Trump’s Saudi visit and changing regional power dynamics

US President Donald Trump begins his second term with a symbolic return to Saudi Arabia, echoing his 2017 debut. His visit comes amid heightened regional tensions: the Gaza conflict, stalled Iran nuclear talks, and evolving alliances. Trump's hallmark approach—transactional diplomacy and personal ties with authoritarian leaders—aims to reposition US influence in West Asia.

Coinciding with the Gulf Cooperation Council (GCC) summit in Riyadh on May 14, the trip gathers Persian Gulf Arab leaders and the US president to discuss regional security, economic cooperation, and key geopolitical challenges.

Saudi Crown Prince Mohammed bin Salman (MBS) sees the summit as an opportunity to bolster US ties while managing sensitive issues like the Israel-Palestine conflict and potential normalization with Israel.

A pivotal topic is a potential US-Saudi civil nuclear deal. Unlike past administrations, Trump reportedly dropped the requirement for Saudi-Israeli normalization before advancing nuclear talks.

This shift signals a pragmatic decoupling of nuclear cooperation from the Palestinian issue, aligning more closely with Saudi interests.

However, the move has alarmed Israel. Officials fear a nuclear-capable Saudi Arabia could destabilize the regional balance, particularly if Riyadh pursues uranium enrichment.

With insufficient Senate backing to block the deal, the Netanyahu government is wary of being sidelined, as the US seems poised to proceed despite objections.

This policy recalibration reflects Trump's broader strategy: strengthening ties with Riyadh while accepting friction with Israel. It may reshape the region’s power dynamics, compelling Israel to reassess its security posture.

Trump aims to expand the Abraham Accords, pushing for broader Arab-Israeli normalization. Yet, ongoing Gaza violence and accusations of Israeli genocide—echoed by MBS—have revived demands for Palestinian statehood as a precondition.

Choosing Saudi Arabia as his first post-reelection stop underscores the region’s centrality to US strategy. The trip aims to reset partnerships, advance nuclear and defense deals, and navigate the complex Israeli-Palestinian landscape.

More than a diplomatic visit, it marks a strategic shift with lasting implications for West Asia's security, politics, and economics.

 

 

 

 

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President Donald Trump is embarking on his first international trip of his second term, returning to Saudi Arabia—a symbolic echo of his 2017 debut on the world stage. The visit, however, unfolded against a backdrop of heightened regional tensions, including the ongoing Gaza conflict, the uphill Iran nuclear negotiations, and shifting alliances. 

Trump's approach, characterized by transactional diplomacy and personal rapport with authoritarian leaders, aimed to recalibrate U.S. influence in West Asia.

Trump's visit coincides with a major (Persian)Gulf Cooperation Council (GCC) summit in Riyadh on May 14, bringing together Persian Gulf Arab leaders and the United States to address pressing regional issues. The summit serves as a platform for discussing security, economic cooperation, and the ongoing challenges facing the region.

Saudi Arabia's leadership, particularly Crown Prince Mohammed bin Salman (MBS), views the summit as an opportunity to strengthen ties with the U.S. while cautiously navigating contentious topics such as the Israel-Palestine conflict and normalization with Israel.

 US nuclear strategy in West Asia 

The potential U.S.-Saudi civil nuclear deal emerging from President Trump's visit represents a major strategic development with far-reaching implications for regional security and U.S. influence in West Asia. Unlike previous U.S. administrations, the Trump administration has reportedly dropped the longstanding U.S. condition that Saudi Arabia must normalize relations with Israel before advancing nuclear cooperation talks.

This shift signals a pragmatic decoupling of the nuclear agreement from the contentious issue of an Israeli-Saudi normalization, which Riyadh has consistently linked to progress on Palestinian statehood.

However, the deal has raised significant concerns in Israel. Israeli officials fear that advancing a Saudi nuclear program without Israeli consent could undermine regional security, especially given Saudi ambitions to enrich uranium. The Netanyahu government, lacking enough support in the Senate to block the deal, has expressed unease about being sidelined, as Washington appears determined to proceed regardless of Israeli objections.

The situation complicates U.S.-Israel relations and could shift the regional power balance, pressuring Israel to recalibrate its diplomatic and security strategies in response to a more autonomous and nuclear-capable Saudi Arabia.

In sum, the U.S.-Saudi nuclear cooperation initiative reflects a bold recalibration of U.S. West Asia policy under Trump, prioritizing strategic and economic interests with Riyadh while risking heightened tensions with Israel and altering the delicate regional equilibrium.

In his second term as president, Trump seeks to expand the Abraham Accords to as many Arab states as possible in order to create a local peace framework that includes political, economic, and security cooperation. However, the conflict between Israel and Hamas and recent Israeli government activity have made this increasingly difficult. Saudi Arabia and neighboring Arab states condemned Israel's military actions in Gaza, and even MBS accused Israel of genocide, basically tripping down, bringing back the Saudi demand that Palestinian statehood be a precondition for normalization.

The significance of this trip, just after the start of Donald Trump's second term, is worth noting. His choice of Saudi Arabia as his first foreign destination indicates the importance of the Middle East in U.S. foreign policy and sends a strong signal that Washington intends to strengthen and enhance its engagement in the Persian Gulf region. The trip aims to redefine U.S. relations with key regional international partners and build the regional security architecture.

Ultimately, Trump's trip to Saudi Arabia runs much deeper than an ordinary diplomatic visit, containing key strategic messages and fundamental changes in U.S. foreign policy and regional dynamics. With a focus on two main pillars of major investments, advanced arms sales, nuclear cooperation, and necessary reconsideration of the Palestine-Israel issue, the trip could provide a new chapter to the extremely complicated and tense history of West Asia, making fundamental changes to its security, political, and economic equations.

 

 

India and Pakistan accuse each other of ceasefire violations

India and Pakistan accused each other of violating an agreed ceasefire on Saturday, just hours after reaching the US-brokered deal aimed at ending one of the most dangerous escalations between the nuclear-armed rivals in decades, reports Reuters.

The ceasefire, which came after weeks of cross-border missile and drone strikes, was announced earlier in the day following negotiations involving top US and regional officials.

India’s Foreign Secretary Vikram Misri said the ceasefire agreement had been breached “repeatedly” and blamed Pakistan for initiating the violations.

Pakistan’s Foreign Ministry rejected the accusation and blamed Indian forces for violating the ceasefire. In a statement, the ministry said Pakistan remained committed to the truce and was “handling the situation with responsibility and restraint.”

The agreement had been announced earlier in the day by US President Donald Trump on his Truth Social platform. “Congratulations to both Countries on using Common Sense and Great Intelligence,” he wrote, hailing the full and immediate ceasefire deal.

Under the terms of the agreement, both sides pledged to halt all military action by land, air, and sea. Military officials from both countries spoke Saturday afternoon to finalize the terms.

Despite the mutual accusations, both governments have expressed interest in pursuing further talks. US Secretary of State Marco Rubio said discussions would soon begin on a broader agreement at a neutral site.

India and Pakistan agree to ceasefire

US President Donald Trump said on Saturday that India and Pakistan had agreed to a "full and immediate ceasefire" after a fourth day of strikes and counter-strikes against each other's military installations, reports Reuters.

Pakistan's foreign minister also said both countries had agreed to a ceasefire "with immediate effect" and India's foreign ministry said it would start at 5.00pm Indian time, 1130 GMT.

"After a long night of talks mediated by the United States, I am pleased to announce that India and Pakistan have agreed to a full and immediate ceasefire. Congratulations to both Countries on using Common Sense and Great Intelligence," Trump said in a post on Truth Social.

The sudden announcement came on a day when fears spiked that the countries' nuclear arsenals might come into play as Pakistan's military said a top military and civilian body overseeing its nuclear weapons would meet. The officials from both sides showed a willingness to take a step back following the day's exchanges, as the combined civilian death toll on the two sides rose to 66.

"Pakistan and India have agreed to a ceasefire with immediate effect," Pakistani Foreign minister Ishaq Dar posted on X.

"Pakistan has always strived for peace and security in the region, without compromising on its sovereignty and territorial integrity."

India's foreign ministry said that the head of Pakistan's military operations called his Indian counterpart on Saturday afternoon and it was agreed that both sides would stop all firing.

The two heads will speak to each other again on May 12, the ministry added.

The fighting began on Wednesday when India carried out strikes on what it said was "terrorist infrastructure" in Pakistani Kashmir and Pakistan, two weeks after 26 people were killed in an attack on Hindu tourists in Indian Kashmir.

Pakistan denied India's accusations that it was involved in the tourist attack. Since Wednesday, the two countries have exchanged cross-border fire and shelling, and sent drones and missiles into each other's airspace.

The countries have been locked in a dispute over Kashmir since they were born after the end of British colonial rule in 1947. Hindu-majority India and Islamic Pakistan both claim Kashmir in full but rule it in part.

They have gone to war three times since, including twice over Kashmir, and clashed several times.

India blames Pakistan for an insurgency in its part of Kashmir that began in 1989 and has killed tens of thousands. It also blames Pakistani Islamist militant groups for attacks elsewhere in India.

Pakistan rejects both charges. It says it only provides moral, political and diplomatic support to Kashmiri separatists.

 

 

India and Pakistan step up military strikes

Pakistan and India launched strikes and counter-strikes against each other's military installations on Saturday, prompting US calls for the nuclear-armed neighbours to begin talks and defuse their escalating conflict, the most intense since 1999.

Fears that the countries' nuclear arsenals might come into play spiked when the Pakistan military said a top military and civil body overseeing its nuclear weapons would meet, but the defence minister later said no such meeting was scheduled.

As tensions remain high, residents across Pakistan and India have rushed to stockpile food and other essential supplies, while families living near the border fled to safer areas. Indian authorities have installed sirens in high-rise buildings in New Delhi, some 650 kilometres (400 miles) from the border.

Pakistan early on Saturday said it had targeted multiple bases in India, including a missile storage site in India's north, in response to prior attacks by the Indian military.

India said there was limited damage to equipment and personnel at four air force stations. The military said there were several high-speed missile attacks on air bases in Punjab state and that India had responded to the attacks.

Five civilians were killed in the attacks in the Jammu region of Indian Kashmir, regional police said. Hindu-majority India and Islamic Pakistan both claim Kashmir in full but rule it in part.

Blasts rang out across Indian Kashmir and the Sikh holy city of Amritsar in neighbouring Punjab until early morning on Saturday. Jammu streets were empty hours after loud blasts were heard and projectiles were seen flying across the city sky.

"Jammu city has never been hit before. Never thought we will be hit like this," said 60-year-old Rajeev Gupta, whose brother was wounded by a shell.

Pakistan said that, before its offensive, India had fired missiles at three air bases, including one close to the capital, Islamabad, but Pakistani air defences intercepted most of them.

Locked in a longstanding dispute over Kashmir, the two countries have engaged in daily clashes since Wednesday when India launched strikes inside Pakistan on what it called "terrorist infrastructure". Pakistan vowed to retaliate.

Pakistan's information minister said in a post on X that Saturday's military operation was named "Operation Bunyanun Marsoos". The term is taken from the Koran and means a firm, united structure.

India has said its strikes on Wednesday, which started the latest round of clashes that have left more than 50 people dead in both countries, were in retaliation for a deadly attack on Hindu tourists in Indian Kashmir last month.

Pakistan denied India's accusations that it was involved in the tourist attack. Since Wednesday, the two countries have exchanged cross-border fire and shelling, and sent drones and missiles into each other's airspace.

Despite growing Western calls for peace, defence experts said the opposite seemed to be happening.

"Operations moving to next level - free use of missiles and drones by both sides," said Pravin Sawhney, a defence author and former Indian Army officer. "And reports that Pakistan Army is moving troops forward. Not good indications of what lies ahead!"

Israel after Trump strikes truce with Houthis

Israeli Prime Minister Benjamin Netanyahu has vowed to “defend ourselves alone” against Yemen’s Houthi rebels after the US President Donald Trump struck a deal with the Iran-backed group.

The US deal, announced just hours after the Israeli military carried out major strikes against Yemen’s international airport and other facilities in response to a Houthi attack on Israel’s main airport, was a surprise to Israel, which was not informed in advance about the truce, an Israeli official told CNN.

According to Trump, the US would halt an ongoing military campaign against the Houthis in exchange for the group stopping its attacks on US interests in the region.

The Houthis acknowledged the agreement but made it clear their attacks on Israel would continue. Senior Houthi leader Mohammed Ali al-Houthi said after the announcement that the agreement was “a victory that separates US support for the temporary entity (Israel) and a failure for Netanyahu.”

On Wednesday, Netanyahu said, “Israel will defend itself by itself.” In the past, Israel has carried out joint strikes with the US against the Houthis, but two consecutive days of Israeli attacks on Yemen earlier this week were done alone.

“If others join us—our American friends—all the better. If they don’t, we will still defend ourselves on our own,” he said in a video posted on social media.

Trump referred to the deal as capitulation from the Houthis on Tuesday but on Wednesday he said they had a “good outcome with the Houthis,” adding they had a “great capacity to withstand punishment” from repeated US strikes.

“You could say there’s a lot of bravery there,” Trump said at a swearing-in of his ambassador to China at the White House. “It was amazing what they took.”

He added that the US would “honor their (Houthis’) commitment” not to attack US warships or commercial vessels in the region.

The US-Houthi truce sidelined the Israeli government, according to former US Middle East envoy Dennis Ross. He noted that Netanyahu was left in the dark when the US began talks with Hamas in March and only found out about US nuclear talks with Iran when Trump made the announcement seated next to the prime minister in the Oval Office last month. The US-Houthi ceasefire is one more instance where Israel’s concerns were a tertiary consideration for the White House, if at all, he said.

Whether Houthi ballistic missile launches against Israel continue remains to be seen, but Ross told CNN that Israel does not appear to have been a major factor in the White House’s thought process.

“The Trump Administration thinks about America’s interests,” said Ross.

There has been no public criticism of the White House decision from Israeli officials. Netanyahu, who once openly criticized the Biden administration’s requests and policies, is one of Trump’s most vocal international supporters. Other members of the government have reserved their judgment as well, instead focusing on Israel’s resolve against the Houthis.

Defense Minister Israel Katz said in a statement on Thursday that “Israel must be able to defend itself by itself against any threat and any enemy. This has been true in the face of many past challenges, and it will remain true in the future.”

Trump designated the Houthi group as a Foreign Terrorist Organization in the final days of his first term as president. President Joe Biden revoked that designation early in his presidency in 2021, and Trump designated it again in January.

PSX benchmark index posts 6.08%WoW decline

Pakistan Stock Exchange (PSX) trended negative throughout the week, some recovery was observed during the final trading session. The benchmark index declined by 6,939 points or 6.08%WoW to close at 107,175 level on Friday, May 09 2025.

Notably, Thursday saw the largest single-day decline in the index's history, when the index plunged by 6,482 points or 5.89% amid heightened concerns over regional instability between the two neighboring countries.

On Friday the index recovered 3,648 points or 3.52% on the expectation of the approval of a US$1.0 billion tranche under the first review of the EFF program by the IMF’s Executive Board.

On the macro front, the central bank reduced policy rate by 100 bps to 11%. Workers’ remittances continued their strong trend, rising to US$3.2 billion for April 2025, up 13%YoY).

The budget deficit for 9MFY25 was recorded at PKR3.0 trillion, with the primary balance posting a surplus of PKR3.5 trillion for the same period.

IMF's Executive Board has approved the US$1.0 billion tranche under the first review of the EFF program, alongside approving the new RSF program of US$1.3 billion.

Average daily traded volume was recorded at 508 million shares as compared to 424 million shares a week ago, up 20%WoW).

Foreign exchange reserves held by State Bank of Pakistan (SBP) reserves rose by US$118 million to US$10.3 billion as of May 02, 2025.

Other major news flow during the week included: 1) India cut water supply to Pakistan from Baglihar Dam on Chenab River, 2) Cement sales for April 2025 were recorded at 3.34 million tons, up 8%YoY, 3) S&P Global forecasted more rate cuts in Pakistan, 4) OMC sales in April 2025 increased by 32%YoY, and 5) GoP raised PKR299 billion through PIB auction.

Vanaspati & Allied Industries, Sugar, and Synthetic & Rayon were amongst the top performing sectors, while Transport, Chemical, and Refinery were the laggards.

Major selling was recorded by Mutual Funds and Individuals with a net sell of US$34.9 million. Banks, Companies and other organizations absorbed most of the selling with a net buy of US$31.0 million.

Top performing scrips of the week were: NESTLE, JDWS, IBFL, and MUREB, while laggards included: AGL, SEARL, PTC, and PSX.

According to AKD Securities, market appears to have overreacted to the ongoing escalations, as the development of nuclear capability has significantly reduced the likelihood of full-scale war. The same has been witnessed during escalations since both nations attained nuclear deterrence. During past escalation periods post-nuclear capability, the market has posted an average return of positive 3%. Meanwhile, in 3 months following de-escalation, the market has historically delivered an average return of +5%.

The brokerage house expects the market to rebound with de-escalation of ongoing geopolitical tensions, alongside approval of a US$1.0bn tranche under IMF’s EFF program and US$1.3 billion under new arrangement of RSF.

The brokerage house maintains an ‘Overweight’ stance on Banks, E&Ps, Fertilizer, Cement, OMCs, Autos, Textile, and Technology sectors, as these stand to benefit from monetary easing, structural reforms and reciprocal tariffs.

Can China and Russia end US hegemony?

Ever since Donald Trump has taken over as President of United States, started trade war with China and European allies take custody of Gaza, China and Russia are not only perturbed, but also considering plan to cause dent to the US hegemony in the Middle East and North Africa, to begin with.

We are of the opinion that China and Russia may be serious in ending the US hegemony, but achieving the target is highly unlikely in the near term.

No one can deny that the United States still Holds a strong Position because of:

Military Presence

The US maintains major military bases and alliances in the region (Saudi Arabia, Israel, Qatar, and others).

Energy Security Ties

Despite shifting energy priorities, US influence over global oil markets via relationships with Gulf states remains strong.

Diplomatic Leverage

The US plays a key role in peace negotiations, arms deals, and counterterrorism efforts.

Soft Power

US culture, education, and tech continue to have significant appeal in parts of the region.

Growing Role of China and Russia

China

Economic Influence

China’s Belt and Road Initiative (BRI) has deepened economic ties, particularly through infrastructure investment and oil imports from Gulf states and Iran.

Diplomacy

Recently brokered the Saudi-Iran détente (2023), signaling growing diplomatic credibility.

Non-Interference Model

Appeals to regimes wary of Western pressure on human rights or democratization.

Russia

Military Intervention

Russia has demonstrated staying power in Syria and maintains naval bases in the eastern Mediterranean.

Arms Sales and Security Cooperation

Offers military support without political conditions.

Energy Deals

Competes with and collaborates on energy projects, particularly in gas.

Challenges to Ending US Hegemony

Use of US dollar in international trade

The single largest point that gives the United States unequivocal strength is use of Greenback in international trade and its absolute control over payment and settlement system.

Lack of Unified Strategy

China and Russia do not have a cohesive alliance or unified vision for the region.

Regional Dependence on US

Many MENA states still rely on US military support and arms.

Distrust Toward Russia and China

Some countries remain skeptical of long-term Chinese or Russian motives.

Way Forward

Though, China and Russia are eroding US dominance through economic, diplomatic, and military inroads, but the US retains deep-rooted strategic advantages. A complete end to US hegemony requires a far greater realignment of regional security and political interests.

Unless China and Russia are able to come up with an alternative currency and payment/ settlement system, they just can not cause dent to the US hegemony in any significant manner.