PESTLE & MORTAR 07 August 2025

#1

U.S. Pressuring India, Likely Won’t Work

The U.S. administration has doubled tariffs on Indian exports from 25% to 50% in a direct attempt to pressure New Delhi into reducing its reliance on Russian oil and military equipment, part of a broader strategy to isolate Moscow amid the Ukraine conflict. President Trump has criticized Prime Minister Narendra Modi for continuing to purchase Russian crude and advanced weaponry, highlighting U.S. frustration over India’s strategic choices. India’s response has been firm: it condemned the tariffs as “unjustified and unreasonable” and pledged to defend its national interests. Modi reinforced this position by reaffirming the “Special and Privileged Strategic Partnership” with President Putin, underscoring the resilience of a relationship that has endured decades of geopolitical shifts. The long-standing India–Russia partnership, built during the Cold War and cemented through arms deals, economic cooperation, and diplomatic alignment, has been a consistent pillar of New Delhi’s foreign policy. For India, Russian oil provides crucial cost savings, reportedly $17 billion over the past three years, while Moscow remains a key defense supplier willing to share technology and co-produce advanced systems domestically. These benefits make it difficult for India to sever ties, regardless of American economic pressure. The tariffs, while potentially damaging to Indian exports, are unlikely to change this calculus in the short term. Washington’s tariff-based diplomacy risks undermining its own long-term goal of drawing India closer as a strategic counterweight to China. By targeting critical economic sectors, the U.S. will likely provoke a nationalist backlash in India, strengthening Modi’s domestic position while reducing the likelihood of concessions on Russian ties. The move also reinforces India’s tradition of strategic autonomy, potentially cooling cooperation in areas like climate policy, multilateral governance, and regional security initiatives. If tensions escalate, both sides will likely respond with reciprocal measures, disrupting trade beyond energy and defense into sectors like technology, digital services, and infrastructure. India will also likely accelerate efforts to diversify its partnerships, turning to other suppliers and markets less vulnerable to U.S. economic leverage.

#2

Cobalt Mines Controlled by M23

The Rubaya coltan mines in eastern Democratic Republic of the Congo, a major source of a mineral essential for capacitors in phones, laptops, and other electronics, have been under M23 rebel control since April 2024; the group levies a 15% tax on sales, generating roughly $800,000 per month, and channels ore into Rwanda via an organized network of traders and routes. The occupying of the mines shows how one of the tech sector’s critical inputs has been folded into a war economy that finances armed groups and destabilizes the region. Washington has recently sanctioned entities tied to conflict minerals around Rubaya (including PARECO-FF, which controlled the site before M23), while also signaling that a peace deal could unlock legitimate Western investment. This episode illustrates why Congo and, more broadly, parts of Africa sit at the center of intensifying geopolitical competition over “transition minerals.” The DRC accounted for about three-quarters of global mined cobalt in 2023 (with market share projected to remain dominant even as Indonesia grows), and it also holds major deposits of copper and tantalum (from coltan), all indispensable for batteries, EVs, grid storage, and advanced electronics. U.S. officials are deepening engagement with Congo’s state miner Gécamines and urging broader Africa partnerships to diversify away from Chinese-controlled supply chains, while European, Middle Eastern, and Chinese investors race to secure offtake, equity stakes, and processing routes. Supply assurance now depends on political risk management as much as on procurement. ESG and sanctions exposure require verifiable traceability from mine to smelter, and portfolio resilience will likely call for dual-sourcing, on-shoring/refining partnerships, and active participation in resource diplomacy. Africa’s mineral corridors have become strategic terrain, and companies that treat them as such by integrating security, compliance, and investment strategy will be better positioned as this competition accelerates.

#3

Fed Highly Likely to Cut Rates

The dollar weakened for a second time after July U.S. inflation came in as expected, reinforcing market pricing of a near-certain September rate cut: LSEG data show about a 98% probability the Federal Reserve will begin easing next month. The dovish tilt was amplified by Treasury Secretary Scott Bessent’s call for a “series of rate cuts,” potentially starting with 50 bps, while fresh political pressure from President Trump’s public criticism of Chair Powell and even talk of a lawsuit over the Fed’s headquarters renovation added to expectations for faster accommodation. Foreign exchange market (FX) moves reflected the shift (euro and sterling higher), and an RBA rate cut underscored a global easing bias. Taken together, the likelihood of a Fed cut in September is very high, with risk skewed toward a larger initial move if growth and core inflation continue to cool and political pressure intensifies; conversely, a surprise re-acceleration in prices (including from tariff pass-through) would temper the pace. A Fed cut would lower borrowing costs, improve refinancing math, and support capex, M&A, and inventory financing; for consumers it would ease mortgage and auto rates, lifting demand in rate-sensitive sectors. A softer dollar would aid U.S. exporters but raise import costs and potentially nudge commodity prices higher; treasury teams should expect shifts in hedging needs, while banks may face margin pressure from a flatter curve. Asset prices typically benefit, equities via lower discount rates and credit via tighter spreads, though FX and commodities volatility can rise during the transition. Net-net, the near-term corporate playbook is to accelerate opportunistic refinancing, revisit fixed-vs-floating exposures, and update FX/commodity hedges for a weaker-dollar, easier-policy baseline.

#4

DARPA Gives Out Prize at DEFCON

The Defense Advanced Research Projects Agency (DARPA), in partnership with ARPA-H, recently concluded its two-year AI Cyber Challenge (AIxCC) at DEF CON 2025. The competition tasked teams with developing autonomous cyber-reasoning systems powered by large language models to identify and patch vulnerabilities in open-source software critical to infrastructure. The finalists competed against synthetic vulnerabilities injected into real-world codebases, with the top systems identifying 77% of the issues and patching 61% within an average of 45 minutes. They also uncovered 18 genuine zero-day flaws, 11 of which in Java were automatically patched. Team Atlanta, comprising experts from Georgia Tech, Samsung Research, KAIST, and POSTECH, secured the $4 million grand prize, while Trail of Bits and Theori earned $3 million and $1.5 million respectively for second and third place. Many of these systems will be released as open-source tools, with DARPA and ARPA-H supporting deployment into critical infrastructure sectors. The AIxCC signals a turning point in cybersecurity, where vulnerability management can move from slow, human-led processes to near-instantaneous detection and remediation at scale. Embedding such AI-driven systems into development pipelines will transform security from a reactive task to a proactive design feature, reducing exposure windows and strengthening resilience against evolving AI-enabled threats. The open-source release democratizes access, allowing even resource-constrained organizations to benefit from advanced defenses. At the same time, integration will require robust oversight to ensure that automated patches do not introduce instability, and companies may soon face regulatory expectations for faster, AI-assisted patching standards. Ultimately, the challenge’s outcome shows that AI is now capable of meeting the speed, scale, and reliability required for defending critical systems, and businesses that adopt these tools early may gain a decisive security advantage.

#5

Wikipedia Loses Court Case in UK

The Wikimedia Foundation, operator of Wikipedia, has lost its High Court challenge against parts of the UK’s Online Safety Act (OSA), which came into force in 2023. The Foundation argued that being designated a Category 1 service—the most tightly regulated classification—would force Wikipedia to verify user identities, undermining the privacy of its fully anonymous and volunteer contributors. The court dismissed the challenge but emphasized that Ofcom, the UK regulator, must interpret and apply the rules proportionately and cannot automatically subject Wikipedia to requirements that would “significantly impede” its open editing model. The decision leaves the door open for future legal action if Ofcom imposes excessive obligations on Wikipedia’s operations. For technology companies, the ruling signals a critical shift in how regulation can reshape operations and risk management. Platforms that depend on user-generated content, open collaboration, or decentralized contributions need to reassess whether their design could trigger stringent OSA duties such as age or identity verification, content moderation mandates, or enhanced reporting requirements. Services built on anonymity, pseudonymity, or community trust may face existential operational challenges if they cannot comply with these mandates, requiring flexible identity models or region-specific moderation systems to balance usability with compliance. Compliance at the Category 1 level is resource-intensive, involving identity checks, content filters, and record-keeping systems. Technology firms will have to weigh whether the costs of compliance justify their continued presence in the UK market, which could lead some to consider geo-blocking, limiting features, or restructuring service delivery based on jurisdiction.

#6

China Leading in Open-Source AI

China is aggressively promoting open-source artificial intelligence (AI) models, aiming to establish them as global standards. Key players like DeepSeek, Alibaba’s Qwen, Moonshot, Z.ai, and MiniMax have released free, modifiable models that are quickly gaining global adoption, aided by their cultural and linguistic adaptability in Asian markets. This strategy contrasts with the more closed, proprietary approach of U.S. companies, though OpenAI recently released its own open-source model, gpt-oss, in response to competitive pressure. The historical pattern in technology suggests that dominance often depends on availability, flexibility, and ecosystem adoption, not just technical superiority. The U.S. government has recognized the strategic stakes, calling for “leading open models founded on American values” to prevent Chinese AI dominance. While open-source AI currently offers little direct revenue, companies seek to lock in users and monetize through related services, much like Google’s Android ecosystem. For technology companies, this trend signals a shift toward open-weight AI as both a competitive differentiator and a geopolitical battleground. Firms must decide whether to embrace open-source models for their adaptability and cost benefits or maintain proprietary control to protect intellectual property and premium services. Chinese models’ strength in local language processing and cultural nuance could make them more attractive in non-Western markets, potentially eroding U.S. tech influence abroad. Corporations deploying AI will likely benefit from the flexibility of open-source options but will also face new security, compliance, and governance challenges, especially if using technology tied to geopolitical rivals.

#7

US Designation BLA as a Foreign Terrorist Organization

The U.S. State Department has designated the Balochistan Liberation Army (BLA) and its armed branch, the Majeed Brigade, as Foreign Terrorist Organizations (FTOs), an upgrade from a previous “Specially Designated Global Terrorist” (SDGT) status from 2019. This move responds to a series of deadly attacks in Pakistan, including suicide bombings near Karachi’s airport and Gwadar Port Authority in 2024, and the March 2025 hijacking of the Jaffar Express train that killed 31 people and took hundreds of hostages. The designation was coordinated with Pakistan’s military leadership and follows a recent trade agreement opening U.S. investment in Pakistan’s oil-rich Balochistan region. Pakistani officials welcomed the decision as validation of their counterterrorism efforts and a deepening of strategic cooperation with Washington. However, Baloch leaders condemned the designation, arguing they are “victims, not terrorists” and accusing Pakistan of sheltering IS-Khorasan militants. The U.S. decision to designate the BLA and its Majeed Brigade as FTOs likely serves a dual purpose: strengthening counterterrorism cooperation with Pakistan while ensuring continued access to the country’s significant oil and gas reserves. The timing coincided with a U.S.–Pakistan trade deal opening investment in energy infrastructure, which suggests Washington is aiming to stabilize the region enough to attract and protect corporate investment. Pakistan’s embrace of the designation reinforces its strategic alignment with the U.S., but it also risks intensifying tensions with India. New Delhi has long accused Islamabad of using counterterrorism narratives to suppress ethnic and political movements while simultaneously tolerating or supporting militant groups that operate against India.

#8

Companies Enforcing Return to Office

Companies across the United States are increasingly enforcing in-office attendance, using monitoring tools and formal oversight to ensure compliance. A CBRE survey found that nearly three-quarters of firms have already met their attendance goals, with the average target being about 3.2 days per week. This enforcement trend has been accompanied by a reversal of pandemic-era downsizing in office space, as many organizations are choosing to expand or maintain their real estate footprints. These shifts indicate growing corporate confidence in the value of in-person collaboration for productivity, innovation, and team cohesion. They also reflect a rebalancing of labor market dynamics, with management regaining leverage to set workplace expectations. Additionally, the move to link attendance data to performance metrics suggests a deeper operational shift where physical presence becomes both a measure of commitment and a component of strategic planning. These developments serve as an economic indicator of renewed investment in centralized work environments, potential stabilization in commercial real estate demand, and a broader belief among executives that physical offices remain integral to competitive advantage.