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Summary
A potential Iran deal remained the story of the week, with conflicting signals from Washington keeping investors on edge. Developments in Ukraine and Japan highlighted long-term challenges.
This week, yet again, the focus is on Iran and whether a deal is finally within reach.
A lot rides on the answer. Fuel prices are the most immediate concern. Across the world, including India, where petrol and diesel prices have risen four times in about a week, higher energy costs threaten to feed inflation.
Markets are watching. Indian equities slumped on Friday, with benchmark indices falling sharply in the final hours of trade amid uncertainty over whether a US-Iran deal would materialise.
The week was marked by conflicting signals about the deal. Reports alternated between a deal being imminent and talks breaking down. On Friday, US President Donald Trump stoked expectations by posting on Truth Social that he was lifting its blockade of the Strait of Hormuz and meeting top officials to consider the proposal on the table. Hours later, the White House confirmed the meeting had concluded but gave no further details. Guess, that means no deal?
This week, there were two strikes by the US on southern Iran and at least one retaliation by Tehran – on Kuwait.
This, as Trump urged (or was it threatened), countries like Saudi Arabia, Qatar, Pakistan, Egypt, Turkey and Jordan to sign the Abraham Accords because they “owe it to” the US to do that. He also hinted that he may not move forward with the deal if they don’t sign.
Response from the countries Trump named has been muted, with Pakistan – his favourite mediator – publicly signalling discomfort over linking any future deal to the accords.
The Abraham Accords, envisaged during Trump's first term, seek to normalise ties between Israel and Arab states. Critics argue they largely sidestep the Palestinian statehood question.
So why is Trump bringing this condition in now? Probably, to bolster his image. Given that there is no real relief visible on the Iran front, if this effort to get Saudi Arabia and others to sign on is successful, Trump could sell it as a foreign policy win.
Back to the deal
According to media outlet Axios, the draft proposal envisages a 60-day ceasefire extension, unrestricted commercial passage through Hormuz, Iranian commitments on its nuclear programme and discussions on sanctions relief.
It also reportedly seeks to wind down the Israel-Hezbollah conflict in Lebanon. The problem is that Trump says he remains in no rush to sign and wants a "great" agreement.
According to most analysts, the US’s strength lies in its network of alliances – security, economic, and political. Now Trump is burning them all up – with his indiscriminate tariffs, bullying and the Iran war. The goodwill that the US had managed to garner has been squandered, and if it is friendless today, the reason is sitting in the White House.
Russia-Ukraine one
Remember, this was the one that Trump said he would wrap up in 24 hours of entering the White House, then it became seven days, then the time frame was quietly discarded. Now that Trump is neck deep in the Iran war, he can’t be blamed for not focussing on the Russia-Ukraine war. Besides, he has already stopped more than half a dozen wars – around the world – so maybe he can be excused for not being successful in ending the Russia-Ukraine war and starting the Iran war?
There seems to be some apprehension in some quarters that Russia, facing a battlefield stalemate in Ukraine and growing war fatigue at home, may try to escalate the conflict.
Evidence of this comes through Russia's warning to carry out "consistent and systematic" missile strikes on Kyiv, backed up by calls for evacuating foreign embassies from Kyiv.
Meanwhile, Sweden said it would donate 16 of its existing Gripen fighter jets to Ukraine by next year. Ukraine also plans to buy some 20 Gripens. “This is a historic decision for Sweden, but it also strengthens Ukraine’s air defence significantly,” Sweden’s prime minister Ulf Kristersson said during a visit by Ukrainian President Volodymyr Zelenskyy to an airbase north of Stockholm. This shows Europe is serious about backing Ukraine amid flagging US support.
Meanwhile, tensions between Russia and Nato escalated after a Russian drone reportedly crashed in Romania.
It’s been speculated that Russia’s flagging Ukraine conflict was the main reason for Putin’s 19-20 May China visit. And China’s assurances of support in the face of Europe’s backing of Ukraine was what Putin was seeking.
China-Russia relations have grown tighter since the start of the Ukraine war as they seek to align against the West. This is a cause for worry in India, as there are fears of Russia being pulled more into China’s orbit.
Ageing Japan
Last but not least, a look at Japan’s demographic challenge that seems to be growing worse. This week, Japan said its population fell by more than 3 million over the past five years, according to official statistics. Japan’s population stood at 123 million in 2025, according to preliminary census results, down from 126.1 million in 2020. This was the biggest decrease since the government began collecting census data in 1920.
Japan is Asia’s second largest economy, a tech and innovation powerhouse, a country with the capacity to challenge China. All this depends on demographics though. An ageing Japan cannot sustain any of the above.
Opening the doors to immigration from foreign countries to balance the population deficit is something long debated and cautiously implemented too. But a “Japan First” agenda has been gaining ground, forcing authorities to put the brakes opening the doors to foreigners.
English (US) ·