Analysis: Why One of the Biggest Deals in Business This Week Signifies What’s Happening In Geo-Politics Right Now

I built this analysis around the opinion I wrote for last week’s TWB newsletter about the United Kingdom (UK) and United States (USA).

In last week’s opinion piece I argued that the UK and USA both revealed their intentions for the future of world order. They were definitely the two biggest events in international affairs last week as the UK joined the Indo-Pacific trade partnership and the US special climate envoy John Kerry went to Beijing to hold discussions on climate change.

That brings me to TWB newsletter for this week. France and India are two important countries for international affairs, since they both seek to play a unique role in the Indo-Pacific.

In Areas & Producers, it’s my goal to keep viewers up to date on the overall changes — shift/scenarios — relevant to multi-national corporations (MNCs) operating in global markets.

Without a global marketplace, MNCs as we know them would cease to exist.

That’s why I’m sharing the details of the biggest deal announced in business news this week: French aerospace company Safran Group’s $1.8 billion purchase of USA defense contractor Raytheon Aerospace Assets.

According to the company’s official website, the mission is: Contribute to safer and more sustainable aviation.

The homepage illuminates the viewer experience with all of the latest aerospace technology designs, engineering and, of course, rocket launches!

The company does not shy away from its global market presence on the homepage either. Scroll down below the content search engine and you will find that they boast more than 83,000 employees across Europe, North and Central America, Africa and Middle East and Asia and Austrailasia.

Knowing these facts about the company makes this deal to buy Raytheon Aerospace Assets look very attractive. The deal allows Safran Group to expand capacity to manufacture flight controls for aircraft and missiles.

It was reportedly being talked about at the 54th Paris Air Show held from 16 to 22 June 2023. Access all content in French or English about the 2023 Paris Air Show in the SIAE 2023 link.

Business reporting on the Safran-Raytheon deal indicates that because of a merger with United Technologies in 2020 that it gave the French aerospace company a step ahead of the competiton for aircraft, helicopters and missiles flight control systems. Indeed, the aerospace industry is booming with increased international travel demand and renewed military and defense cooperation among governments.

Without a global marketplace, MNCs as we know them would cease to exist.

Flight control systems of Raytheon are used for the United States military’s F-35 and V-22 aircrafts, with operations in France already in existence, this puts Safran Group at a unique advantage for aerospace defense business.

But what I would like to point out is how the company is pushing hard into one of the most lucrative emerging markets: India.

The Times of India reported on 18 July 2023 that Safran intends to establish a much larger presence in India by building the largest aircraft engine facility there. This manufacturing facility will serve the markets for maintanence, repair & overhaul (MRO) of which are a critical factor in global aerospace defense cooperation.

The facility is to be built in Hyderabad within India’s special economic zone (SEZ) at the GMR Aerospace & Industrial Park.

MRO is a concept that should be closely followed by anyone interested in world military affairs. MRO allows countries (in most cases allied countries) to set up facilities for multinational aircrafts that promote defense cooperation between them. By setting up this engine manufacturing facility, it could mean that India will become a MRO hub for countries in the Indo-Pacific, like the United States, Australia and Japan.

To illustrate, Germany and India are reportedly in talks to co-develop advanced military submarines, according to a news release on 7 June 2023.

Attending a meeting with Indian leaders, German Defense Minister Boris Pistorius went to Mumbai to discuss a possible deal between German-based Thyssenkrupp Marine Systems and Indian-based Mazagon Dock Shipbuilders for the production of non-nuclear submarines, whereby the two companies signed a memorandum of understanding (MoU) to build the submarines for the Indian naval forces. Anadolu Ajansi

This is definitely a turning point in the Indo-Pacific strategy being led by the United States to establish closer defense ties with countries such as India, Japan and Australia. The latter form “The Quad”— the four countries with significant interests in protecting the Indian and Pacific oceans under a quadrilateral framework of military, defense and security cooperation.

The United Kingdom (UK) just signed a treaty with Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) members to formally join the Indo-Pacific trade bloc at a signing ceremony in New Zealand on 16 July 2023.

According to a report about the deal by CNBC, UK business and trade secretary, Kemi Badenoch, said that one of the reasons for signing this treaty is because it will give the country “huge opportunities and unparalleled access to a market of over 500 million people.” CNBC

Indeed this is true. The CPTPP trade bloc consists of Canada, Mexico, Peru, Chile, New Zealand, Australia, Brunei, Singapore, Malaysia, Vietnam and Japan.

This Indo-Pacific trade partnership has not been a story of roses and rainbows. Geopolitics have had a massive impact on those countries, which is one of the benefits of them coming together for economic cooperation.

John Kerry has been given a role under the Biden Administration as a special climate envoy.

As anyone following United States domestic politics would concur, the role has been doomed to fail from the beginning. Even the title “special” along with the name “climate envoy” smacks with climate change notions that have devolved since the Trump Administration pulled out of the Paris Climate Agreement.

This story is not just about US domestic politics, however.

It’s more about looking ahead at the US-China relationship, as John Kerry’s latest trip to Beijing this week signifies what could be one of the only tailwinds facing ruptured ties between the two world’s largest economies.

Kerry went to Beijing on 16 July 2023 as the special climate envoy during a heatwave in the People’s Republic of China (PRC). This trip has been seen as an indication of the United States’ efforts to restart talks with the Chinese Communist Party (CCP) on the future of climate change.

In report by CNN World, Greenpeace China senior global policy adviser Li Shuo told reporters: “If anything, this is the situation that should most bring China and the US back on the same page.”

This event reveals a very strange mix of intense climate change notions and geopolitical trends, which is why I’m not hopeful about the outcomes at present. But with a volatile world beset by countless effects from the global Covid-19 pandemic, I don’t think the two sides have anything to lose right now.

The problem is about the future.

Can the US special climate envoy agree to a future negotiation with CCP counterparts in Beijing?

For more content on geopolitical trends and global commodities, follow the publication Areas & Producers.

Have a specific topic or case about international affairs in mind? Private message me at Monroe 4PEACE and we can talk about covering it in the publication.