Flashpoints in a Fragmenting Eurasian Landscape
From trade spats to regional strife, Eurasia grapples with mounting pressure on both economic and geopolitical fronts.
Dear Readers of Eurasia Dispatch,
Welcome to the latest issue of the newsletter! There is a lot to unpack after this tumultuous week.
European Central Bank chief Christine Lagarde visited Beijing, where she talked about derisking and the peril of coercive trade practices. The EU imposed temporary duties on wood products imported from China, while Beijing extended its probe into pork imported from the EU. Tensions erupted into hostilities between Israel and Iran, triggering mixed reactions from leaders across Eurasia.
Without further ado, let’s get down to business! This week, Eurasia Dispatch covers:
Institutions
Member states
Business
Commentary
INSTITUTIONS
ECB’s Lagarde in Beijing
The European Central Bank President Christine Lagarde visited Beijing last week and gave a speech at the People’s Bank of China, the Asian country’s central bank. She argued that coercive trade policies are counterproductive and could cause serious damage to the economy. She also pointed out that “a certain degree of de-risking is here to stay,” because most countries prefer to avoid dependence on other states in strategic industries. Lagarde further asserted that Europe and the U.S. will protect its key industries from ‘what increasingly appears to be a conscious policy of flooding the world with’ Chinese goods. Lagarde also met with Chinese Premier Li Qiang, and the two sides agreed to set up a meeting mechanism for the central bank governors of the EU and China.
The Eurasia Dispatch Take: The ECB President’s comments are good for managing Chinese expectations regarding the trajectory of Brussels-Beijing ties. For instance, China dislikes the EU’s triptych framing of China as a ‘partner, competitor and systemic rival’, as it seeks to emphasise partnership. China similarly dismisses the concept of de-risking and often equates it with decoupling. However, Lagarde’s comments in Beijing suggest that the EU is adamant on trade diversification and a nuanced partnership. Acknowledging the EU’s related priorities is crucial for China as the two sides are gearing up for a high-stakes summit next month, that will likely involve negotiations on tariffs between the two sides.
Eurasian reactions to Israel-Iran hostilities
On 13 June, Israel said it executed airstrikes on military and nuclear targets in Iran. Revolutionary Guards chief Hossein Salami and armed forces chief of staff Mohammad Bagheri died in the attacks. Israel's ‘Defence Minister Israel Katz described the Israeli action as a "pre-emptive strike". The [Israeli] army said intelligence showed Iran was approaching a "point of no return" on its nuclear programme.’ Iran retaliated, and tensions remain high.
The U.S. reportedly knew in advance of the attacks, and Secretary of State Marco Rubio’s initial reactions did not include support or criticism of Israel’s actions. As hostilities continued, U.S. President Donald Trump urged Iranians to evacuate Tehran and left the G7 summit ahead of schedule due to the situation. According to a Euronews report, Europe was caught off-guard by the attack. European leaders and the EU called for restraint and diplomacy after the strikes.
China’s top diplomat Wang Yi called Israel’s strikes “unacceptable”. The Shanghai Cooperation Organization (SCO)—a Eurasian intergovernmental group including China, Russia, India, Kazakhstan, Iran, and other states—similarly condemned Israel’s actions. India, however, chose to distance itself from the SCO’s condemnation and called for restraint, dialogue, and diplomacy.
The Eurasia Dispatch Take: The hostilities created yet another schism between global actors. The reactions are indicators of a broader polarisation of the international system marked by the rise of unilateralism and regional conflicts. This global trend may become more pronounced if states continue pursuing their security interests via military means.
MEMBER STATES
Germany on the U.S.-China trade talks and rare earths
Last week, the U.S. and China concluded trade negotiations in London. Their agreement entailed China loosening controls over the export of rare earth minerals and related magnets, and the U.S. allowing Chinese students to stay at its universities. They also agreed on 55 per cent of tariffs on Chinese products imported to the U.S. and 10 per cent of import levies collected by Beijing on U.S. goods. The agreement is still subject to approval by U.S. President Donald Trump and Chinese President Xi Jinping.
German Chancellor Friedrich Merz welcomed the deal. He stated that the agreement does not harm Europe—on the contrary, “it is another conflict that has been resolved.”
The Eurasia Dispatch Take: Merz may be a bit too optimistic. The VDMA industry association, a German engineering group, recently asserted that ‘German plant and equipment makers are increasingly struggling with supply bottlenecks for rare earths,’ and that they are competing with the U.S. for access to these materials. It is unclear if the pressure on EU companies is going to worsen in the coming months. On the one hand, the EU seems to have secured expedited rare earth export clearances from Chinese authorities. On the other hand, China also agreed to facilitate rare earth exports to the U.S. This may complicate the EU’s access to these resources, if the administrative burden of providing clearances is too heavy on Chinese authorities.
BUSINESS
EU-China trade showdown: Pork anti-dumping investigation vs plywood duties
On 10 June, China’s Ministry of Commerce announced that it prolonged its anti-dumping probe into EU pork imports because of the case’s complexity. The investigation started in June 2024, based on an application submitted by the China Animal Agriculture Association. The case was supposed to be concluded on 17 June this year, but it got extended until 16 December.
One day later, the EU’s temporary duties of up to 62.4% on plywood hardwood imports from China went into effect. The duties were imposed as part of the EU Commission’s ongoing anti-dumping investigation that was triggered by a complaint by the Greenwood Consortium, an interest group representing producers in Poland, Finland, France, and the Baltic states. The related measures will reportedly include a monitoring mechanism that traces the imports of modified products, to counter circumvention efforts.
The Eurasia Dispatch Take: The two sides now have probes and duties in place across a variety of industries: electric vehicles, brandy, dairy, and tyres. China’s export controls of certain rare earths and related magnets are another major trade concern. Even if the two sides make breakthroughs at the upcoming EU-China summit next month, it is unlikely that they will solve all of these problems. Based on recent reporting, China’s top priority is to solve the electric vehicle tariffs problem, while the EU seems to be interested in solving the brandy tariff question and gaining steady access to rare earth resources from China. If Beijing’s and Brussels’s respective trade talks with Washington go awry, they may get more inclined to offer concessions next month.
COMMENTARY
C.E.A. Global Initiative founder: China and Europe should pave the way to ‘golden age’ for humanity
Founder of the China-Europe-America Global Initiative David Gosset gave a keynote speech at the China Europe International Business School on 8 June in Shanghai. He ‘rejected narratives of deglobalisation and confrontation’ and criticised unilateralism and hegemonic behaviour. He argued that Europe and China should provide the world with an alternative, based on cooperation and shared responsibility. Commenting on U.S. Defense Secretary Pete Hegseth statement at the 2025 Shangri-La Dialogue, he talked about the risks of framing China as a military threat. He also expressed hope that Europe and China will address their differences and deepen their strategic partnership at the upcoming EU-China summit.
The Eurasia Dispatch Take: Deglobalisation and confrontation are not just narratives that can be wished away. They are events happening on the ground: the U.S. imposes punitive tariffs at will and regional conflicts are proliferating. The EU and China are major actors in the international system, but even their combined capabilities have been limited in countering these trends. However, jointly cooperating with Latin America, Africa, South Asia, and Central Asia could mitigate the negative impact of the ongoing turbulence.
Roadblocks in the EU’s India Pivot and the EU-China-India triangle
Euractiv published an article last week that discussed the challenges in ‘Europe’s push to reduce its strategic dependence on Beijing by pivoting’ to India. First, China is deeply ensconced in global supply chains and it cannot simply be replaced by another state merely because they are similar in size. For instance, ‘India’s share of global industrial production will rise from just under 2% today to around 3% by 2030; China’s portion, meanwhile, is expected to surge from 30% to 45%’, and those numbers cannot be dismissed just because priorities changed. Second, the EU and India have their fair share of problems among themselves, such as India’s protectionist approach to EU products and Brussels’s green standards that could lead to steep duties on India’s exports to the EU. Long story short, the EU and India have commercial and political imperatives to deepen ties, but their enhanced cooperation is unlikely to be the panacea to the EU’s strategic dependency problems.
The Eurasia Dispatch Take: Any effort to ‘replace’ Beijing in supply chains is wishful thinking. Diversification of trade partners is a more achievable goal. India is a valuable partner to the EU given the vast size of its market and it also has significant resources, such as rare earth reserves. The same argument applies to Central Asia, Latin America, and Africa. Instead of fundamentally altering ties with China, the EU would benefit from stable, balanced—less dependent—ties with Beijing while enhancing cooperation with third regions.
BEFORE YOU GO
Trade tensions and regional hostilities shaped the Eurasian discourse in the past weeks. Developments on these fronts will reverberate across global politics, trade, and defence. If you are interested in how these processes evolve further, stay tuned for further updates in the next issue of Eurasia Dispatch! Thank you for reading, and we’d love to hear your thoughts—feel free to share your insights and feedback.
Until next time,
Eurasia Dispatch
P.S. As always, I am grateful to my editor.
Disclaimer: I manage this Substack account independently, in my personal capacity. The views expressed are my own and do not represent the views of my affiliated institutions.