How the world has moved in the second quarter of 2021

The April-June quarter saw Biden making significant diplomatic moves vis-a-vis Europe, Russia and China; the Middle East saw two significant elections in Israel and Iran; China showed ascendancy in space; and there are developments in India’s neighbourhood, especially in Afghanistan. Sundeep Waslekar deciphers the implications

Founding Fuel

We delve into the big shifts in geopolitics during the second quarter of 2021, a continuation of our conversation since the first edition of the podcast: How the world has moved in the first quarter of 2021. Sundeep Waslekar, president of Strategic Foresight Group, takes stock of the most important global events that shape our world this quarter (April - June) and beyond. 

An overview: The critical developments in the last three months

  1. US President Joe Biden’s week of diplomatic travels had a remarkable impact on the relationship between the superpowers—USA, Russia and China. The Summitry included a meeting with G-7 nations, a NATO summit, an EU summit and a bilateral summit between Biden and Russian President Vladimir Putin. 
  2. Through the Summitry, Biden was able to shift European leaders to the US point of view on China—though their response was tempered—and form a loose alliance against Russia and China. 
  3. Critical developments in the Middle East—the war between Hamas in Gaza and Israel, and an eventful election in Israel as well as Iran.
  4. Critical changes in the UAE.
  5. Developments in the regulation of Artificial Intelligence in the EU. 
  6. China’s technological advancement and leadership in outer space.
  7. More evidence of global warming with raging fires in North America, cyclones in India, etc.

Highlights from the conversation 

1. Biden’s Summitry  

Reining in China

  • Through his diplomatic travels, Biden attempted to redefine the world in Cold War language—as a conflict between democracies and autocracies. Though for the US its conflict with China is more significant than with Moscow.
  • The cold war between the US and China is on the rise and it will characterise the years of the Biden presidency and beyond.
  • This last quarter laid the foundation for a new hostility in the world which could potentially risk the survival of humankind in the next decade or two. There’s already a raging arms race between the two countries (hypersonic missiles, killer robots, and may even be killer pathogens—all of which could be more devastating than existing nuclear arms).

The US-Russia relationship

There were significant advancements after Biden’s meeting with Putin:

  • They issued a joint statement on the nuclear arms race, and reiterated that “nuclear wars cannot be won and therefore cannot be fought”. 
  • Instituted a Strategic Stability Dialogue (to lay the groundwork for future arms control and risk reduction measures) and decided to review the process in 6 months. 
  • In the previous quarter (January-March) the New START treaty, a nuclear arms reduction treaty, was renewed by 5 years. Biden now started the negotiating process with the Russians on how to advance the arms control regime, discussing the horrors and failures of these weapons. 
  • They also agreed to cooperate on cyber security and not use cyber technology to interfere in each other’s political system or critical infrastructure. (Of course, they disagreed on human rights in Russia and Russian gas pipeline to Germany—but that was expected.)  

America’s place in the world

  • Biden has been able to undo some of the damage that former US President Trump had done to America’s place in the world. 
  • He has restored the multilateral order to a large extent—WHO is back in business; America is back in the Paris accord on climate change; he has saved the transatlantic alliance (Europe was beginning to talk about its own independent defence policy); revived NATO—and prove to the Western democracies that America is back. 

Stemming Europe’s tilt towards China

  • The EU had earlier negotiated a major investment accord with China (The Comprehensive Agreement on Investment). This past quarter, that pact ran into difficulty in the European Parliament (though the European Commission, France and Germany). 
  • Due to Biden’s efforts, Europeans now see that there’s no advantage in being independent and building a relationship with China, and that they need to be a lot more sensitive to the American concerns. Nevertheless, this is still an open game.

2. The Middle East (Israel, Iran and UAE) 

a) The war between Hamas in Gaza and Israel; elections in Israel

  • It was on the surface an Israel-Palestine conflict, but in reality, it was an internal Israeli conflict where Benjamin Netanyahu wanted to take advantage of the situation to perpetuate his own power, when he had lost the majority.
  • The war began when the Israelis tried to evacuate Palestinians from their houses in the Sheik Jarrah locality of Jerusalem. They sent their forces to the Al-Aqsa mosque. Hamas reacted by sending rockets to Tel Aviv, and the Israelis, in retaliation, attacked Gaza.  
  • Why did Israel force-evacuate the Palestenians from Sheikh Jarrah? Because Netanyahu didn’t get a clear majority in the election and he probably thought that a war with Hamas would unify the country behind him.
  • Biden forced Netanyahu to call for a ceasefire (Trump would have given him a long rope). And the Egyptian intelligence agency negotiated the ceasefire. 

There Is An Alternative: Formation of a new government in Israel 

  • All parties came together to keep Netanyahu away from power. 
  • The new Prime Minister, Naftali Bennet, is an ultra-right wing, pro-settler politician, who doesn’t recognise Palestinian rights. But in his own Prime Ministers office, there is an Arab-Israeli deputy minister, Mansour Abbas, with a mandate to protect the interests of the Arab-Israelis. 
  • They have worked out an interesting power-sharing scheme in the new coalition—there is a prime minister, an alternate prime minister, two deputy prime ministers, an Arab-Israeli deputy minister, etc.
  • The new dispensation agreed that the focus of the government will be on economic and infrastructure development, and that it will stay away from identity politics. 
  • For 15 years Netanyahu was trying to prove that there was no alternative to him. The Israelis have proved that you don’t need to have an alternative ready—you can come together and form some kind of coalition and work out some kind of pragmatic power-sharing arrangement.
  • Though we will have to watch how this develops. Because Netanyahu will do everything in his capacity, from the Opposition benches, to raise the Palestine issue and identity politics, to force the schisms in the government. Also, the two camps were more or less evenly divided—the new government also has a thin majority. 

What this means for the conflict in the region

  • We can expect the Israel-Pallestine conflict to be on the backburner. Though this government has made it clear that if Hamas provokes a conflict, they will retaliate—but beyond that, they will not do anything to deepen the conflict. 

b) Iran

The elections and what that might mean for the nuclear deal with the US 

  • Iran’s incumbent President Hassan Rouhani, a moderate leader, attempted to find a way out. But his tenure coincided with the Trump presidency, who was hostile towards Iran—all of which led to much disappointment among Iranians. 
  • President-Elect Ebrahim Raisi (who will take office in August), has a track record as an ultra-conservative who doesn’t care for human rights. But no one knows how he will turn out. Because conservatives are now firmly in power, it may be easier for Iran to negotiate a deal with the US.
  • Superficially, it is a shift towards a religious hard-line lobby.

c) The UAE

The UAE is taking a nuanced approach towards religion, because they want to build their society on science.

  • They are building a secular Abrahamic Complex, which will house a mosque, a church and a synagogue in one compound. They are trying to signal a more liberal approach to religion.
  • They are trying to play the role of peacemaker in the subcontinent: Rumour is that they played a role in the India-Pakistan ceasefire. 
  • There’s a new kind of leadership in the UAE for the past 2-3 years—with young ministers in their 20s, both men and women, taking up leadership roles. The entire focus of the cabinet is towards science and high technology. 
  • UAE landed a rover on Mars in 2020, with Japanese facilities.
  • They are building a museum of the future, devoted to new technologies. 

3. The US view on global conflicts—and the China factor 

The American worldview under Biden is that they want to resolve as many conflicts as possible, and focus their energy on China. (For example, on the sidelines of the G7, America told Europe to manage the threat coming from Russia; the US-Russia Strategic Stability Dialogue; the US withdrawal from the Middle East, including Afghanistan; and trying to find some reconciliation with Iran.)

  • There are possibilities of backchannel negotiations between Washington DC and Teheran—such backchannels existed during Clinton’s time too. 
  • Maybe there’s a view in Washington that this is the time to do business with the decision makers in Teheran. (Raisi is also likely to replace Ayatollah Ali Khamenei as the new spiritual leader.)
  • Americans are not shy of working with extremists. They have worked with the Taliban to agree on a US troops pull out from Afghanistan. 

The contours of America’s response to China—which they perceive as their biggest threat in the next few decades—are emerging.

  • In addition to its strategic vision on China, the US is also shaping a  strong economic and technological vision to counter China.
  • The US Congress passed an Innovation and Competition Act. The US will invest $250 billion in new technologies, including $200 billion in mostly Artificial Intelligence, and $50 billion in manufacturing semiconductors and chips.
  • In addition, they hope to mobilise 4x that amount from the private sector—about  $1 trillion—for AI, semiconductors, quantum computing, biotechnology or genomics. All of this is being projected as a counter to China and there is bi-partsan consensus on this.
  • The US-China rivalry started with a trade conflict during the Trump years. It has now expanded to a strategic conflict and a political conflict, where the US wants to organize the world into two camps. And now there is this economic and technological dimension.
  • India should be listening to this development (Innovation and Competition Act). We talk about global leadership and competition with China. But what is our investment in frontier and emerging technologies?  

4. China and its leadership in outer space 

In the week that Biden was busy mobilizing its European allies to support the US against China, both in the G7 and the NATO summit, China was busy conquering outer space.

  • China sent up its first and main module of a permanent orbiting space station. The existing International Space Station that was established through a cooperation between the US, Russia and Europe, will retire in one or two years (China was excluded from it). Though the Chinese space station is not full-fledged yet—they are regularly sending cargo flights with cosmonauts, to build out the station in space.  
  • Earlier, China got some samples from the Moon.
  • They have sent a mission to Mars.
  • Last year, China landed on the dark side of the Moon, which is not visible from Earth. 
  • The strategic implication of all this is that in the next couple of years, China will be the only one with a permanent presence in space.
  • Russia has told China that it wants to be part of the Chinese space station. (Russia was an equal partner with the US in the ISS; here it will be a Chinese space station, and other nations can join it.)
  • China’s control of space means it can control the telecommunications infrastructure of the world, and have a major influence on the movement of missiles. If there’s a war between the US and China in the next 20 years, it will not start in Taiwan or the East China Sea, but in the lower geosynchronous orbit. 
  • So, China is dominating outer space, and the semiconductor industry; it has made tremendous strides in AI, biotechnology and petaflop computing. The larger signal is their focus on technological advancement. 

5. Significance of the EU’s AI regulatory framework 

When Europe took a big step on data privacy with GDPR, the US did not really play catch-up. Europe took the lead and the rest of the world followed Europe. What will be significant now?

  • AI is emerging at the core of a new technological horizon. An open debate has started, in the Western democracies at least, on what could happen with AI. 
  • AI could help address climate change, pandemics, and other problems facing humanity. And AI could also be misused to create lethal autonomous weapons, new kinds of military technologies, and social control of citizens. China is already using AI for social control, to grade citizens for social profiling. 
  • The EU regulatory framework categorises the use of AI in different boxes. Some things are simply not allowed—for example, grading citizens even for credit rating; some uses will be subjected to a high degree of control; and some will be encouraged. 
  • This is the first clear and definitive regulation of AI. 

6. Events in India’s neighbourhood


With the US pulling out of Afghanistan, we are looking at civil war post September. 

  • The Taliban is expanding the territory under its control.
  • There’s a strong Iranian influence in the western part of Afghanistan. They will start exerting their influence; they will not want to hand Afghanistan to the Taliban on a platter.
  • The current government of President Ashraf Ghani and the Northern Alliance (an anti-Taliban coalition that was formed in the 1990s) would also like to have control. 

Is there a leverage that the US and the Western world have on the Taliban?

  • The Taliban spokesman keeps saying that they don’t wish for confrontation with other political groupings. But the situation on the ground is different—they are taking control of one town after another.
  • The people who have a real leverage over the Taliban is Pakistan’s ISI. Taliban cannot survive without ISI’s support. 


  • The US seems to be reconciled to the fact that the Taliban will have significant control over Afghanistan--and Pakistan will be pleased with that outcome. Beyond that we don’t know what is happening between Pakistan and the US. Pakistan is no longer significant for the US like it used to be 5-10 years ago. 
  • But for India, it’s important since Pakistan will acquire a strategic depth if they have control on some Afghan territory through the Taliban. 
  • The ceasefire between the Indian and Pakistani Army seems to have been disrupted a bit. But largely it is still holding despite the drone attacks. India did not retaliate aggressively to the recent drone attacks since the minds behind the attack are unknown. It could possibly be spoiler violence by a few ISI freelancers and not directed from the top of the Pakistani hierarchy. 


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Founding Fuel

Founding Fuel aims to create the new playbook of entrepreneurship. Think of us as a hub for entrepreneurs- the go-to place for ideas, insights, practices and wisdom essential to build the enterprise of tomorrow. It is co-founded by veteran journalists Indrajit Gupta and Charles Assisi, along with CS Swaminathan, the former president of Pearson's online learning venture.

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