Recommended Weekend Reads
The Taliban Become Major Critical Minerals Dealers, How the Trump Tariffs Are Reshaping Latin America, A New US-Africa Blueprint To Counter China, And Dollar Dominance After Liberation Day
July 4 - 6, 2025
Below are the reports and studies we found of particular interest this past week. We wanted to share them with you in the hope they will be useful to you. Please let us know if you have any questions. We hope you have a wonderful weekend.
Critical Minerals
Minerals for Recognition: The Taliban’s Shadow Diplomacy Geopolitical Monitor
Since the Taliban’s return to power, Afghanistan’s mineral and extractive industries have assumed growing strategic importance in the broader context of sustaining the country’s fragile economy. The abrupt loss of access to international financial assistance, the freezing of foreign-held assets, and the enforced curtailment of opium poppy cultivation have pushed the Taliban leadership to refocus on domestic resources, particularly the country’s vast mineral reserves. Yet, there is little indication that the Taliban intend to pursue full-scale exploitation or large-scale export of these resources in the immediate term. Rather, their approach appears deliberately cautious, treating Afghanistan’s natural wealth less as a means of short-term economic gain and more as a tool of political leverage and diplomatic bargaining on the international stage.
Trans-Atlantic Critical Mineral Supply Chain Cooperation: How to Secure Critical Minerals, Battery and Military Supply Chains in the European Theatre Instituto Affari Internazionali
Abstract: The intensifying US-China competition has profound implications for critical mineral supply chains (CMSCs), affecting trade, export controls and market dynamics. US and European firms face difficulties competing with China’s dominant market position, which has led to shutdowns and restricted access to essential materials. China’s state-backed industrial policy, integration of the Communist Party into commercial operations and use of market power for geopolitical leverage have enabled it to control key mineral-technology value chains, complicating international cooperation and raising security concerns. The global push for decarbonization has increased civilian demand for critical minerals, particularly in new energy technologies, outpacing defense sector needs and limiting its influence in securing resources. In response, both the US and EU have developed strategies to mitigate vulnerabilities in their supply chains, recognizing the need for diversified control, crisis management mechanisms and enhanced cooperation. The war in Ukraine has further underscored the urgency of strengthening the defense industrial base, with case studies illustrating the material demands for military technologies such as FPV drones. Drawing on the experiences of South Korea and Japan, and fostering transatlantic cooperation through trade agreements and intelligence sharing, the US and Europe can build greater resilience against geopolitical disruptions and the concentrated, mercantilist nature of current CMSCs.
Three U.S. Government Lists: Which Minerals Are the Most Critical? CSIS Critical Minerals Security Program
This interactive report reports on the existence of multiple, inconsistent lists of which minerals the US government considers most critical. The net effect is unnecessary complexity and uncertainty, undermining efforts to encourage private investment across critical mineral supply chains both domestically and internationally. Critical minerals are defined as resources essential to national security and economic competitiveness. However, the U.S. government lacks a single unified list of these minerals. Instead, the Departments of Defense, Energy, and the Interior each maintain their own distinct lists based on factors such as supply chain vulnerabilities and the minerals’ importance to national security, economic resilience, and manufacturing. Among the 70 materials identified across these lists, only 13 are classified as critical by all three agencies. These lists play a significant role in determining eligibility for federal funding and incentives, including Defense Production Act Title III grants, Inflation Reduction Act tax credits, and Export-Import Bank financing. Beyond funding implications, these lists send powerful signals to the private sector about which minerals are considered strategic priorities for U.S. investment.
Geoeconomics
Dollar Movements and Dollar Dominance in the Aftermath of Liberation Day Steven Kamin/AEI Economics Working Paper
Abstract: This paper provides econometric evidence in support of the view that following President Trump’s chaotic tariff announcements on Liberation Day, April 2, the dollar switched from being a safe-haven currency that appreciates in times of market volatility to a “risk-on” currency that moves inversely with volatility. We estimate an equation for daily changes in the DXY dollar index, using as explanatory variables daily changes in US-foreign interest rate differentials and the VIX, a measure of market volatility. We find a significant break in the relationship between the dollar and its primary determinants after Liberation Day, with the dollar falling below its predicted level. More importantly, in the two months after Liberation Day, the sensitivity of the dollar to the VIX shifted from positive to negative, suggesting that global investors ceased to treat the dollar as a safe haven in times of stress. Most recently, the dollar’s sensitivity to the VIX has retraced some of its earlier decline, but whether this signals a return of the dollar’s safe-haven status remains to be seen.
A Trump Risk Premium in the Dollar Robin Brooks Substack
The standard rationale for why the Dollar has fallen so sharply - it’s down 11 percent so far this year - is that chaotic policy making by the Trump administration is causing a risk premium to build. Here’s the thing: there’s no empirical evidence that this is in fact what’s going on. Instead, the fall in the Dollar maps almost entirely into interest differentials. This means markets are trading a much more conventional view, which is that tariffs will drag down US growth, causing the Fed to be more dovish than other central banks. As I’ve noted previously, I disagree with this view. Even if there is a hit to growth, tariffs are inflationary for the US and deflationary for everyone else. That should keep the Fed more hawkish than its G10 peers, not more dovish.
A New Impediment to Balance of Payments Adjustment: Underwater Bonds Brad Setser/Council on Foreign Relations
A few years back, Silicon Valley Bank (and a few other regional banks) got into trouble because they held too many long-dated government bonds. Government bonds are generally a safe investment; advanced economies that borrow in their own currencies don’t usually default on their own debt. But the market value of long-term bonds fluctuates with interest rates, and low-yielding bonds bought before COVID and during the first year of COVID fell in value when inflation took off and the Federal Reserve started raising interest rates. A 10-year bond bought at par with a 2 percent coupon back in 2018 (or a coupon well below that in 2020) isn’t going to be worth its face value in the open market now. A coupon of 2 percent or so is just too low a rate on a bond that still has a few years to maturity. The same is true for long-term Agency bonds (the underlying mortgages now won’t be refinanced, so the long really is a long-term bond) and long-term corporate bonds. This, though, isn’t just a problem for U.S. regional banks.
Africa
Critical Minerals, Fragile Peace: the DRC-Rwanda Deal and the Cost of Ignoring Root Causes CSIS
On Friday, June 27, in Washington, D.C., the foreign ministers of the Democratic Republic of the Congo (DRC) and Rwanda are set to sign the Critical Minerals for Security and Peace Deal, a United States–brokered agreement aimed at calming tensions in a region affected by violence and resource exploitation. This historic accord, which seeks to stabilize the eastern DRC, is the product of months of quiet diplomacy led by Massad Boulos, the U.S. special adviser for Africa. Its objective is to facilitate cooperation over the extraction and trade of rare earth minerals in exchange for security to offset China’s dominance in this sector. Initiated by Congolese President Félix Tshisekedi, this agreement comes amid renewed insecurity caused by the resurgence of the March 2 Movement (M23) militia, which since 2022 has seized significant territory in North and South Kivu provinces, including the strategic cities of Goma and Bukavu. These provinces are not only home to millions of civilians but also hold some of the world’s richest deposits of rare earth minerals—essential for everything from electric vehicles to smartphones. Despite the diplomatic celebrations, the deal raises questions. While mineral wealth is a driver of the conflict, it is not the root cause of the violence.
A New US-Africa Blueprint for Trump Amid China’s Rise Brookings
While Africa has historically been sidelined in American foreign policy priorities, the continent is moving rapidly to the center of specific U.S. global priorities. Driven by demographic growth, critical mineral reserves, and expanding markets, Africa offers one of the clearest arenas where American interests and opportunities align. The Trump administration now faces a critical opportunity to craft a forward-looking strategy that delivers on its own foreign policy priorities: reclaiming leadership in global trade (prosperity), advancing American influence in a competitive world (power), strengthening regional and global stability (peace and security), and promoting core American ideals (principles). Given the scale of opportunity, this brief presents actionable recommendations on how the administration can act decisively across these four pillars and why doing so is both strategically sound and urgently needed.
South Africa and Nigeria need divergent strategies for the informal sector ISS/African Futures
Nigeria and South Africa are Africa’s largest economies, and their future development has a significant impact on their sub-regions and the continent as a whole. The African Futures and Innovation team at the Institute for Security Studies (AFI-ISS) recently completed and presented an updated forecast for Nigeria to the office of the Vice President in Abuja, as well as presented an updated forecast for South Africa at a closed, expert meeting hosted by In Transformation and the Gordon Institute for Business Science. In completing these forecasts, the team was struck by the evidence of lackluster development in Southern Africa compared to West Africa. As one metric of slow growth, Southern Africa registered the highest unemployment rate globally at 33.2% in 2024, using data from the International Labour Organization(ILO). Eswatini, South Africa, and Botswana rank 1st, 2nd and 5th in the world on unemployment rates. In South Africa, the previous systems of mining, education and business were premised on the extraction of maximum profits and burdened the country with huge inequalities. With poor-quality education and limited entrepreneurship, employment is particularly low, and inequality is exceptionally high. In fact, on both these counts, South Africa fares the worst globally.
Burkina Faso, the World's Disinformation Lab Foreign Policy Research Institute
Burkina Faso is many things. The country is considered to be the epicenter of global terrorism today. It is ranked number one on the Global Terrorism Index Scale (2024), marking the first time in the thirteen years since the database’s inception that Iraq or Afghanistan have not topped the index. The country has been rocked by jihadist attacks on major towns like Djibo, with jihadists using drones and anti-aircraft guns to fight off government forces. However, the regime’s propaganda forces paint Burkina Faso in a very different light. All appears well in the digitally constructed alternate reality of President Ibrahim Traoré. In deepfake videos seen by millions worldwide, the country’s president is beloved by international stars such as Justin Bieber and Beyonce. Never mind that these stars have likely never heard of Burkina Faso, nor know anything about the country’s junta president. Traoré’s alternate reality represents an unsettling new world, one in which government-dominated social media attempts to balance the reality of societal collapse.
Americas
How US Tariffs are Rewiring Latin American Trade Americas Quarterly
On April 2, the U.S. tore up the trade rulebook it helped create, as the White House implemented sweeping tariffs that redefined how the world’s largest economy does business. Nearly all countries now face a 10% tariff, and higher individualized rates of up to 50% were also imposed before the Trump administration issued a 90-day pause, set to expire on July 9. Latin America must now decide whether to double down on the current system, where the U.S. plays a dominant yet unpredictable role, or to embrace regional integration and economic diversification with Asia and Europe to hedge against future shocks. Depending on national policy responses and the evolution of bilateral trade negotiations, the aftermath of “Liberation Day” could open alternate pathways for economic growth, foreign direct investment (FDI) and trade.
American Pride Slips to New Low Gallup Polls
A record-low 58% of U.S. adults say they are “extremely” (41%) or “very” (17%) proud to be an American, down nine percentage points from last year and five points below the prior low from 2020. The 41% who are “extremely proud” is not statistically different from prior lows of 38% in 2022 and 39% in 2023, indicating most of the change this year is attributable to a decline in the percentage who are “very proud.”
