Iran Status Update
Prospects for a durable off-ramp to the US-Iran conflict remain limited, as negotiations to re-open the Strait of Hormuz remain directed by Iran’s maximalist hardline leadership. Rather than seeking a compromise which secures its interests while appeasing Washington with some concessions, Tehran appears intent to leave no room for the US to claim a diplomatic success. Iran’s demands for unilateral control of the waterway remain a central sticking point, as do fees, and even if an agreement is reached in the coming days, differing expectations over sanctions relief, shipping governance, and the treatment of foreign vessels are likely to leave any arrangement vulnerable to collapse and renewed fighting.
Emerging World (Dis)Order
Chilean President José Antonio Kast’s economic agenda cleared its first major hurdle this week as lawmakers approved a broad package of reforms intended to reverse years of weak growth and restore Chile’s appeal as an investment destination. The legislation reduces the corporate tax burden over time and introduces incentives aimed at encouraging capital inflows, but government efforts to remove contested provisions and pending constitutional challenges mean the reforms are unlikely to take effect in the form originally envisioned.
The legislative victory highlights the ambition of Kast’s economic program—but also demonstrates its vulnerabilities to institutional roadblocks. After campaigning on a rapid return to growth and investment, the administration now faces the difficult task of convincing companies that Chile can provide long-term policy stability in a deeply polarized nation. The narrow vote and expected legal challenges risk reinforcing concerns that Chile’s policy environment remains vulnerable to political swings, potentially limiting the investment response the government is seeking.
Those domestic challenges are unfolding alongside a complicated foreign policy environment. Kast entered office last March seeking closer alignment with Washington, but a new round of US tariffs on Chilean exports has tested the political value of that relationship. Some Kast-aligned Chilean officials openly criticized Washington, characterizing the tariffs as “unfair” and “arbitrary”, complicating the ongoing trade negotiations and the bilateral relationship more broadly. The episode underscored the importance of Chile’s expanded trade network, particularly with Asian partners.
Despite warmed Santiago-Washington relations since Kast’s election, Chile has maintained engagement with Beijing, reflecting the reality that China remains the country’s largest commercial partner. In fact, Kast met with the Chinese ambassador in Santiago only one day after being informed by the US Trade Representative of the new 12.5% tariffs levied on Chilean goods by Washington. Indeed, for Kast, the challenge is balancing closer ties with the US while protecting the export relationships that underpin Chile’s economy—all while demonstrating to foreign investors that his domestic reforms can survive political and institutional challenges at home.
Weekly Wildcard
Indonesia is beginning to assert direct control over the global nickel trade, creating a new source of uncertainty for the companies that depend on the country’s supply of battery materials. A temporary halt by Chinese industrial giant Tsingshan on mixed hydroxide precipitate (MHP) exports this week highlighted the growing leverage Jakarta has gained over a sector that supplies a significant share of the world’s electric vehicle battery chain.
The government’s strategy is centered on placing the state between producers and international buyers. President Prabowo Subianto’s decision to make Danantara—Indonesia’s sovereign wealth fund—the required intermediary for key commodity exports has given Jakarta oversight over commercial flows that were previously managed primarily by private companies. Instead of restricting production outright, Indonesia is creating a mechanism to shape export decisions, negotiate pricing power, and capture more value from its dominant position in the nickel market.
The shift creates new risks for global battery manufacturers that built supply strategies around Indonesian nickel. Chinese processors, Korean battery companies, and Western automakers have all increased reliance on Indonesian MHP as they seek alternatives to concentrated supply chains elsewhere. But companies that viewed Indonesia as a route to diversify away from China now face a different challenge—access to a non-Chinese supply source that is increasingly controlled by the Indonesian state.
Indonesia is not simply attempting to keep more revenue from its mineral exports—it is seeking greater influence over the terms under which foreign companies participate in its resource economy. Recent measures to curb nickel production while tightening state oversight of exports suggest Indonesia is prioritizing its influence over global supply and pricing rather than maximizing export volumes and short-term revenues. If successful, the approach could offer a blueprint for other resource-rich countries seeking to extract greater strategic value from critical minerals.
