UN Declares Famine in Gaza, Calling It a Man-Made Humanitarian Catastrophe

Political

Latest news on the Israeli-Palestinian conflict

Summary:

The United Nations has officially declared a famine in Gaza, with more than half a million Palestinians facing catastrophic food insecurity. It is the first famine recorded in the Middle East...

Scale of the crisis

According to the Integrated Food Security Phase Classification (IPC), 514,000 people in Gaza about a quarter of its population are experiencing famine conditions after nearly two years of unrelenting conflict. The IPC forecasts that by the end of September, the number could climb to 614,000. This marks the first time IPC has classified famine outside Africa, previously applying the designation only to Somalia, South Sudan, and Sudan. The criteria are stark: at least 20% of the population facing extreme food shortages, one in three children acutely malnourished, and two out of every 10,000 people dying daily from starvation or related disease.

The UN and aid agencies attribute the famine to Israel’s systematic obstruction of humanitarian deliveries. In contrast, the Israeli government rejects the findings, arguing that the IPC’s data is incomplete and sourced from Hamas. Israel’s foreign ministry insisted “there is no famine in Gaza,” directly disputing the UN’s classification. The clash of narratives reflects not only political positioning but also competing claims about data reliability and responsibility for deteriorating conditions.

Human impact and global outcry

Images of skeletal children and starving families in Khan Younis and other parts of Gaza have circulated widely, underscoring the scale of suffering. UN Secretary-General António Guterres called the famine “a man-made disaster, a moral indictment, and a failure of humanity itself.” He demanded an immediate ceasefire, the release of hostages, and unfettered humanitarian access. Governments including the UK, Canada, Australia, and multiple European nations echoed these calls, stressing that Israel must allow sustained aid flows to avert mass death. The correlation here is clear: blocked humanitarian corridors directly reduce food access, while the causal chain links these restrictions to the rising mortality and malnutrition rates.

The famine declaration comes amid escalating rhetoric: Israel’s defense minister recently threatened to destroy Gaza’s largest city, intensifying fears of further devastation. At the same time, international pressure is mounting for Israel to change course, with multiple states framing the crisis as a tipping point for global humanitarian norms. The broader geopolitical context including the Russia-Ukraine conflict and U.S.-China rivalry shapes the urgency of this crisis, as Gaza becomes a litmus test for international responses to mass starvation in conflict zones.

The UN’s designation of famine in Gaza is both a humanitarian alarm and a political reckoning. While the immediate drivers are blockades and conflict, the broader implications reach into international law, global governance, and the moral obligations of the world community. Without rapid humanitarian access and a shift in policy, the crisis risks becoming one of the darkest chapters in recent Middle Eastern history.

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Economic

China’s criticism of U.S. trade policy

Speaking in New Delhi, Chinese ambassador Xu Feihong accused Washington of “weaponizing tariffs” and using them as a political tool. He condemned the imposition of up to 50% tariffs on Indian goods and emphasized that Beijing supports India in defending national interests and free trade. This reflects a direct causal link: the U.S. tariffs, introduced in response to India’s continued imports of Russian oil, prompted Beijing to align itself publicly with New Delhi, both as a counter to American pressure and as a statement of solidarity among major Asian economies.

The Trump administration’s decision to impose an additional 25% tariff on Indian imports, on top of the existing 25%, is scheduled to take effect on August 27. Washington framed the move as a response to India’s reliance on Russian crude, arguing that such trade undermines sanctions and strengthens Moscow’s war effort in Ukraine. India, however, insists that Russian oil is critical to its energy security and affordable supply for its citizens. The correlation here is clear: the higher India’s dependence on Russian energy, the greater the likelihood of U.S. tariff escalation, even if the causal link to Moscow’s revenues is disputed.

Timing and diplomatic signaling

China’s declaration of support came just days before Prime Minister Narendra Modi’s scheduled trip to Tianjin for the Shanghai Cooperation Organization summit, where he is expected to meet President Xi Jinping. Analysts view this as more than symbolic timing: Beijing’s stance strengthens India’s negotiating position vis-à-vis Washington while paving the way for closer Sino-Indian cooperation in multilateral platforms such as SCO and BRICS.

Despite tensions following the 2020 border clashes in the Himalayas, recent months have seen a cautious thaw. India resumed issuing tourist visas for Chinese citizens after a five-year suspension, and Beijing allowed Indian pilgrims to visit Hindu holy sites in Tibet. Both sides also reopened designated border trade posts and reinstated direct flights. These steps, coupled with high-level diplomatic engagements, indicate a correlation between growing bilateral engagement and the shared goal of buffering against Western economic leverage.

Strategic implications

China’s support for India amid tariff disputes highlights a broader strategic recalibration. By siding with New Delhi, Beijing signals its willingness to frame Asian economic cooperation as an alternative pole to U.S. dominance. For India, accepting China’s support could diversify its strategic options, though lingering border mistrust remains a limiting factor. The causal relationship between U.S. economic coercion and Sino-Indian rapprochement is becoming more apparent: Washington’s pressure may be accelerating the very alignment it seeks to prevent.

The public backing from Beijing marks a notable shift in Asia’s diplomatic landscape. While not yet a full-fledged partnership, the alignment of China and India against U.S. tariff measures signals the possibility of deeper coordination, particularly within regional forums where both nations seek greater influence over the evolving global trade order.

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Economic

A cautious green light for September

Speaking at the Jackson Hole symposium, Powell acknowledged that the U.S. labor market has entered a “strange balance,” where both supply and demand for labor are weakening. He warned that job losses could accelerate rapidly if conditions deteriorate, yet emphasized that unemployment remains stable for now. This provides the Fed room to proceed carefully, though markets interpreted his remarks as signaling readiness to lower rates at the upcoming September 16–17 meeting. Futures traders now price in a nearly 90% probability of a quarter-point cut, up from 75% earlier in the week.

Powell underscored the challenge of tariff-related price pressures. Recent broad-based import duties by the Trump administration could prolong inflationary momentum, complicating the Fed’s efforts to maintain price stability. The causal link here is direct: higher tariffs increase input costs, which filter through to consumer prices, keeping inflation sticky even as growth slows. Powell insisted that interest rates are already in restrictive territory, suggesting that future moves must balance the dual mandate of employment and price stability.

Internal divisions within the Fed

Policy consensus remains elusive inside the central bank. Governor Christopher Waller and several colleagues argue for earlier rate cuts to protect a softening labor market, dismissing tariff-driven inflation as temporary. Powell, by contrast, maintains a cautious line, preferring to wait for upcoming August jobs data and September inflation reports before committing. The division reflects competing causal assessments: one camp prioritizes labor market fragility, while the other views inflation as the more urgent risk.

Powell’s remarks drew strong applause at Jackson Hole, a reflection of recognition for his eight years of leadership during turbulent times. Yet the Trump administration continues to pressure the Fed, not only urging Powell’s resignation but also criticizing other board members. Powell reiterated that he will serve his term until May 2026. Political scrutiny adds an external layer of uncertainty, where correlation between Fed policy and electoral dynamics could intensify as the 2025 presidential cycle unfolds.

Strategic framework and outlook

Alongside his remarks, Powell presented an updated Fed strategy framework, reaffirming that maximum employment must remain tied to price stability. Since December 2024, the policy rate has held at 4.25–4.5%, reflecting a pause to assess the effects of tariffs and domestic fiscal measures. With markets expecting two cuts this year, the September meeting and its economic projections will be pivotal in clarifying whether the Fed can engineer a controlled easing cycle or risks falling behind a sharper downturn.

Powell’s Jackson Hole speech signals the Fed’s readiness to act, but with caution. The likely September cut would reflect not only deteriorating labor market conditions but also recognition that monetary policy is already restrictive. Yet with inflation still exposed to tariff shocks and internal divisions unresolved, the path ahead remains one of delicate balancing rather than decisive easing.

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Economic

Cryptocurrency

Strategic goals behind e-CNY

China’s push for digital currency stems from a strategic ambition to enhance the global role of the yuan. As the world’s second-largest economy, Beijing views the digital yuan as a tool to reduce reliance on the dollar-dominated financial system and to position itself as a credible alternative in global trade and payments. The plan correlates directly with broader geopolitical goals: by widening e-CNY use, China seeks to build parallel financial infrastructure less vulnerable to U.S. sanctions and SWIFT dependency.

Since its pilot launch in 2019, the digital yuan has become increasingly integrated into daily life. Large corporations, such as McDonald’s, joined early trials, while local governments in China now use e-CNY to pay public sector salaries. The payment ecosystem already accustomed to Alipay and WeChat Pay has facilitated acceptance. By July 2024, transaction volume had reached 7.3 trillion yuan, a direct result of scaling adoption in retail, wages, and public transactions. This demonstrates a causal relationship between state-backed incentives and rapid uptake in domestic circulation.

International expansion efforts

China is also promoting e-CNY usage abroad, particularly in Africa, where its trade and investment footprint is expanding. These initiatives aim to strengthen yuan settlement in cross-border trade, correlating with China’s Belt and Road projects. Yet without full capital account convertibility, the yuan’s global role remains constrained. SWIFT data underscores the limitation: as of June 2025, the yuan accounted for only 2.88% of global payment transactions, down from a 4.7% peak in July 2024. The contrast with the U.S. dollar’s 47% share reveals the gap Beijing must overcome.

Beijing is also exploring the issuance of yuan-linked stablecoins, though details remain unconfirmed. Unlike decentralized cryptocurrencies such as Bitcoin, stablecoins are pegged to fiat currencies and serve as efficient payment tools rather than speculative assets. Hong Kong, with its semi-autonomous financial framework, has already implemented laws governing stablecoins as of August 1, requiring full reserve backing for HKD-linked tokens. As China’s offshore financial hub, Hong Kong may serve as the testing ground for yuan-denominated stablecoins. The causal link here is clear: legal infrastructure in Hong Kong could accelerate controlled international adoption of yuan-backed digital assets.

Structural barriers to yuan internationalization

Despite progress, China faces systemic hurdles. The yuan is not freely convertible, and strict foreign exchange controls discourage global investors. These constraints causally limit its capacity to rival the dollar or euro. At present, yuan-based trade finance accounts for only 6% of global transactions, with most clearing concentrated in Hong Kong. Without broader liberalization of capital markets, digital yuan expansion remains more symbolic than transformative.

China’s digital currency program reflects both technological innovation and geopolitical ambition. The e-CNY’s success in domestic adoption shows Beijing’s ability to mobilize infrastructure and scale usage quickly. Yet for it to meaningfully challenge the dollar’s dominance, China must address structural barriers in currency convertibility, regulatory transparency, and integration with international financial systems. Until then, the digital yuan serves more as a foundation for long-term influence than as an immediate substitute for the dollar.

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Economic

Signs of renewed momentum

Survey data from S&P Global showed that the preliminary composite Purchasing Managers’ Index (PMI) for the Eurozone rose to 51.1 in August 2025, up from 50.9 in July and well above forecasts of 50.7. This marks the third consecutive monthly increase and the strongest reading since May 2024. A PMI above 50 indicates expansion in activity, and the return of growth in new orders suggests businesses are beginning to regain momentum after a prolonged slowdown.

Manufacturing posted its first return to expansion in more than three years, with the PMI climbing from 49.8 to 50.5. Output surged at its fastest pace in nearly three and a half years, rising from 50.6 to 52.3, reflecting stronger demand and improved production flows. By contrast, services growth moderated, with the PMI slipping from 51.0 to 50.7. This divergence underscores a shift: manufacturing, previously a drag on Eurozone growth, is now stabilizing, while services are expanding at a slower pace.

Country-level dynamics: Germany leads, France stabilizes

Germany, the Eurozone’s largest economy, showed its fastest growth since March 2025 thanks to a robust manufacturing rebound, with its PMI climbing to 50.9, ahead of expectations. France, meanwhile, reported a PMI of 49.7, marking its mildest contraction in a year and signaling progress toward stabilization. Together, these performances suggest that while the Eurozone’s core economies are still uneven, the overall trajectory is gradually turning upward.

ING economist Bert Colijn emphasized that the modest PMI improvement reflects the Eurozone’s resilience in the face of global pressures, supported by new orders and stronger hiring activity. The causal relationship here is evident: higher orders are directly stimulating both production and employment, feeding into business confidence. However, the broader economic outlook remains constrained. Persistent inflationary pressures, weak global trade, and ongoing tariff disputes continue to pose risks, making the recovery moderate rather than robust.

Wider European and global context

Beyond the Eurozone, the United Kingdom also recorded its strongest business activity in a year, driven by services recovery, highlighting that parts of Europe outside the bloc are benefiting from similar trends. Investors now turn their attention to the Jackson Hole symposium hosted by the U.S. Federal Reserve, where central bankers will provide guidance on monetary policy, a factor that could correlate with future Eurozone financial conditions through currency and capital flow effects.

The August PMI data offers cautious optimism: for the first time in over a year, new orders in the Eurozone are rising, industrial activity is rebounding, and Germany is showing renewed strength. Yet with services slowing and economic headwinds persisting, the recovery remains fragile and dependent on both domestic reforms and the trajectory of global trade and monetary policy.

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Forex

Central Bank

St. Louis Fed President Alberto Musalem said on Friday he will need more data before deciding to support a rate cut at the Fed's September 16-17 meeting given that inflation is above the Fed's 2% target and is expected to move higher, while risks to the job market have yet to be realized.

"It is real that inflation is running closer to 3% than to 2%. That's real, and there is a possibility, not the base case, that there could be some persistence," Musalem told Reuters. "So that's one risk against the unrealized risk, not real yet, of a potential labor market deterioration."

"Policy now is in the right place for a full employment labor market and inflation running above target. It's in the right place ... to be leaning against inflation," Musalem said. "But that's at a full employment labor market. If you happen to assess there's risk to the labor market, then that initial policy setting needs to be adjusted."

"I will be updating my outlook and balance of risks all the way up and until two days, three days before the meeting," he said. "Then I'm going to decide."

Musalem spoke on the sidelines of the Fed's annual research conference here, where Fed Chair Jerome Powell in morning remarks pointed to a possible September rate cut given a "base case" that tariff-driven inflation would likely fade, while risks to the job market appeared to be rising.

"The baseline outlook and the shifting balance of risks may warrant adjusting our policy stance," Powell said, words that investors construed to mean that rate cuts are coming.

However, "the operative word there is 'may,' I think," said Musalem, a voter on interest rate policy this year.

His more noncommittal approach showed the ongoing reluctance among some policymakers to lower interest rates while inflation was both above the Fed's target and at risk of moving higher.

Musalem said he agreed that his base case was now for tariffs to have a short-lived impact on inflation, while slowing economic growth posed greater risk of a slide in the job market.

But he said he was hoping to get a fuller understanding of where the economy is heading to develop an opinion "about the whole path ... For me it's not just about September."

At the September meeting Fed policymakers will provide updated projections of where they think inflation, the unemployment rate and interest rates are heading. Prior to that they will receive what could be a pivotal jobs report, covering the month of August, that could either confirm the weakness some policymakers worry is developing, or leave intact the current assessment of an economy operating around full employment.

"Uncertainty is to some degree lifting," Musalem said. "We now have the outline of fiscal policy. We have the outline of trade policy. Now we know immigration policy. The more data we get, the better...I'm going to be able to assess, are tariffs passing through or not, and whether the labor market risks are real."

Source: Reuters

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Stocks

The US government has taken an $8.9 billion, 9.9% stake in Intel (INTC), buying 433.3 million shares in the chipmaker at a price of $20.47 per share.

The government’s investment in Intel will be passive ownership, with no Board representation or other governance or information rights, Intel said in a statement. Intel said the government also agreed to vote with the company's Board of Directors.

Intel said the government's equity stake will be funded by the remaining $5.7 billion in grants previously awarded but not yet paid to Intel under the US CHIPS and Science Act and $3.2 billion awarded to the company as part of the Secure Enclave program.

Intel will continue to deliver on its Secure Enclave obligations and reaffirmed its commitment to delivering trusted and secure semiconductors to the US Department of Defense. The $8.9 billion investment is in addition to the $2.2 billion in CHIPS grants Intel has received to date, making for a total investment of $11.1 billion.

The announcement late Friday comes after President Trump said earlier in the day his administration would take a 10% stake in ailing chip giant Intel. Trump called it a "great deal." Intel's stock closed up 5.5% after the president's announcement.

Intel stock fell 1% in after-hours trading on Friday after details of the deal were confirmed.

"President Trump’s focus on U.S. chip manufacturing is driving historic investments in a vital industry that is integral to the country’s economic and national security," Intel CEO Lip-Bu Tan said in a statement. "We are grateful for the confidence the President and the Administration have placed in Intel, and we look forward to working to advance U.S. technology and manufacturing leadership."

On Tuesday Treasury Secretary Scott Bessent told CNBC that the administration was exploring converting Intel's funding from the Biden-era CHIPS Act into equity aimed at stabilizing the company's US manufacturing business.

Intel is dealing with multiple issues across its businesses. Its manufacturing division is bleeding cash, just as its legacy computer chip segment forfeits market share to rivals Advanced Micro Devices (AMD) and Qualcomm (QCOM) in the PC space. Intel is also woefully behind AMD and Nvidia (NVDA) in the AI race.

The company's market capitalization of $111 billion is less than half of its value in 2021. And CEO Lip-Bu Tan has been forced to lay off 15% of the company's workforce and shelve plans to build plants in Europe.

But the troubled chipmaker is the only large-scale US-based leading-edge chip manufacturer, giving it geopolitical significance as the nation looks to reshore semiconductor production.

Trump's announcement comes the same week that SoftBank Group announced a $2 billion investment in Intel.

All of this comes as Intel continues to navigate its rocky turnaround plan that began under previous CEO Pat Gelsinger. Current CEO Lip-Bu Tan has scaled back Gelsinger's original vision, canceling construction of international plants and further delaying Intel's $20 billion Ohio chip complex.

Intel is fighting to bring customers into its third-party chip foundry business as it works to scale its newest 18A chip technology. The company has already signed agreements to build chips on its technology with Microsoft (MSFT) and Amazon (AMZN), but Intel is still the foundry business's largest customer.

As part of the deal, Intel said the government will receive a five-year warrant, at $20 per share for an additional five percent of Intel common shares, exercisable only if Intel ceases to own at least 51% of the foundry business.

The company is also contending with losing market share in the server business and client computing business to rival AMD, which also benefits from its own AI business. Intel has effectively been shut out of the AI race due to a lack of innovation compared to AMD (AMD) and Nvidia (NVDA).