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Washington took a firm stand against Baghdad after Iraq’s Coordination Framework nominated Nouri al-Maliki for prime minister. President Donald Trump said reinstalling Maliki would be “a very bad choice,” threatening to end U.S. support. Iraq’s blocs convened emergency talks, and a parliamentary session to pick the president was suspended.

The European Union and India, meanwhile, signed a trade pact to remove tariffs on 90% of goods. EU car tariffs in India would drop from 110% to 10%, and wine duties from 150% to 20–30%; India would gain improved access for jewelry, textiles, and several industrial exports.

Markets are on fire: gold futures topped $5,300/oz as the U.S. dollar weakened.

In Gaza, officials moved to reopen Rafah, with European monitors arriving and a new administration expected to enter.

Iran’s rial sank to about 1.5 million to $1, intensifying cost-of-living protests.

Spain plans to regularize around 500,000 undocumented migrants via decree from April 2026.

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Center of Gravity

What you need to know

Trump opposes Maliki’s return as Iraqi prime minister

U.S. officials have sharpened their public messaging to Baghdad as Iraq’s Coordination Framework, the largest parliamentary bloc, pressed ahead with efforts to return Nouri al-Maliki to the premiership after nominating him to be the next prime minister on Saturday. 

In a State Department readout of Secretary of State Marco Rubio’s call with Iraqi Prime Minister Mohammed Shia al-Sudani, Rubio said on Monday Iraq could be “a force for stability” but warned that a government “controlled by Iran” would struggle to put Iraq’s interests first, keep the country out of regional conflicts, or sustain the U.S.-Iraq partnership.

That line was reinforced by the U.S. ambassador to Türkiye and special envoy for Syria, Tom Barrack, who posted that “a government installed by Iran will not be successful” and argued that Iraq’s best path lay in continued cooperation with its neighbors and the West.

The rhetoric culminated on yesterday, when President Donald Trump said on Truth Social that Iraq would be making “a very bad choice” by reinstalling Maliki. Trump blamed Maliki’s earlier tenure for driving Iraq into “poverty and total chaos” and warned that, if Maliki returns, the U.S. “will no longer help Iraq,” adding that without U.S. support Iraq would have “zero chance” of success.

In Baghdad, the Coordination Framework has called an emergency meeting for tonight to discuss Washington’s latest warnings and the next steps in government formation.

There is a good chance that this will delay Iraq’s government formation. The parliamentary session scheduled for yesterday, Tuesday, to select the President of the Republic was suspended.

Now all eyes will be on Baghdad to see how the political blocs respond to Trump’s opposition to Maliki, and whether they can find a way to resolve this issue. 

Known Unknowns: The impact of U.S. tariffs on international trade & especially the U.S. bond market. Whether the U.S. and Iran will restart nuke talks, or whether another round of conflict will occur between the US, Israel, Iran, and their respective allies. Relations of new Syrian government with Israel, international community & ability to maintain stability inside Syria. China’s triggers for military action against Taiwan. U.S. and allied responses to China’s ‘grey zone’ warfare in the South China Sea and north Asia. Ukraine’s ability to withstand Russia’s war of attrition. The potential for the jihadist insurgency in Africa’s Sahel region to consolidate and spread.

New Europe

Europe's center of gravity shifts east, politics moves right, hostility to migrants from the south rises, as ties with the U.S. fray, and fear of Russia increases

Historic India-EU trade deal

The massive India-EU trade deal was signed yesterday, the day after Indian Republic Day, which European Commission President  Ursula von der Leyen attended in New Delhi. 

The deal will eliminate tariffs on around 90% of goods traded between the two sides and is expected to double the European Union’s goods exports to India by 2032. Some of the sharpest cuts are in politically sensitive categories: tariffs on cars exported from the European Union to India would fall from 110% to 10%, while tariffs on wine would drop from 150% to 20%–30%. India, for its part, would gain improved access to the European market, with tariffs on jewelry and textiles cut to zero, alongside zero tariffs on exports of furniture, chemicals, leather, and metals.

Negotiators have spent nearly two decades trying to reach an agreement, and supporters are branding it the “mother of all deals”.

Beyond the tariff schedule, the pact reflects a wider effort by both sides to broaden supply chains and reduce reliance on both the U.S. and China.

Spain moves to regularize undocumented migrants

Spain’s socialist-led coalition is preparing to legalize the status of a large pool of people who live and work in the country without papers, using a royal decree rather than a parliamentary vote.

The government says the measure could cover roughly 500,000 people, including people who entered legally and later fell out of status, as well as asylum seekers caught in long backlogs.

The eligibility rules are intended to be wide-ranging but not open-ended. Applicants must show they were in Spain before 31 December 2025, demonstrate several months of residence, and have no criminal record. The plan is expected to take effect in April 2026. At least initially, it would grant temporary residency and the right to work, bringing many workers into the formal economy and, by extension, into the tax and social-security system.

The move also sends a political signal. As several European governments tighten borders and narrow routes to legal residence, Spain is presenting regularization as both a labor-market repair job and a social-policy one.

Supporters argue that legal status reduces exploitation and speeds integration; critics say it could encourage more irregular migration and weaken deterrence.

The Global Economy

The ultimate complex system

Gold hits new record as U.S. dollar slides

Gold futures pushed above $5,300 an ounce on Wednesday 28 January, setting a fresh record after a blistering run this month as a sharp fall in the U.S. dollar and renewed geopolitical unease drew investors into bullion.

The move looks less like a simple risk-off trade than a broader repricing of confidence in the macro backdrop: when investors pile into a non-yielding asset at this scale, they are signaling a higher required premium to hold paper claims, particularly long-dated sovereign debt, at a time when worries about fiscal expansion and sanctions-linked reserve politics have already encouraged some central banks to diversify into gold.

The economic effects run through several channels at once. Softer demand for government bonds can lift term premia and raise borrowing costs; a weaker dollar can ease financial conditions in parts of the emerging world but also raise local-currency prices for dollar-set commodities; and volatile gold-linked flows can distort exchange rates in trading hubs, provoking policy responses, such as Thailand’s proposed caps and tighter controls aimed at limiting baht appreciation and protecting export competitiveness.

The Middle East

Birthplace of civilization

Gaza crossing prepares to reopen

After the body of the last hostage held in Gaza was returned, officials began finalizing arrangements to reopen the Rafah border crossing on a preliminary basis starting Wednesday.

Several members of the new Gaza government are expected to enter the Strip on Thursday. A European monitoring delegation arrived this morning on the Palestinian side of the crossing.

The return of the final hostage’s remains is also being portrayed as clearing the way for the peace process to move into the second stage of President Donald Trump’s plan.

That stage shifts the focus from the initial ceasefire and hostage file toward three linked tracks: demilitarization, the creation of a technocratic Palestinian governing body to run day-to-day administration in Gaza during the transitional period, and the start of reconstruction under international oversight and coordination.

Rial rout deepens Iran’s cost-of-living unrest

Iran’s currency, the rial, slid on Tuesday to a new open-market low of about 1.5 million rials ($1) to the U.S. dollar, according to local rate-tracking sites.

The drop extends a weeks-long slide that has helped drive nationwide protests over the cost of living. The exchange rate is a symptom, not the disease.

Iran remains trapped in a sanctions-constrained economy where hard currency is scarce, expectations are unanchored, and households try to protect their purchasing power by moving into U.S. dollars, gold, and durable goods.

Inflation has climbed again, with recent reporting putting it at roughly 60% year on year.

Periodic policy adjustments, including changes to subsidized import arrangements, have tended to pass more costs to consumers rather than rebuild confidence.

Oil revenues still keep the system functioning, but only just. Iran has lifted exports to multi-year highs, with much of the flow heading to China.

Revenues are constrained by discounts, the costs of sanctions evasion, and softer global crude prices, which leaves fewer U.S. dollars per barrel to stabilize the currency or pay for imports.

Iran’s long-running reliance on multiple exchange rates further muddles the picture. Official rates often trail reality, while the parallel market has become the clearest measure of economic strain and public anger.

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What happened today:

814 - Charlemagne dies; Louis the Pious succeeds. 1573 - Warsaw Confederation articles signed in Poland. 1624 - First British colony in the Caribbean founded on Saint Kitts. 1909 - U.S. troops leave Cuba, ending the second occupation. 1964 - Soviet forces shoot down a U.S. T-39 over East Germany. 1973 - Vietnam War ceasefire takes effect under the Paris Peace Accords. 1986 - Space Shuttle Challenger disaster. 2011 - Egypt’s “Friday of Anger” protests erupt. 2020 - U.S. unveils the Trump Middle East peace plan.

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