The world this week | India, Pak ties hit another low after Pahalgam terror attack, New Delhi, Ottawa to reset strained ties, US threatens sanctions against Iranian oil buyers

Islamabad also said on Friday that it has a “right” to seek a meeting of the United Nations Security Council when “appropriate” as tensions heightened with India. These remarks came as India sought to throttle Islamabad strategically via measures ranging from a heightened diplomatic offensive to mobilising the international community and exerting economic pressure. 

In its latest move to ramp up pressure on Pakistan, India made a concerted effort to bring Islamabad back into the ‘grey list’ of the Financial Action Task Force (FATF). Being on the ‘grey list’ of the global money laundering and terror financing watchdog will severely hamper foreign direct investment (FDI) and capital flows into Pakistan. 

India said it will also raise objections to the International Monetary Fund’s (IMF) continued financing of a three-year $7-billion aid package, which began in July last year, under its Extended Fund Facility (EFF) programme.

In addition to building economic pressure, India intensified its global diplomatic outreach and made key strategic wins this week. In the United Nations Security Council, India blocked Pakistan’s attempt to get “disputed” added to Jammu and Kashmir with support from the US and France, while China backed Islamabad’s call for an “impartial investigation” into the Pahalgam terror attack in which terrorists killed 25 tourists and a local resident.

The unanimous condemnation of the attack by Pakistan’s allies – Saudi Arabia, the UAE, the Taliban-led Afghan government and Turkiye – alongside the US, the UK, and France was seen as strengthening India’s position while isolating Pakistan globally. 

India also garnered “strong support” from the US in its “right to defend itself”. The US stands “in solidarity” with India and supports its “right to defend itself”, US Defence Secretary Pete Hegseth told Defence Minister Rajnath Singh on Thursday. 

The Defence Minister also said that “Pakistan has a history of supporting, training and funding terrorist organisations” – the first direct reference to Pakistan by a senior minister in the aftermath of the terror attack.

The US’s unequivocal support to India came at a time when Prime Minister Narendra Modi told the top military leadership that the armed forces have “complete operational freedom to decide on the mode, targets and timing of our response” to the Pahalgam terror attack.

However, amid the heightened tension between the two nuclear-powered neighbours, calls for restraint and de-escalation started pouring in from the US, the UN, and the European Union (EU) among others, while Iran offered to mediate between the two countries.

The US urged both countries to work towards a “responsible solution”, with Vice-President J D Vance saying his country hopes it will not lead to a “broader regional conflict” — and that the US expects Islamabad to “cooperate” with New Delhi to “hunt down” terrorists “sometimes operating from their soil”. 

The EU called on India and Pakistan to show “restraint” and pursue dialogue to defuse tensions, while UN Secretary-General Antonio Guterres expressed deep concern over the rising tensions and underlined the need to avoid a confrontation that could result in tragic consequences.

The calls perhaps cannot go unheard in India, especially in view of its “no first use” policy, which means it will only retaliate with nuclear weapons if there is a nuclear attack on Indian forces or Indian territories.

Such concerns over this regional volatility were further compounded by the ongoing trade war that upended the global economy. 

China evaluates talks with US 

The trajectory of the trade war this week largely remained uncertain, while the IMF lowered its global growth forecast for this year from 3.3% to 2.8%. The Fund has also scaled down India’s growth estimate. 

This week also seemingly cleared the haze around the US-China tariff talks, with Beijing saying that it is “evaluating” the possibility of initiating tariff negotiations with the US. The negotiations could have implications for India. 

“China has noticed that the senior leadership of the United States has repeatedly stated that it is willing to negotiate with China on tariff issues. At the same time, the United States has recently taken the initiative to convey information to China through relevant parties, hoping to talk to China. In this regard, China is evaluating it,”  China’s Ministry of Commerce said in a statement on Friday.

However, uncertainty over a deal lingers on, while reports suggest that Trump’s tariffs began to show its inevitable impact on both the US and China. On Wednesday (April 30), the official data from the Bureau of Economic Analysis showed that the US GDP contracted in the first quarter. This was thanks to the spike in imports, which typically drag down GDP, as companies tried to build up inventories in anticipation of high tariffs.

Similarly, China’s factory activity “contracted at the fastest pace in 16 months in April”, according to Reuters. Also, Bloomberg reported this week that about 40 US-bound cargo ships are currently waiting at ports in China, 40% down from the number in early April. 

Meanwhile, amid elevated tariffs on Chinese goods, Indian exporters started receiving more orders and inquiries from US clients. Exporters told The Indian Express that the availability of shipping containers — which had been a constraint — is beginning to improve due to the cancellation of several Chinese shipments to the US. 

The biggest shift so far has been observed in the electronics sector. Apple CEO Tim Cook said that a majority of iPhones sold in the US during the June quarter will be exported from India. However, he added that he could not offer a longer-term outlook due to the evolving trade war between the US and China, where Apple currently manufactures most of its products.

In addition to the trade war, assessments of Donald Trump’s first 100 days in office highlighted how his presidency was marked by aggressive policy shifts, polarising immigration policy, and diplomatic uncertainty, disrupting the established international system. 

India seemed to have navigated the Trump administration’s policies on immigration and trade. India has finalised the Terms of Reference, which outline the framework of the US-India Bilateral Trade Agreement. The deal aimed to increase total bilateral trade from the current $191 billion to $500 billion by 2030 and enhance cooperation in energy, defence, infrastructure and technology. 

The possibility of early conclusion of an India-US trade deal — US Treasury Secretary Scott Bessent is reported to have said that India could well be the first country to sign one — has buoyed sentiment in India. 

Notably, this diplomatic momentum seems to be extending beyond the US, with encouraging developments taking place in Canada as well.

With Liberals in power, India, Canada to reset their strained ties

The victory of the Mark Carney-led Liberal Party in Canada’s federal elections is largely hailed as an opportunity to bring India-Canada strained ties “back on track”. The bilateral ties between the two countries have been strained for one-and-a-half years after former Prime Minister Justin Trudeau’s unsubstantiated allegations against India over the killing of Khalistani separatist Hardeep Singh Nijjar in 2023.

Prime Minister Narendra Modi signalled a change in trajectory as he congratulated his Canadian counterpart Mark Carney on the victory of his Liberal Party in the federal elections on Tuesday. He said that he looked forward to working with Carney to “strengthen our partnership”. “Congratulations @MarkJCarney on your election as the Prime Minister of Canada and to the Liberal Party on their victory,” Modi said in a post on X.

“India and Canada are bound by shared democratic values, a steadfast commitment to the rule of law, and vibrant people-to-people ties. I look forward to working with you to strengthen our partnership and unlock greater opportunities for our people,” Modi added.

A tangle of factors, primarily Trump’s tariff war and his suggestion to annex Canada as the 51st American state, helped Carney lead his Liberal Party to a surprising electoral victory. However, Carney’s intent to “rebuild” India-Canada ties, which he called “incredibly important” is more important for India.    

In addition, the electoral defeat of Jagmeet Singh, leader of the left-leaning New Democratic Party (NDP) and a backer of pro-Khalistan separatists, is seen as a significant development for India. The NDP supported Trudeau’s minority government from 2021 to 2024, but this time failed to meet the 12-seat threshold required for official party status.

Sources told The Indian Express that New Delhi and Ottawa are looking at “restoring their High Commissioners by June this year” after they were expelled in October last year. 

India and Canada share strong bilateral ties evident in nearly two million people of Indian origin living in Canada, and over four lakh Indian students currently studying there. Beyond people-to-people contacts, key sectors of collaboration between the two nations include pharmaceuticals, agri-tech, energy and climate change mitigation. 

Meanwhile, India continued its broader push to deepen global partnerships across sectors ranging from economic to defence cooperation.

Indian Navy gets Rafale boost

Boosting the Navy’s operational capabilities, India on Monday signed an Inter-Governmental Agreement (IGA) with France to procure 26 Rafale-M fighter aircraft – 22 single-seater and four twin-seater – for the Indian Navy. Deliveries are set to begin from mid-2028 and likely to be completed by 2030.

According to the Ministry of Defence, the procurement will substantially enhance joint operational capability, besides optimising training and logistics for the aircraft for both Indian Navy and IAF. “The induction would lead to the addition of a potent force multiplier to the Indian Navy’s aircraft carriers, substantially boosting the nation’s air power at sea,” it said.

The Rafale-Marine is a carrier-borne combat-ready aircraft with proven operational capabilities in maritime environments. A key India-specific enhancement will be that the aircraft will be able to take off and land from a short deck with a ski jump, which is a feature of Indian aircraft carriers.

“The deal includes training, simulator, associated equipment, weapons and Performance-Based Logistics. It also includes additional equipment for the existing Rafale fleet of the Indian Air Force,” a Defence Ministry statement said. “The delivery of these aircraft would be completed by 2030, with the crew undergoing training in France and India.”

The agreement includes Transfer of Technology for the integration of indigenous weapons, such as the Astra Beyond Visual Range air-to-air missile, on the Rafales. “It also includes the setting up of production facility for Rafale Fuselage as well as Maintenance, Repair and Overhaul (MRO) facilities for aircraft engine, sensors and weapons in India,” the statement said, adding that the deal is expected to generate thousands of jobs and revenue for a large number of Micro, Small, and MediumEnterprises (MSMEs).

The agreement, valued at over Rs 63,000 crore, was signed by Defence Minister Rajnath Singh and Minister of Armed Forces of France Sebastien Lecornu remotely.

Interestingly, as India and France deepen their defense cooperation, a critical minerals deal between the US and Ukraine also seems to be reshaping geopolitical equations elsewhere.

US, Ukraine sign critical minerals deal 

After months of intense negotiation, twists and turns, the US and Ukraine signed a deal this week granting American access to Ukraine’s vast reserves of critical minerals. The deal came at a time when the US’s effort to end the three-year war between Russia and Ukraine is yet to yield a concrete result. 

Ukraine had insisted that US security guarantees be included in the deal, officially known as the US-Ukraine Reconstruction Investment Fund. However, the deal reportedly doesn’t offer any such guarantees to Ukraine in its grinding war with Russia. Instead, it merely states that the US “supports Ukraine’s efforts to obtain the security assurances necessary to build a lasting peace”. 

“This agreement signals clearly to Russia that the Trump administration is committed to a peace process centered on a free, sovereign, and prosperous Ukraine over the long term,” Treasury Secretary Scott Bessent said in a statement. 

The signing comes two months after the Oval Office meeting debacle involving President Donald Trump, Vice President JD Vance and Ukrainian President Volodymyr Zelenskyy. 

The US’s push to secure these minerals also coincided with China’s suspension of all exports of rare earth elements – the American tech and defence industries heavily rely on the critical minerals used in everything from electric vehicles and wind turbines to missiles.

Although the deal highlights the US challenge of balancing economic interests with strategic goals, its implications for ending the conflict in Ukraine remain unclear. A day after the deal was signed, the US said it sees no end to the war in Ukraine. US Vice President JD Vance told Fox News on Thursday that the Ukraine war prompted by Russia’s invasion of the country in 2022 was “not going to end any time soon”.

However, Ukraine as well as Europe are hopeful that the deal could revive US support and increase Ukrainian security. 

Meanwhile, Russian President Vladimir Putin’s unilateral declaration of a three-day ceasefire (May 8-10) in Ukraine ahead of Moscow’s World War II Victory Day commemorations on May 9 didn’t go down well. Ukrainian President Zelensky called it an “attempt at manipulation,” pointing out that Russia has not accepted the US proposal for a 30-day ceasefire that Kyiv has agreed to. This breakdown in diplomatic overtures was visible in other parts of the world too such as West Asia.

Israel continues Gaza strikes, Iran nuclear talks postponed

Conflicts and wars seem to be spiraling across West Asia, while the fourth round of US-Iran nuclear talks was postponed. Alongside Israel’s war on Gaza, military strikes in Syria by Israel and the attack on the Houthi-controlled Hodeidah port in Yemen by the US were reported this week.  

Even a ship carrying aid to Gaza was attacked off the coast of Malta on Friday. The ship was part of an attempt to challenge Israel’s two-month blockade of Gaza, Al Jazeera reported. The UN warned that Israel’s total Gaza blockade of food, water and other critical supplies to Gaza in early March exposed Palestinian children to the ‘growing risk of starvation, illness and death’.

Many of the states participating in the International Court of Justice (ICJ) hearing into Israel’s obligation to allow aid to Palestine rebuked Israel for acutely restricting humanitarian aid into Gaza since launching the war on October 7, 2023.

In the meantime, several Israeli military strikes were reported across Syria this week. The attacks came hours after the country’s presidency denounced an earlier Israeli attack near the presidential palace in Damascus as a “dangerous escalation”, Al Jazeera reported. 

At the same time, the Houthi-affiliated Al Masirah TV media outlet has reported that seven US strikes hit the Ras Isa oil port in al-Salif district in Hodeidah in the last few hours, where a US strike at the same port last month killed at least 80 people, reported Al Jazeera. 

Earlier Friday, Iran-backed Houthis claimed responsibility for launching two missiles towards northern Israel, targeting the Ramat David military airbase and the Tel Aviv area. 

Amid the throat of spiralling conflicts, hope for the US-Iran nuclear deal was dashed this week. Days before the fourth round of talks were expected to begin, the foreign minister of Oman announced that the talks about Iran’s nuclear programme had been postponed.

“For logistical reasons we are rescheduling the US Iran meeting provisionally planned for Saturday May 3rd,” Badr bin Hamad al-Busaidi wrote on X on Thursday, adding “New dates will be announced when mutually agreed.”

Al-Busaidi mediated three rounds of talks between Iran and the US, which were described by the two sides as positive and constructive. However, the talks were held amid US threats of military action against Iran and sanctions against Iran’s nuclear programme and its oil network. 

Soon after the fourth round of talks was postponed, President Trump also threatened sanctions on anyone who buys Iranian oil. It may be noted here that China is the leading buyer of Iran’s oil. 

“All purchases of Iranian Oil, or Petrochemical products, must stop, NOW!,” Trump wrote on social media. He said any country or person who buys those products from Iran will not be able to do business with the US “in any way, shape, or form”. 

Post Read Questions

How is India’s efforts to push Pakistan back into the Financial Action Task Force’s (FATF) grey list a strategic diplomatic move?

How does international condemnation of the Pahalgam terror attack affect Pakistan’s global standing?

How did US President Donald Trump’s first 100 days in office affect global diplomatic and trade relations? How do you think India navigates the Trump administration’s policies on trade and immigration? 

Why is the victory of Mark Carney’s Liberal Party in Canada seen as significant for India-Canada relations?

How does China’s suspension of rare earth exports relate to the US’s interest in Ukrainian minerals? Why are critical minerals important to the US economy and national security?

Send your feedback and ideas to ashiya.parveen@indianexpress.com.