WSJ What’s News - The Diplomatic Storylines to Watch in 2025

Episode Date: December 26, 2024

Dec. 26 Edition. The WSJ’s Shayndi Raice, Gabriele Steinhauser and Liza Lin describe how a Middle East “grand bargain,” a diplomatic shakeup in the Horn of Africa, and intensifying U.S.-China trade tensions could define the year to come. Plus, wealthier Americans drive a surge in U.S. holiday spending. And dueling narratives emerge after the deadly Christmas Day crash of an Azerbaijan Airlines plane. Luke Vargas hosts. Programming note: The next episode of What's News will be released midday Friday. Sign up for the WSJ’s free What’s News newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

This episode is brought to you by HelloFresh. Be honest, between meetings, workout classes, and the kids' clubs, who's got time to cook? That's where HelloFresh comes in. No matter how busy you get, HelloFresh makes it easy to get a home-cooked meal on the table. With flavor-packed recipes like crispy chicken parmigiana, you'll be filling your kitchen with the cozy aromas of a homemade meal in no time. Visit HelloFresh.ca and use code Spotify for your exclusive offer. U.S. holiday spending rises from last year, driven by high earners.

Plus, sectarian and political divisions flare in Syria, complicating work for new Islamist rulers, Hayat Tahrir al-Sham. HTS is facing their first clear challenges to their power after seizing control of Syria from the Assad regime. And journal reporters and editors on the diplomatic storylines to watch in 2025. It's Thursday, December 26th. I'm Luke Vargas for the Wall Street Journal and here is today's edition of What's News,

the top headlines and business stories moving your world today. The Christmas Day crash of an Azerbaijan Airlines plane bound for the Russian city of Grozny was likely caused by Russian air defenses, according to aviation security firm Osprey Flight Solutions. A Ukrainian national security official also said in an ex-post that the plane was shot down by a Russian air defense system, citing visible damage to the aircraft. At least 38 people were killed in the crash, which occurred when the plane diverted course over an area where Moscow has been battling Ukrainian drones before crashing in Kazakhstan. As many as 29 passengers on the flight survived.

Russian officials couldn't be immediately reached for comment about the osprey and Ukrainian assessments. Just weeks after seizing power, Syria's new leaders, the Islamist group Hayat Tahrir al-Sham, or HTS, are facing fresh challenges to their authority, including from allies of the toppled Assad regime. Yesterday, 14 members of the new government's security forces were killed in an ambush in a coastal province heavily populated by Syria's minority Alawite sect, which includes the Assads. heavily populated by Syria's minority Alawite sect, which includes the Assad's.

Elsewhere, protesters yesterday gathered to accuse HTS-affiliated forces of destroying religious symbols. Journal correspondent Omar Abdel-Bakhi in Damascus has more. This ambush highlights the remaining presence of people who may be loyal to the Assad regime. It also comes as HTS is cracking down on people who were affiliated with the regime and who they say committed atrocities under the Assad regime, causing some not only controversy but also what is seen as violent pushback against HTS's efforts. Given HTS's background as a Sunni group that has its history rooted in al-Qaeda, everyone is waiting to see how HTS and the factions under HTS are going to run

Syria. So that's why the destruction of religious symbols is quite important because it's a sensitive time and a small act by a rogue troop can lead to the fanning of flames and instability that spreads across the country. And in Markets News, U.S. consumers spent 3.8% more from November 1st through Christmas Eve compared to the same period last year. That's according to MasterCard Spending Pulse, which showed online retail sales rising more than twice as much as in-store sales. Higher-end retailers also appear to have fared better than discounters, who have been suffering from belt tightening among their core consumers. U.S. jobless claims fell last week. A sign the economy continues to avoid a major surge in layoffs despite the unemployment

rate inching higher throughout the year as the labor market softens. The initial jobless claims figure of 219,000 came in below economist expectations. Stock markets in Asia ended the day broadly higher. Europe's major indexes were closed for Boxing Day, and U.S. stocks are mostly flat entering afternoon trading in their first post-Christmas Day session. Coming up, we'll hear from journal editors and reporters about the diplomatic storylines that could come to define 2025 from resource wars to a grand bargain in the Middle East. That's after the break.

With Uber Reserve, good things come to those who plan ahead. Family vacay? Reserve your ride as soon as you book your flights. To all the planners, now you can reserve your Uber ride up to 90 days in advance. See Uber app for details. It's the most wonderful time of the year to consider what stories could define the next year.

And since we heard earlier this week how fiscal strain could dominate 2025 in parts of Latin America and Europe, let's cast an eye now to some diplomatic dramas potentially coming into focus. To do that, I asked three journal editors and reporters what they'll be watching for, starting with Deputy Middle East Bureau Chief Shandy Race, who told me that the upcoming change in U.S. administrations could unlock a major geopolitical realignment that's lately been on hold. At the end of the Trump administration, Israel normalized relations with the United Arab Emirates

and a handful of other Muslim countries. This was meant to be the precursor to a bigger normalization deal that would have seen Israel normalize relations with Saudi Arabia. The Trump administration was fairly close. The Biden administration was much closer, actually. And before Hamas's October 7th attack, it was thought to be perhaps weeks away. That attack obviously threw everything into disarray. And the Saudis decided to take

normalization off the table. So Shainty, what exactly has changed? The war in Gaza obviously is continuing. One is that Israel had a very successful military campaign against Hezbollah in Lebanon. It also weakened Iran's axis of resistance, which is this sort of proxy militias that it has throughout the region that fight against Israel and Western interests. It also led to the collapse of Bashar al-Assad's regime in Syria. And these are things that make Israel appear to be a stronger partner for the Saudis. The other is President Trump is going to be coming back into office. And he has said, and many of his people have said that they plan on reviving this effort. The

big catch here is that Saudi Arabia has very publicly condemned Israel. They even recently said that Israel's campaign in Gaza was tantamount to genocide, but a lot of people who go and meet with the Saudis within Israel from America, they say that there is a real divide between what the Saudis say publicly and what they say privately. Shandy, if that's true, I imagine a deal here with Saudi Arabia that could potentially be followed by other Muslim nations also normalizing with Israel would be met with dismay among Palestinians. It has been a long standing policy of the Arab world generally that they would not normalize with Israel would be met with dismay among Palestinians.

It has been a long standing policy of the Arab world generally that they would not normalize relations with Israel until there was a Palestinian state. The Abraham Accords destroyed that. So yes, there would be a lot of anger within the Palestinian world, within a lot of the Arab world, if Saudi Arabia were to normalize with Israel.

There was a lot of anger at the UAE for normalizing with Israel without really getting anything concrete towards statehood. And it's become much harder for the Israelis politically to give anything like statehood after October 7th. At the same time, it would be very difficult for the Saudis to do it, especially because they have their own citizens who probably are tremendously angry at Israel. But at the end of the day, they're going to decide what's best geopolitically for them.

Before the war in Gaza started, the Saudis had expressed hope a deal with Israel could lead to a range of economic and security benefits. Well, quite a bit further off the radar, but still regionally significant, is the possibility that Donald Trump could recognize the self-declared nation of Somaliland, a comparably peaceful corner of violent Somalia that despite its strategic location across the Gulf of Aden from Yemen, has yet to be recognized by a single country as independent. But Journal-Africa Bureau Chief Gabrielle Steinhauser's long-shot item to watch is that that could change, given mention of U.S. recognition of Somaliland within the 900-page

policy blueprint for federal government actions during the Trump administration known as Project 2025, where the idea is raised as a way for the U.S. to hedge against its weakening position in neighboring Djibouti, the home to a Chinese naval base. The U.S., which obviously has not recognized Somaliland, has for many years supported the Somali government in its fight against al-Shabaab. But we have with Project 2025, funnily enough, in its chapter about Africa, the one place that is sort of mentioned by name is Somaliland and the recognition of Somaliland. It's important to say here that Donald Trump has distanced himself from Project 2025, but

it is something that comes up in conversations with people who are sort of in the Trumpian orbit. And if it were to happen, it would really shake things up quite dramatically. It would break with longstanding diplomatic precedents and international law, right? Where most countries have sort of signed up to national borders and for the US, the world's most powerful country and largest economy, to then recognize a country that according to the UN is not a country and according to most countries in the world is not a country would certainly have pretty big implications. And ending on something a bit more likely, reporter Lisa Lin told me that the Trump administration's promised escalation of tariffs on China could lead Beijing in the new year to dial up the

firepower that it's bringing to its trade battle with the U.S. As the China Tech reporter, you tend to spend a huge amount of time on the Byzantine world of export controls. And for most part of the recent years, it's been focused on chips. Towards the end of 2024, I've seen the conversation turn in a different direction. I've started hearing people talk not just about a chip war, but a raw material and critical mineral war. Just this month, China kicked things off by saying it would ban the export of gallium, germanium and antimony to the U.S.

three minerals that the U.S. Geological Survey deems as essential to American economic or national security and which have vulnerable supply chains. China has made threats about capping exports before, but Lisa thinks this time it's serious. Firstly because China is the largest producer of these things. And in this tech rivalry with the U.S., it doesn't have that many hands to play. And imposing export controls on critical minerals, which the U.S. cannot be fully self-sufficient in, that's actually the best hand. And the second reason why we think that this is going to blow up is because over the last couple of years, ever since Trump first left export controls on companies like Huawei, ZTE, SMIC, all these large Chinese

tech companies, China has seen the pattern coming out from the US and they're gradually preparing themselves to do the same. So what we saw over the last couple of years is China was preparing and actually putting in place an export control regime that allows them to much better track where exports of these critical minerals are going and how to stop them. So this makes them a lot more effective in playing this export control game. So where could this critical mineral war lead? According to the USGS, to a nearly $3.5 billion hit to US GDP, should China stick with a total ban? Or, as Lisa predicts, to high-stakes negotiations.

I do think it might end up in a situation of who blinks first. But I think more fundamentally, people believe that these solvables are really just meant to set the stage for a broader negotiation between Trump and China. China knows Trump is a negotiator and it wants to show its cards early so that Trump will come to the table. Well, from the Middle East to the Horn of Africa or the front lines of the U.S.-China trade war, if any of those predictions come to pass in the new year, you'll hear about them here. And that's it for What's News for this Thursday. Today's show was produced by Charlotte Gartenberg with supervising producer Michael Cosmides.

And I'm Luke Vargas for The Wall Street Journal. We will be back with a new single show tomorrow at midday. Until then, thanks for listening.