As the war enters its second month, we find ourselves at a moment of maximum uncertainty. The Strait of Hormuz is besieged by missile launchers. The oil price has surged. America’s Nato allies are balking at Trump’s demands for help. Trump has announced a five-day postponement of strikes on Iranian power plants, claiming that Iran and the US are now in peace talks — only for a senior Iranian official to deny that such talks are taking place. All the while, domestic pressure is mounting on Trump: his allies want him to finish the job or get out.

Will Trump double down to achieve a complete and unquestionable victory, perhaps through a territorial takeover of the Strait of Hormuz? Or will he claim the action he’s already taken as a total win, blame his allies for failing to secure the peace, and walk away? Will the global economy ride out the chaos — or should we expect recessions?

With these questions in mind, the Swift Centre has consulted its forecasters on what is likely to happen next.

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1. Will the US send in the army?

If President Trump wants to secure a clear victory, the most urgent question facing the Pentagon is whether aerial dominance is sufficient. If not, then does the US commit significant troops — not just special forces, but a brigade — to secure critical strategic territory? A ground war would be highly unpopular with most Americans — but it might be the only way to destroy the remnants of Iran’s nuclear program or control the critical supply chain through the Strait of Hormuz.

To analyze the prospects of a ground war, the Swift Centre professional forecasters were asked about the likelihood that the US will deploy more than 1,000 troops into Iran before May 31st 2026 — providing a median forecast of 30%.

The forecasts were made before Trump claimed that peace negotiations were underway, but they take into account the President’s volatility. Of particular significance is Trump’s statement, when asked about the prospects of a ground war, that “nothing is off the table”.  

As one forecaster observed: 

“The simple fact that the door was not closed was a meaningful turning point. Previous presidencies (including 45th) had not hesitated to rule it out even if that meant losing some strategic advantage.”

That the 11th and 31st Marine Expeditionary Units (MEUs) are en route to the region has added weight to this possibility. These units, though relatively small, are designed for the kind of targeted territorial seizures now being discussed in Washington. Forecasters are particularly focused on the crown jewel of Iran’s oil export infrastructure: Kharg Island.

“[The deployment of 1,000 troops on Iranian soil] is most likely to happen if the US tries to seize Kharg Island or secure the Strait of Hormuz… Strikingly, a thousands-strong Marine Expeditionary Unit (MEU) has been dispatched from Japan to the Middle East. It will arrive in the region well before May 31.”

Some suggest Trump has held an obsession with the island for decades, citing a 1988 interview where he claimed “One bullet shot at one of our men or ships, and I’d do a number on Kharg Island. I’d go in and take it”.

But a large commitment of American troops would entail significant risks — and the taking of territory would not necessarily bring the US closer to achieving its goals. As a more skeptical forecaster put it:

“It is very difficult to determine what military objective would be simultaneously risk tolerant for political leaders and effective in changing the political will, economic conditions, or combat conditions to warrant using them to attempt to take any territory.”

Ultimately, President Trump needs to weigh his priorities for this conflict in the context against the political risks in an election year. One forecaster put it bluntly:

“Does he have the guts to send over a thousand soldiers though?… That’s bound to bring a high number of coffins back home, and this is not going to look good six months before the midterms”.

2. For how long will the Strait of Hormuz be at a standstill?

The Strait of Hormuz, being the world’s most critical economic choke point, is being held hostage by Iran. The IRGC has calculated, correctly, that if it can hold up the shipping, it can cause worldwide economic havoc, thus creating leverage for itself.

So far, the strategy seems to have been effective. The International Energy Agency has already stated that this war is causing the largest ever disruption to oil markets and that oil flows will take months to recover after the war ends. If Trump seems more interested in peace talks, it is probably at least in part because he fears that Iran can inflict economic pain on the US and its allies.

We therefore asked our forecasters how long it would take for the Strait of Hormuz to return to a “normal” flow of traffic following a US withdrawal or indefinite cessation of military action. Our yardstick for “normal” was the point when the seven-day average of ship arrivals reaches 60 per day, as reported by IMF Portwatch.

The result was a median forecast of three weeks. On paper, a three-week lag sounds manageable. However, the distribution of our forecasts reveals a worrying long tail. The forecasters believe there is a 90% chance the Strait will be back to normal within eight weeks — but that leaves a 10% chance that the disruption could last even longer than two months. The physical and legal friction of war cannot be wished away by a presidential decree or a declaration of victory. As one forecaster noted:

“The requirements are: 1) Demining the area, 2) insurers and carriers agreeing to resume transit and ships physically getting back to the Gulf, and 3) about seven days of high enough traffic to build the moving average”.

In other words, there is no switch enabling the world to go from zero to “normal” in only a few days.

Beyond the logistics, there is a deeper risk: that the cessation of military action does not equate to a restoration of the status quo. Forecasters are weighing the possibility that the Islamic Revolutionary Guard Corps (IRGC), having survived the initial US onslaught, permanently weaponizes the Strait. One forecaster noted:

“If the IRGC survives, which is the most likely scenario… They will instead see it as an opportunity for leverage on their enemies and will act to control their access. With that in mind, I think they will set it up as a toll gate, charge ships for the privilege, and be selective as to who they let pass.”

The longer the war goes on, the greater the risk to infrastructure that would be required to get the supply chain back to normal levels. A forecaster who felt the most likely scenario was a fast reopening warned that it could take up to 12 weeks, noting the possibility of the Strait being heavily mined. The same forecaster warned that it would be in the Iranian regime’s interests to slow down the reopening.

A toll gate would be a nightmare scenario for global trade. It would place a tax on the West while favoring Iran’s allies, like China and India, whose ships have already begun to trickle through the Strait again. For Trump, this creates a secondary dilemma: walk away and allow the value of the Strait to be extracted by Iran, or stay and commit to the very type of “forever war” he has spent his political career railing against.

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3. Will the war cause a recession in the West?

The ripples of the Iran conflict are already washing against the shores of the world’s largest economic blocs. European economies, having failed to make a quick recovery from the Covid pandemic, were already struggling with the effects of the war in Ukraine, and are vulnerable to the fallout from the war in Iran — not least because the EU has failed to secure its own energy supply. A key question, then, is: will the US or the EU fall into a recession in 2026?.

The Swift Centre’s current aggregate forecast places the likelihood of such a recession at 35%. While this might not yet be a coin-flip, it represents a dramatic elevation above the historical base rate — estimated at around 10-15% for these regions. The key factor here is energy. As one forecaster noted:

“Europe didn’t need for the Strait to be closed in order to already have issues, so I’m pretty concerned”.

The forecasters note a stark gap in vulnerability between the two economic blocs. While the US can look to its own domestic petrochemical resources to smooth out price shocks, Europe remains perilously exposed to the flow of gas and oil from the Persian Gulf. 

“The EU bloc is more vulnerable than the US with growth being anemic anyway and [its] dependency on oil from the Gulf region being higher.”

In part, the economic danger is represented by the price at the pump, which is often the focus of the mainstream news. But other risks include potential shortages of critical industrial materials such as aluminum, fertilizer and helium. Swift Centre forecasters note a troubling cocktail: the war in Iran is coming at a time when the private credit market in the US is in trouble; when there are significant structural constraints on European industrial growth; and when Trump’s own tariff policies are causing inflationary pressure on the American economy.

If the “toll gate” scenario in the Strait becomes a reality, then, the temporary shock of war could transform into a structural economic drain. One forecaster cautioned that “if Hormuz strait remains functionally closed for months… the risk rises dramatically”. The EU, facing a potential multi-year natural gas shortage, will be hoping for a quick resolution, but time is running out.

Nevertheless, there is hope. Some forecasters are more bullish on the economic resilience of the EU and US. They note that consumer demand, which remains healthy, is a reliable predictor of whether the US faces recession, and that if the US stays out of recession, then the EU generally does the same. “The US has experienced gas prices this high many times,” one forecaster wrote, “and there are many tools that can be used to manage or lower gas prices.” Perhaps Trump’s hand is stronger than his claims of peace talks would suggest.

Yet when Asian markets opened later in the night, the search for oil and gas resumed and prices came back off their lows. With traffic through the Strait of Hormuz still at a virtual standstill — and the Islamic Republic warning “the end of the war is in Iran’s hands” — the President is learning that it’s easier to start wars than finish them. Trump may now have to confront an unpleasant dilemma: either stand down US forces and allow a murderous regime its victory parade, or save face and risk derailing the world economy. 

Yet despite chatter to the contrary, such a downturn wouldn’t reprise the Seventies. Then, an oil-price spike triggered by a Middle East war caused inflation to skyrocket. Now, the impacts will be considerably more muted, for several reasons. 

First off, the world economy is much less carbon-intensive than it was back then. On average, it takes half the energy to produce a dollar of output than it did when the Yom Kippur War began, with the productivity gains most pronounced in Western economies where the shift from manufacturing to services and more efficient technologies have greatly reduced dependence on imported energy. Second, the US has gone from being dependent on the Middle East for its energy to being a net exporter of oil and gas: making it less vulnerable to external shocks. Third, many countries are well into an energy transition towards renewable energy, and so are more able to withstand a surge in oil and gas prices.

All the same, while the world is more resilient to an energy shock than it was 50 years ago, in other ways it is actually more vulnerable to the impact of an oil shock right now. To begin with, the interruption of oil flow is bigger than it was then, with one prominent industry analyst arguing that the supply removed from the market has been twice the size of any previous shock. That’s unsurprising: this time, the entire Gulf supply has been cut, representing 30% of the world’s output.

This price shock hits the world economy at a delicate time. All three of the world’s biggest economies are already showing signs of weakness. China just downgraded its growth target, recognizing that its economy is slowing, and that boosting domestic consumption will be harder and more time-consuming than hoped. Europe, for its part, is still in a funk and is being hit hard by the price rises — especially when it’s so dependent on oil and gas imports.

As for America, there are already signs that its economy has also been softening. As last week’s employment report revealed, the job market is in bad shape – 90,000 jobs lost last month and revisions to previous reports that reveal the economy hasn’t created any new jobs since last spring. Meanwhile, the GDP report for the final quarter of 2025 came in much weaker than expected, and while most economists have anticipated a bounceback once new tax cuts kick in, higher oil prices would neutralize their effects. 

While the oil shock will be less severe in the US than in Europe, meanwhile, it will nonetheless encourage inflation if oil prices stay on their current path. Even though futures markets indicate traders expect oil prices to start falling soon, they also expect them to finish the year some 25% higher than was expected just a few months ago. In other words, even in the optimistic scenario, higher prices may be here for a while.

Nor is oil the only inflationary challenge here. Because such a large share of the world’s fertilizer supply comes from the Gulf, prices here have shot up too. This will feed straight through to food prices — and because the northern hemisphere has already begun its spring planting season, these increases are already informing production costs. Farmers could adjust by using less fertilizer, particularly in developing countries, but given the tight correlation between fertilizer input and crop yield, this pretty much guarantees production shortfalls and so higher food prices later in the year.

For their part, aluminum prices have shot up too, with shipping costs rising by about a fifth. If the war lasts for more than a few weeks, supply chains may take months to re-establish, and backlogs will persist for a while, just as they did after the Covid  lockdowns. Aluminum, for example, is widely used in construction and in the production of cars, consumer electronics and packaging. Its increased cost will ripple quickly through the economy.

All this is happening as inflationary pressures rise across the US economy. Last month’s Producer Price Index came in much hotter than expected, suggesting inflation was looming. That’s as a recent report from the Institute for Supply Management found that manufacturers are expecting substantial price increases this year. At worst, then, this oil shock will raise inflation; at best, inflation won’t come down, possibly for the rest of the year. 

Either way, it will now be harder for the Federal Reserve to cut interest rates, which will provide a headwind to the stock market. Wall Street has traded sideways for four months, and is now down slightly since the start of the war. So far there’s been little sign of panic, and stocks are far from bearish. Even so, that may not offer much solace to investors. With the job market now so weak, and American consumers having run down their savings, the so-called “k-shaped” economy has been kept afloat by rich Americans spending their stock market gains.

Any interruption could therefore slow consumption in the top half of the economy, contributing to a wider slowdown. But it could also store up some even bigger problems. In particular, private equity firms were looking to a positive 2026 to finally unclog the pipeline of IPOs they need to generate the cash for shareholders. A weak stock market may affect their cash flow negatively, which could in turn force their owners, including big institutional investors like pension funds, to sell other shares to generate income. Already, we’re seeing strains in the credit part of the private equity industry, where Goldman Sachs is now pitching funds that will short corporate loans, pointing to what could be a difficult year.

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All told, the US economy, like most of the world, can ill afford a protracted shock. And while global markets won’t follow the plotlines drawn in the Seventies, they’re still at risk of decelerating if Trump’s war doesn’t end soon. 

For the moment, we must see where oil prices go. If they keep falling through the week, it may suggest that traders genuinely see an end to the war. But if they keep rising, or even stay where they are, the global economy faces a grim 2026.

To be sure, a global downturn wouldn’t necessarily mean a global recession; many economies would continue growing, albeit more slowly than before. But for developed economies, the risk of outright recessions would be high. And, given the debt burdens already accumulated by Western governments, their space for fiscal stimulus could be constrained, meaning any recession could prove quite stubborn.

In short, we must hope for peace — and soon. Unfortunately, those prosecuting this war don’t appear to have a clear idea of how to end it. Part of Trump’s challenge now is that even if he cuts and runs, the Gulf will remain volatile, which could prevent normal traffic. Israel, for its part, may continue its strikes even if the Americans step back. Without a definitive defeat for Iran, the Islamic Republic may opt to keep the Strait closed in order to secure better peace terms.

Worse for Trump personally, meanwhile, is that he’d lined up several investment commitments from regional governments, which were to benefit both the US economy and his own family. With Gulf governments understandably distracted, these plans may be put on hold.  Already, governments which had pledged hundreds of billions of dollars of US investment and offered to fund Trump’s Gaza Board of Peace are reconsidering their plans. So even if Trump wants to believe he’s exempt from the old Pottery Barn Rule — if you break it, you own it — he may now be stuck with a hell of a bill: whatever he does next.

These thefts were motivated by a phenomenon that commodity traders call a supercycle, meaning an extended period of high prices for raw materials. Since the Industrial Revolution, the world has seen five supercycles, coinciding with major bursts of economic development or war. Those manhole covers had become valuable because the price of iron, an ingredient for the production of steel, was surging. And most of the demand was coming from one country in particular. China was beginning its rise as an industrial giant.

Iron ore was the signal substance of Chinese growth — by 2024, its price was almost 1,000% higher than in 1995 — but all kinds of resources were sucked into the whirlwind: oil and coal, nickel and copper, soybeans and rubber and wool. In recent months, though, analysts have been announcing the end of the two-decade China supercycle. Chinese iron ore consumption is starting to come down, along with steel production. Some reckon its demand for oil may be peaking too. This does not mean that China will stop growing, but the economic patterns are shifting.

As Donald Trump’s tariff experiment now lurches into an escalating trade war with China, it is worth considering the epochal shift that brought us here. The supercycle was an epic chapter carved into the material substrate of our world, reverberating in every corner of the globe. It has raised China, in the space of a generation, from a poor and largely rural society to a superpower that is competing at the frontiers of technology, while controlling the most important resources for the future. It has transformed the developing world. It is implicated with the rise of Trump and, in various ways, with European weakness.

“If you don’t have steel, you don’t have a country,” declared Trump in 2018. The British government seems to agree, as it haggles with Jingye, a Chinese company, to save the UK’s last two remaining blast furnaces. These strands of history can be traced back to the start of the century, when those manhole covers were being cut up into scrap, shipped across oceans, melted down, and fed into Chinese steelmaking converters.

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What set the supercycle in motion? Until the Eighties, China still measured affluence through the humble quartet of a bicycle, a wrist watch, a sewing machine, and a radio. By the turn of the century, however, the country was reaching an inflection point. Its GDP was approaching $4,000 per person, the level at which a society’s demand for resources tends to leap upwards, as consumers buy more manufactured goods and governments build more infrastructure. Crucially, though, China’s transition was supercharged by global trade in the decades following the Cold War. With its enormous, cheap labor force, and its authoritarian government, it was perfectly positioned to become the world’s factory. Just as China was reaching the $4,000-per-head threshold, it gained admission to the World Trade Organization.

China began sucking in the world’s resources like a drain emptying a bath, turning them into vast cities and infrastructure projects as well as products to be shipped back out to the world. What happened next is best captured in numbers, since language can scarcely convey its sheer scale. In 1995, China’s economic output was one-tenth the size of America’s. By 2021, it was three quarters. Over the same period, the Chinese share of world manufacturing output went from 5% to 30%. Whereas just one-in-five Chinese people lived in cities at the turn of the century, today more than three in five do. So rapid was this urbanization that, between 2000-2010, China’s villages disappeared at a rate of 300 per day.

In 2003, China had no high-speed rail, but by 2011 it had the world’s biggest network. The country produced more steel in two years than Britain has in almost two centuries. Similarly, China poured more concrete between 2018-20 than the United States has done in its entire history. China melts and refines almost half the world’s copper supply. Chinese oil imports, at 11 million barrels per day, are more or less equivalent to the entire output of Saudi Arabia. China burns 30% more coal than the rest of the world combined, and its consumption is still rising. This means that the Chinese energy system is, by far, the biggest factor determining the future of the climate.

If global trade helped to set this engine running, the Chinese Communist Party pushed it into higher gears. Rather than directing the proceeds of growth towards social safety nets or consumer spending power, the CCP has, until recently, sought to funnel them back into material production. This strategy has helped China become utterly dominant in key supply chains underpinning the modern world, but it has also resulted in prodigious waste and, ultimately, instability. The country’s enormous, debt-swollen property sector, which went into crisis in 2021, threatens to drag the entire economy down. Dozens of concrete “ghost cities” are still awaiting residents, though some are so poorly constructed that they might collapse first. An overworked population faces one of the world’s most daunting fertility deficits. Polluted industrial areas have poisoned their residents and spawned ecological catastrophes.

But Chinese economic development has not only taken place within China itself. A large share of the resources fueling China’s growth has come from poor and developing regions of the world, whether Brazilian iron ore and soybeans, Congolese copper, Malaysian rubber, or Indonesian nickel. Many of these places have received big Chinese investments in infrastructure, and have become markets for Chinese construction firms and manufactured goods.

The results have been especially dramatic in the world’s poorest continent: Africa. China is the leading purchaser of a wide spectrum of African metals and fossil fuels, and it imports large quantities of African food products, timber and tobacco (China has almost one-third of the world’s smokers). Chinese companies, many of them state-owned, have built more than 300 dams, almost five-dozen power plants, and thousands of kilometers of roads and railways right across Africa. They have constructed an immense apparatus of pipelines and other facilities to access the petroleum reserves of more than a dozen African countries. That’s not to mention the airports, hospitals, and sports stadiums, or the nearly 200 government buildings.

This relationship has undoubtedly brought Africans some benefits, in the form of much-needed government revenues and basic infrastructure that would otherwise not exist. On the other hand, much of this development is designed for resource extraction rather than the needs of ordinary Africans. Much has been financed through exploitative debt arrangements, and much Chinese spending has merely lined the pockets of African politicians. China has stripped African forests for timber, ravaged African wildlife for traditional medicine, and supplied African governments with advanced tools for surveillance and repression.

In 2002, shortly before all of those manhole covers started to vanish, 1,000 Chinese workers arrived in Dortmund, a city in Germany’s Ruhr region. They had come to dismantle a large steelworks. Steel had been produced at the site since 1843, employing 10,000 workers at its peak. Now ThyssenKrupp, a German conglomerate, had agreed to sell the plant to the Chinese firm Shagang.

The enormous industrial edifice, complete with a seven-storey blast furnace, would be packed into crates and shipped 9,000 miles to Handan, a city on the Yangtze River north of Shanghai. It took the Chinese workforce less than a year, toiling 12 hours a day, seven days a week, with scant regard for health and safety precautions. Tens of thousands of parts were meticulously labelled and packed, down to individual screws, requiring some 50 container ships to move. The documents detailing the reassembly process alone weighed 40 tonnes.

Shagang’s steelworks in Handan — which also incorporated equipment from France and Luxembourg — is now the largest in the world. It has helped China’s steel output to surpass that of every other country combined. Back in Dortmund, the site of the former plant is unrecognizable. It has been redeveloped into the Phoenix-See, an artificial lake offering water sports, surrounded by restaurants and ranks of pristine white villas in the International Style. This post-industrial idyll has not, of course, managed to fill the void left by the city’s coal and steel sectors, which employed more than 75,000 people in 1960. When the journalist James Kynge visited Dortmund after the departure of the steel plant, he found widespread unemployment and social disintegration. “Do we look like yachtsmen to you?” a jobless steel worker asked. A local Lutheran priest had a starker message: “Our identity is lost.”

The implications of this story are not exactly what we might expect. Since 2015, when Trump first ran for the presidency, we have become familiar with his account of the “China shock”, or the impact of Chinese growth on manufacturing in the West. According to Trump, China had stolen American blue-collar jobs and grown rich selling America goods that should have been made there. Trump’s trade war against China during his first term was the opening salvo of the radical tariff program we are seeing today. This view of China’s rise has not gained the same political traction in Europe, but it has become a kind of conventional wisdom. It is because China makes everything, we assume, that areas like the Ruhr or northern England no longer do.

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But Western de-industrialization is a much longer story. It was well underway before the China shock arrived, thanks to competition from countries like South Korea and Japan, and it is still going on today. Those Chinese workers who came to Dortmund were dismantling the last vestiges of unprofitable industries which had been closing down for decades. Germany had already shifted to sectors like cars, machinery, and chemicals, where China was not initially a competitor.

The impact was greater in the US, where according to one commonly cited estimate, the China shock cost a million manufacturing jobs, and 2.4 million jobs in total, during the first decade of the century. Still, what made Trump’s pitch so politically potent was not the number of lost livelihoods, but their concentration in Rust Belt states that helped him to win election in 2016. These areas were suffering from a manufacturing recession at the time, but one that was caused by the dollar’s appreciation against the Euro, not by China.

If we want to understand how the China supercycle has reshaped and undermined the political economy of Western countries, we should focus not just on the losers, but on the winners. Chinese growth offered significant benefits to the Western business and governing classes, and these benefits ultimately made them complacent. In Europe especially, elites became tacitly reliant on China to help them avoid difficult choices. They did not want to acknowledge that their advantages were only temporary, and that they were storing up problems in the longer term.

China rose in a global trading system dominated by America, and American big business reaped the rewards. Multinationals like Apple and Walmart benefited from Chinese manufacturing, which was not only cheap but highly skilled and innovative, allowing them to develop new products and sell them around the world. In 2018, Forbes suggested that an iPhone would cost “in the $30,000 to $100,000 range” if Apple had to make it in the US, which may be an exaggeration but gets the point across. Likewise, business and financial interests poured capital into China to take advantage of the country’s growing market.

The wealth generated by this system incentivized the belief that, somehow, Chinese growth would not pose a major threat to America’s own power. This was despite clear evidence in the 2010s that China was rapidly scaling the technological ladder, while leveraging its own advantages in resources, production, and trade to secure a controlling position in the global economy. Since 2016, US politics has been overshadowed by these misjudgments, with both parties competing to appease the working class and trying to slow China’s advance.

A similar story can be told about Germany. The German car industry, which has played such an outsized role in European politics over the years, was another winner in China. The big three German carmakers — BMW, Mercedes and Volkswagen — together accounted for a quarter of the Chinese market in 2019. But they failed to anticipate that China would rapidly develop its own world-beating automotive industry, focused on EVs and software. In fact, in this and other important areas, China has now become a direct competitor. And Germany is ill-prepared for this challenge, since its earlier successes disguised an irresponsible political consensus that, in the name of fiscal restraint, has starved the country of much-needed investment.

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Even Europe’s moral aspirations look like a complacent fantasy when China’s role is taken into account. European politicians claim to lead the world in two areas: ensuring the welfare of their citizens, and protecting the environment. But in 2007, when the New York Times ran a report on the aftermath of the Dortmund steel transfer, it could already see that this model of virtuous prosperity was “illusory”. Europe’s clean air, the authors noted, was only possible because Chinese cities like Handan had become a nightmarish “miasma of dust and smoke”, poisoning their residents and driving up global CO2 emissions. Chinese steel mills produced three times more carbon dioxide than German ones, and did so in part to supply Europeans with cheap goods. As an economist at China’s Ministry for Commerce admitted, “the shortfall of environmental protection is one of the main reasons why our exports are cheaper.”

In other words, Europe built its green ambitions on the back of China’s rise as the biggest polluter in history. Britain is especially guilty here. UK governments have boasted about cutting the country’s emissions by about 40% since 1990, but when imported products are taken into account, the figure falls to 23%. Last October, to great fanfare, Britain marked the first day of coal-free electricity in its history. Yet this is basically irrelevant when global coal consumption, led by China, continues to reach new highs every year. Even the transition to renewable energy is being largely driven by coal. Everything from solar panels and electric vehicles to the metals used by green technologies are produced cheaply in China thanks to coal energy.

The solar panels now carpeting the English countryside also rely on the forced labor of Uyghur Muslims in the Chinese region of Xinjiang, where much of the world’s polysilicon is mined and processed. Meanwhile, China’s fishing fleets plunder the world’s oceans and its petrochemical factories pump out plastics for Shein garments, all to the benefit of European consumers.

Since January, the instability rippling across the world has been seen, understandably, as a result of the revolution taking place in the United States. The Trump administration has undermined old alliances and appeased old enemies, extorted trading partners and nakedly coveted the resources of other nations. Now it is trying to fashion a new economic order with the bluntest tools it can find. But even if America is responsible for the dramatic shape and pace of events, we should not lose sight of the dynamics operating in the background, dynamics unleashed by the supercycle.

The US has been trying to pivot its military forces away from Europe and towards Asia since the days of Barack Obama. The disregard in Trump’s circle for Ukraine and NATO is a more extreme expression of the same logic, which is ultimately dictated by the need to contain Chinese power. And recall that Joe Biden prosecuted his own trade war against China, raising tariffs on steel, aluminum, solar cells and EVs — the latter tariff was 100% — and tried to limit Chinese access to advanced computer chips. The Biden administration also coordinated Western investments in African railways and other infrastructure, as part of an effort to counter Chinese control of natural resources on the continent.

Likewise, Europe’s frantic efforts to regain a measure of autonomy are not only a response to Trump’s betrayal, but a belated attempt to gird the continent against Chinese economic might. The enormous investment packages recently passed by Germany’s parliament, reversing two decades of fiscal policy, are aimed at strengthening German industry as well as building defense capacity. European governments and the EU itself are reassessing environmental schemes that threaten security and economic competitiveness. Regulations on combustion cars are being relaxed, while carbon tax exemptions and the recent “clean industrial deal” actually protect polluting industries. If Europe wants to defend itself, then carbon-intensive sectors like steel may need to be subsidized after all.

Even the incipient sense of anarchy in the world is not entirely Trump’s doing. In recent decades, stability came not only from American supremacy, but from the structure of the supercycle, which anchored the world’s supply chains in China. But raw materials traders have long been gearing up for the next supercycle, which is now commencing. This one will be driven by the minerals used in renewable technologies and advanced computing. And rather than the stabilizing framework of American-Chinese cooperation, it will take the form of a competitive scramble for resources. Numerous countries will want access to lithium, cobalt, and nickel for batteries, copper for transmitting electricity, platinum for electronic components, and a host of exotic rare earths — gallium, palladium, neodymium and more — for the hardware that underpins artificial intelligence. They will also want oil for the tons of plastic that go into every wind turbine and electric vehicle.

The problem for Western countries is that, thanks to the last supercycle, China has a massive head start in this race. It controls two-thirds of all lithium and cobalt processing, almost 70% of rare earths, and around 80% of battery production. Nor is this only a material question. Western commentators sometimes imagine that industrial capacity can simply be summoned into being by relaxing planning laws and providing financial incentives. But advanced manufacturing requires deep pools of experience and skill, which China has developed over time and the West, in many areas, has not. As Apple CEO Tim Cook put it a few years ago, “in the US you could have a meeting of tooling engineers and I’m not sure we could fill the room. In China you could fill multiple football fields.”

Look at Europe’s struggle to make batteries. Last year, around two decades after those workers came to Dortmund to dismantle the steel plant, another Chinese contingent was in the Swedish town of Skellefteå. This time they had come as experts, installing machinery for Northvolt, a beleaguered company that was being billed as Europe’s battery champion. As one engineer told the Financial Times, referring to China’s skill base, “they are established and they have already done it. So they’re just better. We are late to the party.” Northvolt went bust in March. China may not have cracked advanced semiconductors, but neither has America. In Arizona, efforts to kick-start an industry with Taiwanese assistance have been bogged down by a shortage of skilled workers.

Insofar as there is a consistent logic in Trump’s economic plans, it appears that he wants the US to be more like China — to have more heavy industry, more manufacturing jobs, more exports, and more self-reliance. Yet his tariffs are a self-destructive way to pursue these goals. They have already caused American manufacturing to seize up, because it relies on the very materials that Trump is making more expensive to import. As Michael Strain has pointed out, for every job making steel in the country, there are 80 jobs that use steel to make something else. And bringing back factories back to the US is not the same as bringing back jobs, since companies will seek to avoid the higher wage costs through automation.

If the China supercycle taught us anything, it is that the ability to make things depends on raw materials and supply chains far beyond a country’s borders. For all its industrial power, China too is vulnerable in this sense, and that is why it has invested so much effort in building up global networks through its Belt and Road Initiative. Trump, by contrast, prefers threats of conquest and the erratic theater of the “deal”. To compete in the next supercycle, America will need leaders with a more subtle sense of how to run an empire.

The Brics acronym was coined more than two decades ago by Lord Jim O’Neill, formerly Goldman Sachs’s head of global economic research, and it has stuck — unlike the initial expectations for the group. Only this week, O’Neill himself suggested that the collective of emerging economies — Brazil, Russia, India, China and South Africa — has not “achieved anything since they first started meeting”.

Yet the aggregate numbers remain impressive. Jointly, the group holds $4.4 trillion in reserves. Its New Development Bank (NDB), a counterpart to the World Bank, is capitalised at $100 billion, and the Brics Contingent Reserve Arrangement (CRA), equivalent to the IMF, also stands at $100 billion. Between them, Brics countries are home to more than two-fifths of the world’s population.

Despite this success, Brics members disavow any competitive or confrontational aspirations against the developed world in general, or the G7 in particular. Sotto voce, they make it clear they regard themselves as the new kids on the block, emphasise their common purpose and extol their bountiful resources. Look deeper, however, and one finds more conflicting sub-agendas in Brics than the group lets on.

First, the two biggest players, China and India, are prickly neighbours. Apart from the ongoing 60-year border dispute that has claimed hundreds of lives, the two are highly competitive in developing world countries, particularly in the Indo-Pacific region, and are certain to clash at this year’s summit over China’s ambitions to expand the group to bring in more “non-aligned” members. Twenty-two states have formally applied to join, among them Iran, Argentina, Saudi Arabia and the United Arab Emirates. India — which, in terms of GDP, would beat France, Italy and Canada to a seat at the G7 — wants to keep things reasonably tight.

Second, embattled Russia hopes to use the Summit to push its own agendas, primarily garnering developing-world support for its imperial ambitions in Eastern Europe and driving a de-dollarisation of the international financial markets, possibly through some form of Brics currency. This might seem a forlorn hope in the short term, but it’s perhaps obliquely attainable in the distant future, through the strengthening of the Chinese renminbi against a weakening dollar. Again, India, alarmed by Russia’s putschists methods in Africa and locked into deep market relations with the US and the Middle East, is unlikely to be convinced. The absence from the meeting of Russia’s president Vladimir Putin, because of the possibility of arrest under an International Criminal Court warrant (he is expected to appear by video link), indicates exactly how embattled his country’s position is.

Third, the Brazilian and South African governments will likely pursue a narrative aimed at creating an ostensible “non-aligned” lobby in world geopolitics, inside or outside the Brics group, that is, in reality, an anti-America front, something that may become too confrontational for India’s liking. They hope, perhaps erroneously, this will play well with the punters back home. Yet the duo is unlikely to be making any of the big calls: Brazil and South Africa’s combined shareholding in Brics, if measured by nominal GDP, amounts to 7.3%; South Africa is at 1.62%, which is perhaps why O’Neill has always argued the country should not be part of the club at all.

Lastly, the Brics are divided on key issues of energy policy. Resource-poor India and China favour alternative energy systems. Russia and South Africa are prodigious producers of coal, and, in the case of the former, oil.

So, what does Ramaphosa hope to gain from this gathering of fraternal yet deeply wary confreres? He certainly hopes to use it to add weight to his public argument that, regarding the Ukrainian war, there is a middle way between blind support for the United States and Europe on the one hand, and Russia and its silent sponsor, China, on the other. Amid a resurrected Cold War, he wants a resurrected “non-aligned” movement — or, to use the buzzword, “Global South states”.

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Few in the developing world would disagree with the objective; many feel the US has acted badly in attempting to lead-pipe third-party nations into picking sides. But Ramaphosa also seeks to use the Brics Summit to promote Africa, to advance Russian interests in Africa, and to divert focus from the multiple self-induced crises that confront him at home. Sixty-nine heads of Global South states, including all African heads of state but no developed world ones, have been invited as “observers”.

The extent to which African leaders respond to the invitation will be a guide to some key questions: the attraction of the Brics option, the resilience of US influence in the Global South, increased Russian and Chinese activity in Africa and, lastly, the status of Ramaphosa himself at both home and abroad. His vulnerability, ironically, may well be his chumminess with Russia.

The nature of South Africa’s relations with Russia hardly needs rehearsing: its persistent refusal to condemn the Russian invasion of Ukraine, the holding of joint naval exercises with Russian naval forces, clandestine arms trading between the countries, and the unhealthy predominance of Russian oligarchs financing the perennially cash-strapped ruling African National Congress. Ramaphosa was also instrumental in organising a quick-fire “peace mission” to Ukraine and Russia in June, with seven rounded-up African heads of mostly minor states. He was also front and centre in the recent Russia-Africa Summit in St Petersburg, though attendance by African heads of states was down — 17 this year, compared to 43 at the Sochi 2019 Summit, which had heralded Russia’s new and ardent embrace of Africa.

As his gofer efforts continue to be coolly received by the majority of African leaders, Ramaphosa’s Russophile position runs the risk of sidelining him and South Africa from the doyen position that the country and its president has always assumed since liberation. Indeed, if India has claims to a place at the G7, Nigeria has an even greater claim to Africa’s seat at Brics: its GDP is now larger than South Africa’s.

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Samuel Ramani, in his new book Russia in Africa, intensively tracks Russian post-Cold War engagement in Africa. The theme of that diplomacy, although sometimes erratic, is a long-term strategy: patience in ambition, opportunism in deployment and lupine in execution. “By combining counterinsurgency operations, arms sales, autocracy promotion and soft-power tools, such as media outreaches, educational diplomacy, debt forgiveness and humanitarian aid, Russia could remain an attractive partner for African countries and preserve a unique niche between France, the United States and China,” he writes.

The target countries for such attention share certain disfiguring features: fragile states under weak leadership, volatile internal politics, collapsed national institutions, despairing polities, emigrating elites, biddable security services and vacuums created by the departure of agencies once able to guarantee sovereign stability. To these tottering autocratic regimes, Russian Private Military Companies (PMCs) make an offer they cannot refuse: private security support to maintain power in return for control or shares in mining operations and preference in infrastructural contracting.

Since its renewed interest in Africa in 2019, Russia’s fingerprint can be seen wherever there is existent chaos: in Libya, Burundi, Congo, Central African Republic, Guinea, the Sudan and, most recently, in Niger. This is particularly true in the Sahel and Maghreb, where the West’s reckless and naïve support of the Arab Spring in 2010 destroyed stable autocratic regimes and left a mishmash of theocratic zealots, bandits and irredentist nationalists, opening the way for the independent and muscular Russian PMCs such as the Wagner Group, with its billions of dollars in revenue from its mining and oil operations in Africa and the Middle East. A Blackwater on steroids, Wagner is dangerously independent and ferocious. In asymmetrical warfare, they offer their clients something the judicialised military of the West cannot: brutal, indiscriminate efficiency.

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The involvement of Wagner in coup or counter-coup activities on the continent has raised huge concern among African leaders, most recently in the Niger coup which the Economic Community of West African States (Ecowas) vows to crush. But curiously, and damagingly, President Ramaphosa — known here as “Cyril the Silent” — has not taken a firm public position on Wagner, despite the fact mercenary activity is outlawed under the African Union’s Covenant on Mercenarism, effective since July 1985. Indeed, one of Ramaphosa’s predecessors, Thabo Mbeki, was the driving force behind its implementation and instrumental in closing successful white South African mercenary operations across the continent following the democratic transition in 1994.

After its bizarre, two-day quasi mutiny in June, Wagner’s role as Putin’s stormtroopers in Europe appears to have run its course. It now proclaims that Africa is its future, another troublesome legion consigned to the farthest part of an empire. Thinking South Africans, watching the complex forces at play in their Brics summit, conscious of the fragility of their nation and alert to the possibilities of tumult at the elections next year, pray that they remain out of reach.