putting up our own tariff walls.

When any industry is too big to fail, the answer is not to feed it. Instead, it is diversification. If European politicians are scared of the car industry going under, they should ask themselves why, and try to find a long-term solution. Instead, we have more can-kicking.

This is the disruptive time where powers are realigning their spheres of influence. Not only Russia, China and the US are exerting influence on other countries and continents. Turkey too, is enlarging its own sphere in the Middle East as the now de facto protector of Syria. 

Turkey is following through on a long-term strategic plan. The historic announcement of Abdullah Ocalan, the leader of the PKK, the Kurdish Workers party, that the movement he leads is to lay down its arms and disband could have dramatic consequences to the balance of power in Syria and the regional role Turkey is playing. It could facilitate the withdrawal of US troops from Syria and challenge Israel’s presence in southern Syria. With the regional developments since Hamas's 7 October attacks, Turkey and the Kurds have a greater interest in ending their decades-old feud that has costed tens of thousands of lives since the 1980s. Still, the Kurds in Iraq and Syria have yet to follow the call. 

The PKK’s main headquarter in Iraq only partially endorsed Ocalan’s request, the cease-fire. Talks are now continuing for an eventual disarmament and disbandment of what the US and the EU consider a terrorist organisation. If Erdogan achieves this conciliation with the PKK, it would give him leverage in the US and in Europe, and change the political dynamics in Syria. 

The Kurds in Syria consider themselves not bound by Ocalan’s statement for now and put forward their demands to Damascus that would weaken central governance. But Syrian Kurds depend on US backing for their equipment. This is no longer guaranteed with Donald Trump in the White House and Congress on his side. If Erdogan manages to take the PKK conflict off the table and convince Trump that they can look after Isis prisoners in Syria themselves, the US may see no reason to stay. The Kurds in Syria may then have no choice but to integrate into a Syria governed by Ahmed Hussein Al Sharaa, and thus indirectly by Turkey. Once the Kurds are integrated militarily into the Syrian army and loosen their claims on becoming an independent region, Turkey could withdraw its troops from the Kurdish-controlled north of the country.

In the south, Israel is occupying land, and sees itself as the protector of the Druze communities. But their calculations are much more tactical, and the opposite of those in Turkey, writes Zvi Bar’el in Haaretz. Israel has an interest in a weak government in Damascus, and lobbies the US administration for Russia to keep its bases and to mitigate Turkey’s influence in Syria that it considers a threat to its own security. But even if Russia were to stay, it will be limited in operation and its presence is unlikely to stop Turkey’s influence over Syria. Some suggest that Syrian airspace, which was open to Israel based on coordination with Russia, will close up if Turkey replaces Russia as the air defence force protecting the new regime in Syria. Israel may then come under pressure to leave. A lot depends now on how the Trump administration will play this card.

Donald Trump’s energy policy is, to put it politely, a bit quixotic. On the one hand, he very clearly wants to bring oil prices down, and therefore petrol prices for American consumers. On the other, he is virtually destroying the US’s relationship with its largest foreign source of oil, Canada, and engaging in another round of sanctions whack-a-mole.

The Trump administration has kept sanctions on Russia’s oil industry from the Biden administration in place. It also recently issued new sanctions against Iran’s oil and gas sector, after soft-pedalling from the Biden administration helped lead to a material increase in Iranian oil output. Now, it is also coming for Venezuela.

Trump recently cancelled a deal that allowed Chevron to operate a joint venture in the country with PDVSA, the Venezuelan state oil company, and export that oil to the US. Chevron is currently responsible for exporting more than 25% of Venezuela’s oil output, or about 240,000 barrels per day. Without Chevron’s involvement, PDVSA would not be able to export to the US.

The first thing this could do is cause some practical difficulties for American refiners, especially in conjunction with the Canada issues. Both countries are sources of heavier-grade crude oil, as opposed to the typically lighter-grade crude that American shale producers pump out. Another source for this oil would be Saudi Arabia, handing them leverage that successive American governments have sought to reduce in the past.

Trump can try and convince Saudi Arabia to pump more, but why would it? Opec, led by Saudi efforts, has been trying, and not really succeeding, to boost oil prices at the expense of market share with a series of output cuts. More sanctions, if they do reduce the targets’ oil output, basically does Opec’s work for it.

Beyond that, there’s the fact that when you’re still the world’s largest oil consumer, it’s hard to sanction everyone. The US’s dependencies have been reduced by domestic production. But it’s still, at the end of the day, a global market. We could be in a situation where the US is then simultaneously pressuring Russia, Iran, and Venezuela at the same time. Is this really sustainable?

One might think the first sanctions to go would be the ones on Russia. But that would complicate things if Trump cannot, in fact, get a quick peace deal in Ukraine. Without the oil sanctions, he would lose an important source of leverage on the Russian government. It’s pretty clear now that Ukraine will just have to accept basically any deal in front of it. This is not necessarily the case for Russia. If the US isn’t as committed to supporting Ukraine militarily, and Russia can get its most valuable export out relatively unimpeded, where is their incentive to stop fighting?