EU's Critical Mineral Strategy Failing, Report Finds

Greenland’s government has accused Washington of continuing to pursue control over the strategic Arctic island, asserting that the U.S. objective remains unchanged even after President Donald Trump ruled out military action.

Figure 1: U.S. President Donald Trump's stated interest in Greenland has created diplomatic and psychological pressure on the Arctic island's population.

In a speech to the island's parliament in Nuuk, Prime Minister Jens-Frederik Nielsen delivered a stark warning about Washington's intentions. "The view upon Greenland and the population has not changed: Greenland is to be tied to the U.S. and governed from there," Nielsen stated, adding that the U.S. continues to seek "paths to ownership and control over Greenland."

Background: Trump's Push and NATO's Role

Earlier this year, President Trump intensified calls for the U.S. to take control of Greenland, citing national security concerns related to Russia and China. The move drew criticism from some European NATO allies, who defended Denmark's sovereignty over the territory and warned that Trump's pressure could fracture the alliance.

While the U.S. president later stepped back from any threats of force, he claimed to have secured "total U.S. access" to Greenland through a NATO deal, though the specifics of this arrangement have not been clarified.

Public Anxiety Prompts Mental Health Survey

The sustained pressure from the U.S. has taken a toll on the island's population. The Greenlandic government recently launched a survey to assess the mental health of its citizens, citing an environment of "extraordinary pressure."

"Some of our compatriots have severe sleep problems, children feel the worry and anxiety of adults, and we all live with constant uncertainty about what may happen tomorrow," Nielsen said. "We want to say it very clearly: This is completely unacceptable."

Diplomatic Talks Begin Amid Tensions

In response to the escalating situation, diplomatic talks involving the United States, Denmark, and Greenland commenced last week. According to Denmark's foreign ministry, senior officials met to "discuss how we can address American concerns about security in the Arctic while respecting the Kingdom's red lines."

Throughout the crisis, Nielsen has praised Denmark as a close and reliable partner. He has previously said that if Greenlanders were forced to choose between the U.S. and Denmark, they would unequivocally choose Denmark. His latest speech made no reference to independence for Greenland.

Cultural Divide Over Land and Sovereignty

The debate over ownership directly conflicts with the cultural values of Greenland's native Inuit population. Under Greenlandic law, which reflects the Inuit concept of collective land stewardship, individuals can own houses but not the land on which they are built. This foundational principle stands in sharp contrast to the U.S. approach to land ownership, adding another layer of complexity to the diplomatic standoff.

Iran and the United States are scheduled to resume nuclear negotiations in Turkey on Friday, according to officials from both nations. The talks, which will also include representatives from countries such as Saudi Arabia and Egypt, aim to revive diplomacy over Iran's nuclear program and ease fears of a new war in the region.

The meeting in Istanbul will bring together U.S. Special Envoy Steve Witkoff and Iranian Foreign Minister Abbas Araqchi. Regional allies, including Turkey, have been pushing for de-escalation. A regional diplomat confirmed that Qatar, Saudi Arabia, the UAE, and Egypt would attend the meeting, which will involve bilateral and trilateral discussions.

Naval Buildup Sets Tense Backdrop

The talks are happening under a cloud of high tension, marked by a U.S. naval buildup near Iran. This follows a deadly crackdown on anti-government protests in Iran last month, the most severe domestic unrest since the 1979 revolution.

U.S. President Donald Trump, who held back from military intervention during the protests, has since dispatched a flotilla to Iran's coast while demanding nuclear concessions. Last week, Trump stated that Iran was "seriously talking," a sentiment echoed by Tehran's top security official, Ali Larijani, who confirmed that arrangements for negotiations were underway.

Iranian sources report that President Trump has laid out three conditions for restarting talks:

• Zero uranium enrichment in Iran.

• Limits on Tehran's ballistic missile program.

• An end to Iran's support for regional proxy groups.

Iran has consistently rejected these demands as infringements on its sovereignty. However, two Iranian officials indicated that the country's clerical leadership considers the ballistic missile program a more significant obstacle to a deal than the issue of uranium enrichment.

Diplomacy Hinges on Preconditions

Iranian Foreign Ministry spokesperson Esmaeil Baghaei said Tehran was evaluating "the various dimensions and aspects of the talks," adding that "time is of the essence for Iran as it wants the lifting of unjust sanctions sooner." A Turkish ruling party official confirmed that both Washington and Tehran had agreed to refocus on diplomacy, a move that could avert potential U.S. military action.

Ahead of the talks, U.S. envoy Witkoff is expected to visit Israel to meet with Prime Minister Benjamin Netanyahu and the country's military chief.

An Iranian official stated that diplomacy is active but emphasized that for talks to resume, there should be no preconditions. He added that Iran is prepared to show flexibility on uranium enrichment, including handing over 400 kg of highly enriched uranium and accepting a zero-enrichment solution under a consortium arrangement. In return, Tehran wants U.S. military assets moved away from its vicinity before talks begin.

"Now the ball is in Trump's court," the official said.

Nuclear Site Activity and Regional Context

Iran's regional influence has been weakened by Israeli attacks on its proxies—including Hamas, Hezbollah, and the Houthis—and the ousting of its key ally, former Syrian President Bashar al-Assad.

In June of last year, the United States joined an Israeli bombing campaign, striking Iranian nuclear targets over a 12-day period. Since then, Tehran has claimed its uranium enrichment activities have stopped. However, recent satellite images of two targeted sites, Isfahan and Natanz, show some repair work has been undertaken since December, with new roofing visible on two previously destroyed buildings.

According to Washington-based think tank ISIS, satellite imagery from late January shows construction at tunnel entrances at the Isfahan site. The think tank noted this could "indicate a preparation for additional military strikes," similar to activity seen before last year's U.S. attacks, or it could signal the movement of assets from other facilities.

Stalled Negotiations and Uranium Stockpiles

After five rounds of talks stalled in May 2023, several major issues remain unresolved. Key sticking points include Iran's insistence on enriching uranium on its own soil and its refusal to ship its entire stockpile of highly enriched uranium abroad.

The UN's nuclear watchdog has repeatedly asked Iran to account for its highly enriched uranium stock since the June attacks. While Western nations worry the material could be used for a warhead, Iran maintains its nuclear program is for peaceful purposes like electricity generation.

Iranian sources suggest Tehran might be willing to ship its highly enriched uranium abroad and pause enrichment as part of a deal that also includes the lifting of economic sanctions.

President Donald Trump has announced he would welcome investment from China and India in Venezuela's crucial oil industry, signaling a new phase in the country's energy politics.

"China is welcome to come in and will make a great deal on oil," Trump told reporters. He also confirmed that the United States is actively working with India on a plan for it to purchase Venezuelan crude.

"India's coming in and they're going to be buying Venezuelan oil, as opposed to buying it from Iran," he stated, adding, "We've already made the deal, the concept of that deal."

A New Era for Venezuelan Oil Policy

This shift follows historic changes to Venezuela's nationalist oil policy approved by the country's acting president. The reforms, designed to attract foreign capital, include reduced taxes and greater ownership stakes for international oil companies.

These changes were implemented less than a month after U.S. forces captured former leader Nicolas Maduro. In a related move, the U.S. Treasury Department issued a general license that expands the ability of American companies to export, sell, and refine crude oil from the sanctioned South American nation.

The United States is now on track to import the most Venezuelan oil in a year as the Trump administration works to control the country's energy supply. Part of this strategy involves pressing oil companies to invest $100 billion to rebuild Venezuela's deteriorating oil infrastructure.

Tracking the Shift in Crude Shipments

While the U.S. is becoming the primary destination for Venezuelan oil, shipments to China have collapsed. After averaging 400,000 barrels a day last year, exports to China dropped to zero in January. This halt is the direct result of a U.S. naval crackdown on the "dark fleet" of tankers used to transport sanctioned oil.

The majority of Venezuelan crude now arriving in the U.S. is handled by Chevron Corp., which operates under a specific license to sell the sanctioned oil. Commodity trading giants Trafigura Group and Vitol Group account for about 20% of the supply.

The Trump administration tapped these two firms to help sell up to 50 million barrels of oil following Maduro's ouster in early January. According to Bloomberg data, Vitol and Trafigura are currently on course to lift 14 million barrels of Venezuelan crude. Much of this oil was loaded onto ships originally bound for China before January. The traders have since placed about 9 million barrels in Caribbean storage, with the remainder heading to markets in the U.S. and Europe.

High-stakes diplomatic talks between Ukraine, Russia, and the United States are scheduled for February 4-5 in the United Arab Emirates. However, this push for negotiation is unfolding against a backdrop of relentless and deadly Russian air assaults on Ukrainian civilian sites.

In a video address on February 1, Ukrainian President Volodymyr Zelenskyy confirmed the upcoming trilateral meeting. The announcement followed a period of uncertainty after the talks, originally planned for February 1, were postponed.

Diplomatic Track Resumes in Abu Dhabi

Zelenskyy stated his team was prepared for the negotiations and would meet with Kyiv's main negotiator, Rustem Umerov, to finalize the framework before heading to Abu Dhabi. "February will be a period of quite intense foreign policy activity on our part," Zelenskyy said, emphasizing the importance of the American role in de-escalation.

"We expect that the American side will be just as active, and in particular this applies to de-escalation measures -- reducing strikes," he noted.

The Kremlin also confirmed the new dates. Spokesman Dmitry Peskov explained that the initial postponement was due to a scheduling issue requiring "additional coordination" among the three parties. "Now, on Wednesday-Thursday, the second round will indeed take place. It will be held in Abu Dhabi," Peskov affirmed.

These discussions follow a recent resumption of direct contact. Representatives from Moscow, Kyiv, and Washington previously met in Abu Dhabi on January 23-24. Additionally, U.S. special envoy Steve Witkoff held what he called "productive and constructive meetings" with Kremlin negotiator Kirill Dmitriev in Miami on January 30. That meeting also included U.S. Treasury Secretary Scott Bessent, Jared Kushner, and government adviser Josh Gruenbaum.

Civilian Infrastructure Under Heavy Fire

Despite diplomatic efforts, Russian air attacks have continued to batter Ukraine's infrastructure as the country faces temperatures as low as minus 30 degrees Celsius.

Drone Strikes Kill Miners and Civilians

On February 1, Ukrainian officials reported that separate drone strikes killed at least 14 people and injured seven more in the southeastern Dnipropetrovsk region. Twelve of the victims were miners returning from their shift when their bus was struck near Pavlohrad, according to DTEK, Ukraine's largest private utility company. Two others died when a drone hit a house in the regional capital, Dnipro. Local authorities declared February 2 a day of mourning for the miners.

Maternity Hospital and Cities Attacked

In the neighboring city of Zaporizhzhya, air raids struck a maternity hospital, injuring at least six people. Regional Governor Ivan Fedorov said two of the women were undergoing medical examinations at the time of the impact, calling the attack "yet more proof of a war directed against life." A later strike on another neighborhood injured three more people, including a young boy.

Ukrainian Air Forces reported on February 2 that Russia had launched an Iskander-M ballistic missile and 171 drones overnight. In central Cherkasy, a massive drone attack injured four people.

Widespread Power Outages and International Reaction

The attacks have crippled energy infrastructure, causing power outages across the Sumy, Kharkiv, Dnipropetrovsk, and Cherkasy regions, according to the national electricity company Ukrenergo. Emergency blackouts were also implemented in Kyiv, where Mayor Vitaliy Klitschko reported that 244 buildings remained without heat.

The ongoing assaults drew sharp criticism. The attacks continued even after former U.S. President Donald Trump claimed on January 29 that Russian President Vladimir Putin had personally promised him a week-long pause in air strikes.

Katarina Mathernova, the EU ambassador to Ukraine, questioned the Kremlin's actions in a Facebook post. "Is this what a 'cease-fire' is supposed to look like?" she asked. "Like explosions. Like dead civilians. Like destroyed energy and transport infrastructure."

A recent nationwide survey by the Kyiv International Institute of Sociology (KIIS) found that 88% of Ukrainians believe Russia's strikes are intended to leave them without electricity and heating to force a capitulation.

Meanwhile, Russian officials reported on February 2 that a Ukrainian drone strike in Russia's Belgorod region killed two civilians, while another drone injured one person in the Bryansk region. Russia's Defense Ministry stated it had destroyed or intercepted 31 Ukrainian drones.

Payrolls Growth In Line With Breakeven Rate

Headline nonfarm payrolls are set to have risen by +65k last month, a modest quickening from the +50k pace seen in December, though broadly in line with the breakeven pace of job creation, which presently lies in a range of around +30k to +80k.

In any case, the range of estimates for headline job creation is as wide as ever, from a low of -10k, to a high of +130k, while revisions to the prior two months' of NFP data also bear watching closely. Additionally, as usual, the January report will also bring with it the annual benchmark revision, applicable to the March 2025 employment level. The preliminary QCEW data previously suggested a record -911k downward revision, roughly cutting the previously released employment level in half, with the final figure likely to be broadly in line with that figure.

Leading Indicators Largely Unchanged

Leading indicators for the payrolls print are, on balance, largely unchanged from where they stood this time a month ago, though at the time of writing we are yet to receive either of the monthly ISM surveys, or the monthly ADP employment report.

In any case, both initial and continuing jobless claims fell between the December and January survey weeks, by 14k and 48k respectively, though the former seems largely a reflection of seasonal adjustment factors, as opposed to underlying labour market shifts. Meanwhile, the weekly ADP employment report pointed to a total of 31k jobs having been added in the four weeks to 3rd January, a week prior to the BLS reference week.

Meanwhile, the NFIB hiring intentions survey has continued to tick higher in recent months, and suggests a considerably above-consensus private payrolls gain of around +180k. However, since last autumn, the correlation between hiring intentions, and actual hiring, appears to have broken down, not only lessening the utility of the metric as a lead for NFP growth, but possibly also suggesting that businesses remain reluctant to follow through on those plans, likely due to economic uncertainty, especially on trade, remaining at incredibly elevated levels.

Factors To Watch

As for other factors to watch in the jobs report, it's important to recall that the January report typically sees a significant upwards skew as a result of seasonal adjustments, largely reflecting the significant turnover that is seen as the holiday season wraps up, temporary contracts end, and amid typically higher-than-usual retirement levels at year-end.

Speaking of the holiday season, the unwinding of some degree of temporary hiring around the festive period may act as a drag on headline payrolls growth, though it must be said that said hiring was conducted to a lesser degree in 2025 than had been seen in year prior, hence any impact on this front could well be negligible. Besides that, the recent cold weather snap hit the US after the conclusion of the January survey week, hence shan't have any sort of significant impact, while the composition of hiring will also be closely watched, with the vast majority of private sector jobs over the last 12 months having come in the healthcare sector.

Earnings Pressures Remain Contained

Remaining with the establishment survey, earnings data is unlikely to be of especially much concern from an inflationary perspective, reinforcing the FOMC's view that the labour market is not a significant source of upside price risks at the present juncture.

Average hourly earnings are set to have risen by 0.3% MoM in January, unchanged from the pace seen a month prior, which would in turn see the annual pace dip 0.2pp from the 3.8% YoY seen in December, to 3.6% YoY this time out. Such a pace would, by and large, be broadly compatible with a sustainable return to the 2% inflation aim over the medium-term.

Household Survey Key For FOMC

All that said, it is the household survey to which policymakers continue to pay considerably more attention, not least considering Chair Powell's comments regarding headline payrolls growth, and the potential for the NFP print to be overstating job creation by as much as 60k per month. Hence, it is the details of the HH survey which are of much greater importance in terms of triggering shifts in the future policy path.

Headline unemployment is seen having held steady at 4.4% in January, having fallen to that level in December from a downwardly revised 4.5% November print. In fact, the December figure was a 'low' one, printing 4.3751% on an unrounded basis with this, and the more promising direction of travel, having given the FOMC confidence to stand pat on policy at their first confab of the year.

Labour force participation also bears watching closely, having fallen 0.1pp to 62.4% in December, implying that the overall size of the labour force had begun to fall, likely a result of the unemployed having given up their job searches. Participation should remain unchanged at that level this time out.

Fed Policy Implications

As noted, the FOMC stood pat on policy at the January meeting, while shifting to more of a 'wait and see' approach, with Chair Powell noting that policy is now 'well-positioned' moving forwards. With that in mind, we can reasonably conclude that the majority of the Committee are comfortable that the 75bp of 'insurance' cuts that were delivered at the tail end of last year will provide adequate support against potential downside labour market risks.

That said, while the base case now suggests that the fed funds rate will remain unchanged until at least June, when Kevin Warsh is due to take over as Chair, risks to this outlook skew in a dovish direction, not least considering the incredibly narrow breadth of hiring currently being seen. Hence, any signs of renewed labour market softness are likely to lead to a dovish repricing of market expectations, especially with just 9bp of easing discounted by the USD OIS curve between now and April. The FOMC, however, shan't overreact to a single datapoint, particularly with the February jobs report also due before the next meeting, in March.

Source: Pepperstone

Source: decrypt