All’s Quiet on the Western Front?: 2025.07.17
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Today we look at:
The Trump tariff on Indonesia; as the Southeast Asian countries as a group are moving closer to the European Union to reduce their trade relation with the US
The continued U.S. – Israel Alliance’s slaughter and starvation of civilians in Gaza
Israel’s attacks on the Bekaa Valley in Lebanon, which killed at least 8 people
Syrian unrest where Israel’s military is intervening and where we explain why Syrian civil war is in Israel’s strategic interest and why its military intervention signals an intent to break up Syria and establish a Druze client state
HSBC’s decision to leave the Net Zero Banking Alliance (NZBA), which it helped found back in 2021
Macroeconomics & Technology
The U.S. and Indonesia have agreed a tariff deal, writes Nikkei Asia. Trump said that under the deal, the U.S.’ "reciprocal" tariff rate on Southeast Asia's largest economy will drop from the previously threatened 32% to 19%. In return, Indonesia committed to buying $15 billion worth of U.S. energy, $4.5 billion of American agricultural products and 50 Boeing jets. Trump also noted that “transshipments” will be charged the higher tariff of the country of origin. As we have noted before, this specifically targets China which is Indonesia’s closest trading partner and biggest investor.
Nevertheless, Southeast Asian countries are moving closer to the European Union, seeking a reliable trade partner in the face of steep tariffs imposed by the Trump administration, writes Nikkei Asia. This past Sunday, Prabowo Subianto, President of Indonesia, and Ursula von der Leyen, President of the European Commission, reached a political agreement to move ahead on a comprehensive economic partnership agreement (CEPA). The finalized deal is expected in September. Under terms of the deal, tariffs would be eliminated for 80% of Indonesian exports to the EU within one or two years of the agreement coming into effect. Other ASEAN countries are also engaging in trade negotiations with the EU to diversify export destinations. Thailand completed its sixth round of trade agreement talks with the EU at the end of June, and has indicated plans to conclude the negotiations by the end of the year.
Geopolitics
Gaza
Israeli strikes killed more than 90 Palestinians, including dozens of women and children, and wounded at least 278, in a 24 hour period, writes the Associated Press. One of the deadliest strikes hit a house in Gaza City’s Tel al-Hawa district and killed 19 members of the family living inside. In addition, UNRWA, the main U.N. agency caring for Palestinians in Gaza, said it had screened nearly 16,000 children under age 5 at its clinics in June and found 10.2% of them were acutely malnourished, writes the Associated Press.
Lebanon
On Tuesday, Israel launched a series of strikes in Lebanon’s eastern Bekaa Valley, writes the Associated Press. For reference, EPM notes the Bekaa Valley is not in Lebanon’s south, but significantly north of the Litani river. Lebanon’s state-run National News Agency said that altogether the strikes killed 12 people and wounded eight, including seven people at a Syrian refugee camp. Hezbollah said one of the strikes hit a rig used to drill water wells. The Israeli military said it had attacked a number of Hezbollah controlled compounds.
Iran
The Russian Foreign Ministry has denied an Axios report which claimed that President Vladimir Putin had told U.S. and Iranian officials that he supports a nuclear agreement that would prohibit Iran from enriching uranium, writes the Moscow Times. The Axios report was covered by EPM in our Monday update. Russia’s Foreign Ministry called the claims "part of a new political smear campaign" aimed at increasing tensions over Iran's nuclear energy activities. Iran’s Tasnim news agency has also cited a top official who said that Tehran had received no communication from Moscow about any proposed deal barring uranium enrichment.
While Russia might not have joined the U.S. – Israel Alliance against Iran, Europe has. The Associated Press writes that the United Kingdom, France and Germany have agreed to restore their sanctions on Iran by the end of August if there has been no concrete progress on a nuclear deal. The matter had been raised in an earlier phone call between U.S. secretary of state Marco Rubio and the foreign ministers of the three countries.
Syria
Fighting has renewed inside the country between different groups. The Associated Press writes that in southern Syria Bedouin tribes have been clashing with Druze militias. According to the Syrian Observatory for Human Rights, a U.K.-based monitor, the conflict started with the kidnapping and robbery of a Druze vegetable seller by members of a Bedouin tribe, leading to tit-for-tat attacks and kidnappings. Government security forces were sent to restore order on Monday, but instead of calming things down this appears to have caused an escalation, especially after Israel started to target these forces. Israeli Defense Minister Israel Katz said in a statement that the Israeli military “attacked targets in Syria as a message and a clear warning to the Syrian regime — we will not allow harm to the Druze in Syria.” EPM notes that this active military support for the Druze community in Syria by Israel is likely to further ostracize them. And that, we suspect on the basis of the history of Israel’s actions in neighboring countries, is the real objective behind Israel’s “concern” for the wellbeing of the Druze. It justifies the kinds of interventions in other countries that lead to states failing, which in the Israeli view provides security for the State of Israel.
The Syrian government has been unable to restore order, and fighting in the majority Druze town of Sweida continued into Wednesday, writes the Associated Press. Israeli Defense Minister Israel Katz said in a statement that the Israeli army “will continue to attack regime forces until they withdraw from the area — and will also soon raise the bar of responses against the regime if the message is not understood.” EPM notes that this Israeli message signals an Israeli desire to break up Syria and to establish a “Druze state“.
Other
HSBC has formally left the Net Zero Banking Alliance (NZBA), writes The Guardian. HSBC’s decision follows a wave of exits by big U.S. banks. Six of the largest banks in the U.S. – JP Morgan, Citigroup, Bank of America, Morgan Stanley, Wells Fargo and Goldman Sachs – left the NZBA after Trump was elected. HSBC was a founding member of the NZBA at its launch in 2021.