Welcome back to World Brief, where we’re looking at the economic impact of the European Union-Mercosur trade deal, Russia’s hypersonic threat to Ukraine and NATOand mass protests in Iran.
Major Win or Cause for More Unrest?
The European Union gave the green light on Friday to a trade deal with South America’s Mercosur bloc, overcoming 25 years of drawn-out negotiations to create one of the largest free-trade zones in the world. Although the deal’s key European backers, such as German Chancellor Friedrich Merz and European Commission President Ursula von der Leyen, are trumpeting the agreement as a win, analysts suggest that the accord’s economic impact on the continent will be minimal at best—and could spark further political unrest at worst.
Welcome back to World Brief, where we’re looking at the economic impact of the European Union-Mercosur trade deal, Russia’s hypersonic threat to Ukraine and NATOand mass protests in Iran.
Major Win or Cause for More Unrest?
The European Union gave the green light on Friday to a trade deal with South America’s Mercosur bloc, overcoming 25 years of drawn-out negotiations to create one of the largest free-trade zones in the world. Although the deal’s key European backers, such as German Chancellor Friedrich Merz and European Commission President Ursula von der Leyen, are trumpeting the agreement as a win, analysts suggest that the accord’s economic impact on the continent will be minimal at best—and could spark further political unrest at worst.
Under the EU-Mercosur deal, more than 90 percent of tariffs on EU exports will be eliminated to allow for an integrated market of some 780 million consumers. Europe has framed the agreement as necessary to counter steep U.S. tariffs, which would bolster the EU’s automobile and pharmaceutical industries, as well as a significant way to burnish the bloc’s reputation on the world stage.
The EU also believes that the deal will help diversify European markets, specifically by providing another source of critical raw materials apart from China. Beijing is South America’s biggest trading partner, in large part due to investments from China’s Belt and Road Initiative.
“At a time when trade and dependencies are being weaponized and the dangerous, transactional nature of the reality we live in becomes increasingly stark, this historic trade deal is further proof that Europe charts its own course and stands as a reliable partner,” von der Leyen said.
However, the European Commission estimates that the EU-Mercosur deal will add only 0.05 percent (around $90.2 billion) to the bloc’s economy by 2040. This is because trade between Europe and Mercosur’s five full members—Argentina, Brazil, Bolivia, Paraguay, and Uruguay—is historically low, even with Brazil (Latin America’s largest economy) being part of the deal.
The accord’s impending signing also threatens to exacerbate political unrest in Europe. In recent weeks, farmers and environmental activists have escalated their protests against the agreement, citing concerns that it fails to safeguard European interests. Agriculture workers claim that the deal will flood the EU with cheap food imports, specifically beef and poultry; raise prices; and require excessive local regulation. Meanwhile, environmental groups and other critics argue that South American producers do not meet European standards on animal treatment, deforestation, pesticides, and workers’ rights.
Austria, France, Hungary, Ireland, and Poland voted against the deal on Friday, and Belgium abstained. However, last-minute concessions, including early access to roughly $52 billion in agricultural aid, convinced Italy—a major holdout—to flip its position, allowing the accord to pass.
The European Parliament still needs to approve the treaty for implementation. In the meantime, farmers across Europe launched new protests on Friday, and France’s far-left and far-right parties have launched or vowed to launch no-confidence motions against President Emmanuel Macron’s government over the deal’s impending signing.
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What We’re Following
Signaling further aggression. The Russian military claimed on Friday to have fired a hypersonic Oreshnik missile at Ukraine’s critical infrastructure. Moscow said the attack was in response to an attempted Ukrainian drone strike last month on one of Russian President Vladimir Putin’s residences. Kyiv says that strike did not occur, a claim supported by a U.S. intelligence finding. According to Russia’s Defense Ministry, one of the Oreshnik’s targets was a factory that produced drones used in that alleged operation.
This is the second time that Russia has fired an Oreshnik missile, known for its difficulty to intercept and its ability to carry nuclear warheads. Lviv Gov. Maksym Kozytskyi confirmed on Friday that the missile—whose warheads contained no explosives, according to a Ukrainian assessment—damaged an energy facility in the Ukrainian region. No casualties were reported.
Some European officials said Moscow’s targeting of Lviv, which borders NATO member Poland, with this missile was meant to send a message to the alliance. The attack comes just days after some of Ukraine’s key European allies agreed to provide security guarantees for Kyiv in the event of a cease-fire with Russia. “This is a new level of threat—not only for Ukraine, but also for the security of Europe,” Lviv Mayor Andriy Sadovy posted on Telegram.
Moment of reckoning. Iranian Supreme Leader Ayatollah Ali Khamenei signaled on Friday that Tehran would “not back down” in the face of mass anti-government protests, which first erupted on Dec. 28 over soaring inflation rates and the country’s plummeting currency. Protesters are “ruining their own streets … in order to please the president of the United States,” Khamenei said, in reference to U.S. President Donald Trump threatening U.S. intervention if Iran “violently kills peaceful protesters.”
Tehran heightened its crackdown this week by cutting off internet access across much of the country, and Iran’s public prosecutor has threatened to issue death sentences against those who the state claims are acting on behalf of Washington or its allies. Already, at least 62 people have been killed and more than 2,300 others detained, according to the U.S.-based Human Rights Activists News Agency.
Experts suggest that Iran’s current unrest is the country’s biggest internal challenge in at least three years, when protests erupted over the death of Mahsa Amini, a 22-year-old Iranian woman who was arrested and allegedly beaten to death by the country’s morality police for violating Tehran’s mandatory hijab law.
Control of southern Yemen. Yemen’s Southern Transitional Council (STC), a United Arab Emirates-backed secessionist group, announced it would be dissolving its institutions on Friday following a failed weekslong lightning offensive aimed at seizing control of the southern Hadramout and al-Mahra provinces. According to STC Secretary-General Abdulrahman Jalal al-Sebaihi, the council did not approve the military operation, adding that the offensive “harmed the unity of the southern ranks and damaged relations with the Saudi-led coalition,” which backs Yemen’s National Shield Forces.
Saudi Defense Minister Khalid bin Salman heralded the STC’s decision on Friday as “courageous,” adding that Riyadh will work with southern Yemeni figures to host a conference focused on finding a comprehensive political solution for the country. A date for the summit has yet to be announced.
The council’s dissolution comes one day after STC leader Aidarous al-Zubaidi fled to the UAE after Yemen’s Saudi-backed presidential council charged him with treason for failing to attend planned talks in Saudi Arabia this week. Riyadh has accused Abu Dhabi of helping Zubaidi escape; such assertions could exacerbate tensions between the regional oil powers.
What in the World?
The United States on Saturday abducted Venezuelan President Nicolás Maduro and one other individual. Who was captured alongside Maduro and taken to New York for prosecution?
A. Vice President Delcy Rodríguez
B. His wife, Cilia Flores
C. His son, Nicolás Maduro Guerra
Mr. Defense Minister Vladimir Padrino López
Odds and Ends
The Democratic Republic of the Congo welcomed twin baby mountain gorillas to its Virunga National Park on Wednesday. Park workers discovered the newborn boys on Jan. 3 and are monitoring their health closely, calling their birth a “major event” for ongoing conservation efforts. Africa’s oldest national park is home to around 350 mountain gorillas; however, much of Virunga is under rebel control, and fighting has accelerated forest loss, threatening the already endangered species.
And the Answer Is…
B. His wife, Cilia Flores
The abduction and preceding large-scale strikes follow months of U.S. military buildup in the Caribbean, FP’s Rishi Iyengar and John Haltiwanger report.
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