Introduction: English — Richard 

Welcome back to Café con Leche. As usual, I’m your host in English, Richard.

This episode is a little different.

We’re not here to chase headlines. We’re here to understand power — how it works, how it moves, and how it’s changing.

Today, we look at the world through the lens of Global Political Economy: how markets, states, security, and power interact.

So as usual, we’ve organized this episode around five themes. Each one shows a different way power is exercised today: when diplomacy starts to look like corporate management, when trade becomes a weapon, when sovereignty is negotiated, and when markets stop being neutral.

So, this episode is for those who want to go beyond the surface — not just what is happening, but why it is happening within the system.

So Grab a coffee, put in some milk. Café con Leche. Episode 12, January 26, 2026.

Let’s begin!

Theme 1: Trump’s “Peace Council” — The Privatization of Sovereignty

Trump’s so-called “Peace Council” represents something deeper than a controversial proposal for the Middle East. It marks a structural shift in how power is conceived and exercised in global politics. Classical diplomacy is based on the Westphalian model: sovereign states interacting through treaties, multilateral institutions, and international law—however imperfect those mechanisms may be. Trump’s approach rejects this logic outright. Instead, it replaces diplomacy with business negotiation and state action with corporate governance. The Peace Council functions like a private-equity board. Decision-making is concentrated in a small group of ultra-wealthy “shareholders,” with Trump acting as a kind of executive chairman of a geopolitical asset. The one-billion-dollar entry fee is not incidental: it signals the transformation of political legitimacy into liquidity. Influence is no longer gained through representation or international norms—it is purchased. For Palestinians, this approach profoundly depoliticizes the conflict. Sovereignty, self-determination, and rights are pushed into the background, displaced by investment flows. The problem ceases to be occupation or statelessness and is redefined as an infrastructure bottleneck. Luxury hotels, ports, and real-estate projects replace political agency. From a Global Political Economy perspective, this is neoliberalism taken to its logical extreme: peace as a market outcome. History, however, shows that this model is fragile. Without political legitimacy, capital flows are exposed to what economists call the obsolescing bargain. When political reality collides with economic fantasy, investment becomes a target. This is not diplomacy. It is asset management disguised as peacebuilding.

POWER WORDS — Theme 1: Trump’s “Peace Council” — The Privatization of Sovereignty

Tema 1: El “Consejo de la Paz” de Trump — La privatización de la soberanía

B2 — Upper-Intermediate

1. Sovereignty — Soberanía
Meaning: The authority of a state to govern itself.
Significado: La autoridad de un Estado para gobernarse a sí mismo.

2. International law — Derecho internacional
Meaning: Legal rules governing relations between states.
Significado: Normas legales que regulan las relaciones entre Estados.

3. Investment flows — Flujos de inversión
Meaning: The movement of capital across borders.
Significado: El movimiento de capital entre países.

C1 — Advanced

4. Corporate governance — Gobernanza corporativa
Meaning: Business-style management applied to political decision-making.
Significado: Gestión de tipo empresarial aplicada a decisiones políticas.

5. Political legitimacy — Legitimidad política
Meaning: The recognised right to exercise authority.
Significado: El derecho reconocido a ejercer autoridad.

6. Depoliticisation — Despolitización
Meaning: Removing political meaning from an issue.
Significado: Eliminar el contenido político de un asunto.

C2 — Proficiency

7. Westphalian model — Modelo westfaliano
Meaning: A state-based system of international order.
Significado: Sistema internacional basado en Estados soberanos.

8. Private-equity board — Consejo de capital privado
Meaning: Investor-led decision-making structure.
Significado: Estructura de toma de decisiones controlada por inversores.

9. Obsolescing bargain — Acuerdo que se vuelve obsoleto
Meaning: When political change undermines investment security.
Significado: Cuando el cambio político debilita la seguridad de una inversión.

Theme 2: Tanzania and the United States — The New Scramble for Africa

At first glance, the graphite agreement between the United States and Tanzania appears to be a limited deal over natural resources. In reality, it sits at the heart of the Green Cold War. For decades, China has refined a strategy of vertical integration, controlling extraction, processing, logistics, and manufacturing within a single state-coordinated chain. African minerals flow into Chinese refineries and then into batteries, electric vehicles, and defence technologies. The West reacted late to this reality. The U.S. response — labelled friend-shoring or de-risking — seeks to undo this dependence. Tanzania acquires a structurally powerful position, not because of its wealth, but because it controls a strategic resource that is key to the energy transition. President Samia Suluhu Hassan pursues a sophisticated balancing strategy. By allowing U.S. geological surveys, Tanzania does not merely sell access to minerals: it demands technology transfer, data, and capacity building. This is an attempt to escape the classic resource curse, in which countries export raw materials and import value added. The fundamental tension is structural. China can absorb losses because its mining strategy is state-subsidised and geopolitically motivated. The U.S. model, by contrast, depends on private companies seeking profitability. But green-transition minerals are still not profitable at scale. They are an investment in national security disguised as market activity. The key question is simple: if the price of graphite falls, will Washington intervene? If it does not, China wins by default. That is why the green transition is not only environmental policy — it is industrial policy under geopolitical pressure.

POWER WORDS — Theme 2: Tanzania and the United States — The New Scramble for Africa

Tema 2: Tanzania y Estados Unidos — La nueva carrera por África

B2 — Upper-Intermediate

1. Natural resources — Recursos naturales
Meaning: Economically valuable materials from nature.
Significado: Materiales de la naturaleza con valor económico.

2. Raw materials — Materias primas
Meaning: Unprocessed resources exported abroad.
Significado: Recursos sin procesar que se exportan.

3. Private companies — Empresas privadas
Meaning: Profit-seeking business entities.
Significado: Empresas que operan con fines de lucro.

C1 — Advanced

4. Vertical integration — Integración vertical
Meaning: Control of multiple stages of production.
Significado: Control de varias fases de la cadena productiva.

5. Strategic resource — Recurso estratégico
Meaning: A resource essential to security or industry.
Significado: Recurso clave para la seguridad o la industria.

6. Technology transfer — Transferencia tecnológica
Meaning: Sharing technical knowledge and capabilities.
Significado: Cesión de conocimientos y capacidades tecnológicas.

C2 — Proficiency

7. Green Cold War — Guerra Fría Verde
Meaning: Geopolitical rivalry over energy-transition resources.
Significado: Rivalidad geopolítica por recursos de la transición energética.

8. Balancing strategy — Estrategia de equilibrio
Meaning: Managing relations between rival powers.
Significado: Gestión de relaciones entre potencias rivales.

9. Industrial policy under geopolitical pressure — Política industrial bajo presión geopolítica
Meaning: State economic strategy shaped by global rivalry.
Significado: Estrategia económica estatal condicionada por rivalidades globales.

Theme 3: The Chagos Islands and Mauritius — Rent, Law, and Military Power

The agreement over the Chagos Islands is often presented as a long-overdue act of decolonisation. In reality, it is a textbook case of asymmetric interdependence. Formally, sovereignty is transferred to Mauritius. However, control over Diego Garcia — one of the most strategic military bases on the planet — remains firmly embedded within the security architecture of the United States and the United Kingdom. What changes is legal ownership, not functional power. This agreement allows the United Kingdom to reconcile two opposing imperatives. On the one hand, it responds to pressure from international law following adverse rulings by the International Court of Justice. On the other, it preserves the material reality of a global garrison state in the Indo-Pacific. Mauritius becomes, de facto, a rentier state. Rather than exercising full sovereign control, it monetises its legal claim through a guaranteed flow of income: geopolitical rent. From a Global Political Economy perspective, this is a rational strategy for a small state operating within a power hierarchy. The greatest losers are the displaced Chagossians. Sovereignty is transferred at the state level, but human restitution remains unresolved. This reveals a recurring pattern: legal victories for states do not guarantee justice for populations.

POWER WORDS — Theme 3: The Chagos Islands and Mauritius — Rent, Law, and Military Power

Tema 3: Islas Chagos y Mauricio — Renta, derecho y poder militar

B2 — Upper-Intermediate

1. Sovereignty — Soberanía
Meaning: Authority to govern territory.
Significado: Autoridad para gobernar un territorio.

2. International law — Derecho internacional
Meaning: Legal framework governing state relations.
Significado: Marco jurídico que regula las relaciones entre Estados.

3. Legal ownership — Titularidad legal
Meaning: Formal legal possession.
Significado: Posesión reconocida jurídicamente.

C1 — Advanced

4. Decolonisation — Descolonización
Meaning: The process of ending colonial rule.
Significado: Proceso de poner fin al dominio colonial.

5. Rentier state — Estado rentista
Meaning: A state that earns income from rents.
Significado: Estado que obtiene ingresos a través de rentas.

6. Legal claim — Reclamación legal
Meaning: Formal assertion of rights.
Significado: Reivindicación formal basada en el derecho.

C2 — Proficiency

7. Asymmetric interdependence — Interdependencia asimétrica
Meaning: Unequal mutual dependence between actors.
Significado: Dependencia mutua desigual entre actores.

8. Security architecture — Arquitectura de seguridad
Meaning: Structured military system of power.
Significado: Sistema estructurado de poder militar.

9. Geopolitical rent — Renta geopolítica
Meaning: Income from strategic positioning.
Significado: Ingresos derivados de una posición estratégica.

Theme 4: The United States and Australia — The Myth of Market Solutions

We are witnessing the securitisation of raw materials. Minerals are no longer governed solely by supply and demand. They are governed by strategic necessity. The invisible hand has been replaced by the visible fist of the state.Here, the execution gap emerges. If China floods the market to drive out competitors — a classic case of instrumentalised interdependence — Western firms collapse without state intervention. That intervention will come in the form of subsidies, price guarantees, and public procurement.The West talks about diversification, but the reality of Global Political Economy is harsh: China’s advantage is built on economies of scale, looser environmental standards, and state coordination. Competing requires abandoning the ideology of pure free markets.Rare earths underpin everything from fighter jets to wind turbines. While mining exists in many countries, processing does not. China dominates the midstream segment, where raw minerals are transformed into usable components. That is where real power lies.The merger between Energy Fuels and Australian Strategic Materials is not a corporate story. It is a story of state survival disguised as corporate strategy.

POWER WORDS — Theme 4: The United States and Australia — The Myth of Market Solutions

Tema 4: Estados Unidos y Australia — El mito de las soluciones de mercado

B2 — Upper-Intermediate

1. Rare earths — Tierras raras
Meaning: Minerals essential for advanced technology.
Significado: Minerales esenciales para tecnología avanzada.

2. Subsidies — Subsidios
Meaning: Financial support from the state.
Significado: Apoyo financiero del Estado.

3. Supply and demand — Oferta y demanda
Meaning: Market forces that determine prices.
Significado: Fuerzas del mercado que determinan precios.

C1 — Advanced

4. Economies of scale — Economías de escala
Meaning: Cost advantages from large-scale production.
Significado: Ventajas de costes por producir a gran escala.

5. State intervention — Intervención estatal
Meaning: Direct government involvement in markets.
Significado: Participación directa del Estado en la economía.

6. Public procurement — Contratación pública
Meaning: Government purchasing of goods and services.
Significado: Compras de bienes y servicios por el Estado.

C2 — Proficiency

7. Instrumentalised interdependence — Interdependencia instrumentalizada
Meaning: Using dependence as a tool of coercion.
Significado: Uso de la dependencia como instrumento de presión.

8. Securitisation of raw materials — Securitización de las materias primas
Meaning: Treating resources as security assets.
Significado: Tratar los recursos como activos de seguridad.

9. Visible fist of the state — Puño visible del Estado
Meaning: Direct and forceful state control.
Significado: Control estatal directo y contundente.

Theme 5: Mark Carney at Davos — The Playbook of Middle Powers

Mark Carney’s speech in Davos was quietly radical. By stating “we are Canadians,” Carney rejects the idea that globalisation implies the disappearance of national identity. Instead, he advances economic patriotism without isolation — a strategy tailored to middle powers. From a Global Political Economy perspective, Carney understands that the era of passive participation is over. Middle powers can no longer limit themselves to accepting rules imposed by the United States or China. They must actively shape the system. His defence of values-based trade redefines labour rights, environmental standards, and democratic norms as strategic assets, not moral luxuries. This is managed trade with a normative component. This is how middle powers avoid the Thucydides Trap: not by choosing sides blindly, but by creating strategic room for manoeuvre.

POWER WORDS — Theme 5: Mark Carney at Davos — The Playbook of Middle Powers

Tema 5: Mark Carney en Davos — El manual de las potencias medias

B2 — Upper-Intermediate

1. National identity — Identidad nacional
Meaning: Shared sense of national belonging.
Significado: Sentimiento compartido de pertenencia nacional.

2. Labour rights — Derechos laborales
Meaning: Legal and social worker protections.
Significado: Protecciones legales y sociales para trabajadores.

3. Environmental standards — Estándares ambientales
Meaning: Rules protecting the environment.
Significado: Normas destinadas a proteger el medio ambiente.

C1 — Advanced

4. Economic patriotism — Patriotismo económico
Meaning: Defending national interests without isolation.
Significado: Defensa de intereses nacionales sin aislamiento.

5. Middle powers — Potencias medias
Meaning: Influential states below superpower level.
Significado: Estados influyentes sin ser superpotencias.

6. Values-based trade — Comercio basado en valores
Meaning: Trade guided by ethical and political norms.
Significado: Comercio guiado por normas éticas y políticas.

C2 — Proficiency

7. Passive participation — Participación pasiva
Meaning: Accepting rules without influencing them.
Significado: Aceptar reglas sin influir en ellas.

8. Strategic assets — Activos estratégicos
Meaning: Resources or norms that generate power.
Significado: Recursos o normas que generan poder.

9. Thucydides Trap — Trampa de Tucídides
Meaning: Risk of conflict between rising powers.
Significado: Riesgo de conflicto entre potencias en ascenso.

POWER WORDS — Bonus File (Structural Analysis)

Archivo bonus — Análisis estructural

B2 — Upper-Intermediate

1. Tariffs — Aranceles
Meaning: Taxes on imported goods.
Significado: Impuestos aplicados a bienes importados.

2. Security — Seguridad
Meaning: Protection against threats to the state.
Significado: Protección frente a amenazas al Estado.

3. Trade policy — Política comercial
Meaning: Rules governing international trade.
Significado: Normas que regulan el comercio internacional.

C1 — Advanced

4. Instrumentalisation of tariffs — Instrumentalización de los aranceles
Meaning: Using tariffs for political goals.
Significado: Uso de aranceles con fines políticos.

5. Issue linkage — Vinculación de temas
Meaning: Connecting policy areas to exert pressure.
Significado: Conectar ámbitos políticos para ejercer presión.

6. Comparative advantage — Ventaja comparativa
Meaning: Specialisation based on efficiency.
Significado: Especialización basada en la eficiencia.

C2 — Proficiency

7. Loss of trade neutrality — Pérdida de la neutralidad del comercio
Meaning: Trade losing its apolitical character.
Significado: El comercio deja de ser políticamente neutral.

8. Economic coercion — Coerción económica
Meaning: Using economic tools to force behaviour.
Significado: Uso de herramientas económicas para forzar conductas.

9. Asymmetric dependence — Dependencia asimétrica
Meaning: Unequal economic reliance.
Significado: Dependencia económica desigual.

10. Normalisation of economic coercion — Normalización de la coerción económica
Meaning: Acceptance of coercive economic practices.
Significado: Aceptación de prácticas económicas coercitivas.

Conclusion — English | Richard

The five themes all lead us to the same conclusion.

We no longer live in a world where politics, economics, and security are separate.
Today, power flows through supply chains,
through contracts,
through rules,
and through access.

Trade is no longer just about efficiency.
Markets are no longer neutral.
And sovereignty is no longer absolute.

This is the world of Global Political Economy, where capital is political and politics is structural.

If there is one key idea to take away from this episode, it is this:
don’t just watch events unfold.
Learn to read the architecture that sustains them.

Thank you for listening to Café con Leche.
Until next time.