Geopolitical implications of the Iran deal and G7 dynamics (with Guy, Tom)

Is this G7 now dominated by what comes next when it comes to the Strait of Hormuz? How did the narrative change overnight?

Guy

Karen von Hippel

Tom was correct in using the term interim. We just don't know what the deal looks like. The deal only talks about cessation of hostilities, but it's not going to be the floodgates open because of demining and other challenges. It's early days.

The deal won't be signed until Friday, by then the G7 will be over.

We never thought the Strait of Hormuz could be closed, but we live in a world increasingly where chokepoints matter. How should the G7 think about that?

Guy

Karen von Hippel

This is an own goal by Donald Trump. Other countries now know that if they have control over a narrow strait, they can use that for leverage. We're dealing with a new era of geo-economic threats that didn't exist before.

The other own goal was when Trump slapped huge tariffs on China and they said 'fine, no critical minerals for you.'

The spending on defense by European countries. How quickly is that conversation evolving about what you spend that money on?

Tom

Karen von Hippel

You can divide Europeans into two groups: northern Europeans/Scandinavians/Baltics/Poles who understand the need to spend more, and everybody else (Brits, French, Southern Europeans) who are not as convinced. The challenge is convincing publics of the importance of defense and the trade-offs in social welfare spending.

That could usher in far-right parties if publics go against that trade-off.

How should G7 members ex-US be thinking about AI as a strategic asset?

Tom

Karen von Hippel

There are questions about AI sovereignty. They don't want to be too reliant on the United States and want to develop their own capabilities. The US will want them to continue to buy into US companies.

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