Russian Perspectives On The Trump-Xi Summit – Analysis

Observer Research Foundation
By Aleksei Zakharov

Before US President Donald Trump’s visit to China, Russian experts unanimously predicted that his summit with the Chinese leader Xi Jinping would not alter the US-China equation. This view was grounded in the belief that the US-China confrontation has taken on a systemic nature, compounded by the broader shift in the world order, which has been set in motion “in earnest and for the long haul.” In this context, the odds of a ‘big deal’ between Washington and Beijing, let alone the establishment of a ‘G2’ condominium, seemed slim.

The summit outcomes have reinforced this view, indicating that the bilateral competition, albeit carefully managed by both sides, resembles a long-term strategic deadlock that is unlikely to give way to any significant rapprochement.
Readings of the US-China Summit

Moscow is increasingly convinced that Beijing, seriously affected by the global geopolitical churn, may be reconsidering its foreign policy approach. China no longer harbours any illusions about reaching compromises with the US that could deliver mutually beneficial solutions. Therefore, the Trump-Xi meeting was less about a rapprochement and more about a ‘truce’ between the two closely intertwined yet distrustful states.


Recognising this, Xi urged the US to continue the dialogue to prevent relations from descending into deeper crises. On economic issues, he stated that consultation “on an equal footing” is the only option going forward. Whether the new formula revolving around “constructive and strategic stability,” as suggested by China, will become a mainstay for bilateral relations remains to be seen.

As Fyodor Lukyanov, Editor-in-Chief of the journal, Russia in Global Affairs, argues, the outcome of the US-China talks is the consolidation of interdependence amid diverging interests. He believes that the interdependence between the two will weaken, and the divergences will further intensify. Rather than being temporary, this shift appears to be a permanent feature of the relationship. However, it will be a gradual process, as neither side has any interest in ending ties.

Vasily Kashin, Director at the Center for Comprehensive European and International Studies, HSE University, and one of Russia’s foremost China scholars, observes that China’s strategy is to delay a full-scale confrontation with the US. If the US remains in a deep political and economic crisis, as the Chinese leadership seems to believe, the future will only bring improved circumstances for China and the US “may retreat from certain positions without a fight.”

Ivan Zuenko, another prominent Russian expert on China and Associate Professor at MGIMO University, points out that the Summit underscored China’s elevated status in world affairs, reflecting Washington’s realisation that Beijing cannot be pressurised. The talks could lead to the relaxation of US tariffs and can bring new trade deals, including China’s imports of US oil. However, despite securing some economic concessions, the US will not abandon its containment policy since the China threat is a matter of bipartisan consensus in the US Congress. As such, the summit has given an impetus for the two countries to move ahead with the talks on critical topics, without bringing in any significant breakthroughs.

Russian observers are confident that the US-China talks will not affect Russia-China cooperation. They estimate that American oil cannot compete with Russian oil and that the spike in energy prices may push Russia-China bilateral trade to a new record by the end of 2026.

US-China-Russia Triangular Dynamics

Back-to-back visits to Beijing by the US and Russian presidents have revived conversations about the US-China-Russia strategic triangle. According to Lowell Dittmer’s classification, this triangle is a ‘stable marriage’, featuring amicable relations between two of the players and antagonistic ties between each of them and the third player.

Trump’s attempts to employ the ‘Reverse Kissinger’ strategy in the first months of its presidency have not visibly altered the trilateral equations. The US-Russia rapprochement has not delivered any tangible results, not even on technical issues such as visas and frozen diplomatic property. This has prompted growing disillusionment among Russian officials who are losing hope of improving ties with Washington. US and China remain locked in a strategic competition, while Russia and China have considerably expanded their strategic partnership. These types of relationships within the triangle are set to endure for years to come.

Some Russian experts have argued that in certain cases, Russia and China may refrain from providing direct support to each other if doing so would cause undue complications; however, they will never act to the detriment of their counterpart. Conversely, when it comes to its relations with the US, China now seems to realise that the policy shift is not a reflection of presidential preference, but rather of how the US fundamentally understands its goals and objectives. This could mean that periodic escalations and de-escalations have become a tacitly accepted norm of US-China relations.

A Shift to Coalition?

The inability of major powers to negotiate with Trump and the US, in Russian eyes, might prompt them, including China, to shift gears. Firstly, Beijing is expected to double its military capabilities to withstand any external pressure. Secondly, a deadlock with the US could encourage China to join forces with Russia to build an alternative financial infrastructure immune to US encroachment–something that Beijing has been lukewarm about despite Moscow’s proposals. From this perspective, the absence of a ‘big deal’ between the US and China plays into Russia’s hands.

Despite appearing battered after four years of war, Moscow has not lost its great power ambitions. Russian experts firmly believe that the US-Russia-China triangle will be pivotal in shaping an equilibrium-based new world order. However, these great power aspirations are often met with a harsh reality check, forcing Russia to build its capabilities without leaning heavily on China.

With a growing realisation that the transition to a new world order will not be peaceful, there is a greater argument in Russia for a coalition with China, beyond military engagement, including closer coordination on financial, economic, and technological issues. Even as these musings might, at some point, strike a chord with China, convincing it to consider such a coalition, which, as the logic goes, could shield the two from Western sanctions and potential naval blockades, Russia, in a more desperate condition, will seemingly have to play second fiddle to Beijing.

The notable shift in Russian narratives from positioning as a guarantor of a ‘New Non-Alignment’ alongside India–a popular idea before the war in Ukraine–to embracing the prospect of a coalition with Beijing against the US, colours Russia’s engagement with China more definitively and provides New Delhi with food for thought. It is probably not so much the US-China ‘G2’ but rather the trajectory of Moscow’s ever-closer alignment with Beijing that could pit India against a new geopolitical reality in the not-too-distant future.

About the author: Aleksei Zakharov is Fellow, Russia & Eurasia, with the Strategic Studies Programme at the Observer Research Foundation.

Source: This article was published by the Observer Research Foundation.

 

Panama moves to shed its tax haven status, on its own terms

Scandal-hit Panama has built a significant portion of its service economy around frictionless incorporation and territorial taxation.Facebook

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By Alek Buttermann June 2, 2026

Panama has enacted legislation imposing a 15% levy on multinational entities that cannot demonstrate genuine economic activity within its borders. The measure is framed domestically as a modernisation of the tax framework. In practice, it is an exercise in damage control, driven almost entirely by the need to exit the European Union's blacklist of non-cooperative tax jurisdictions, where the country has sat since 2020.

The National Assembly last week passed Ley 641, known as the economic substance law, with near-unanimous support, 70 of 71 deputies voting in favour, and President José Raúl Mulino signed it promptly into law. It takes effect for fiscal year 2027. Entities unable to demonstrate qualified staff, adequate premises, genuine strategic decision-making, and real operating expenditure on Panamanian soil will face a flat 15% charge on net passive income derived from foreign sources.

Yet it remains unclear how much of Panama's offshore architecture this actually dismantles. On close reading of the legislation, in fact, relatively little. Companies that can demonstrate a meaningful physical presence retain the country's longstanding territorial exemption on foreign-sourced income entirely. The law targets the most egregious end of the spectrum: shell entities with no staff, no offices, and no commercial reality, booking foreign income through a Panamanian legal address. For the broader industry, the primary consequence is higher compliance costs, not a structural overhaul.

That precedent exists elsewhere. The Cayman Islands and British Virgin Islands both absorbed comparable economic substance requirements in recent years. Neither jurisdiction saw its offshore industry collapse. What followed instead was a consolidation toward better-capitalised, more professionally staffed structures, and increased demand for local legal and administrative services. Panama is likely to trace a similar path, with the reform functioning as a barrier to entry for the most artificial arrangements rather than a fundamental reorientation of the model.

Finance Minister Felipe Chapman was explicit during the parliamentary debate that this legislation is the single most important requirement for Panama's removal from the EU list. He pointed to October's scheduled review by EU finance ministers as the earliest realistic exit point, with February 2027 as the fallback. Panama is currently the only Latin American country on the list, which also includes Russia, Vietnam, and the US Virgin Islands. The EU last updated the list in February 2026, retaining Panama while removing Fiji, Samoa, and Trinidad and Tobago.

The Panama Papers scandal of 2016 is the origin of the country's reputational problem, but a decade on, the more relevant question is structural: Panama built a significant portion of its service economy around frictionless incorporation and territorial taxation. The economic substance law preserves the core of that proposition while excising its most indefensible features. Whether that is sufficient to satisfy Brussels is a political judgement the EU will make later this year. Whether it represents genuine reform, or a calibrated minimum concession to external pressure, is a question the legislation itself answers fairly clearly.

 

Asia’s EV race speeds up as China’s champions challenge Tesla

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By Mark Buckton in Taipei June 2, 2026

Electric vehicle adoption across South, East and South-East Asia is accelerating, but the region’s transition is increasingly being shaped by domestic industrial policy, Chinese manufacturers and the slow build-out of charging infrastructure rather than by Tesla (NASDAQ:TSLA) alone – the efforts of Elon Musk notwithstanding.

As of mid-2026, China remains the centre of gravity in the EV world.

The country accounts for the overwhelming majority of Asia’s EV sales and continues to set the pace for manufacturing, battery development and charging networks. Yet even within China, the market is changing rapidly. Reporting by Caixin noted that sales momentum weakened after subsidy reductions and changes to tax incentives, exposing how dependent parts of the industry remain on government support. The same reports point to domestic vehicle sales in China falling sharply in early 2026 as consumers adjusted to the new policy environment.

This is, in part, down to Tesla remaining a significant force in China but even the world’s most iconic EV maker is facing intensifying pressure from domestic Chinese rivals.

BYD (SHE: 002594) has overtaken the US group as the world’s largest EV seller in terms of volume of sales, while manufacturers such as Geely, Wuling (HKG: 0305), Nio, Xpeng, Li Auto and Xiaomi (HKG: 1810) continue to gain market share. The South China Morning Post reported recently that low-cost models from Geely and Wuling have of late become some of China’s best-selling EVs, reflecting growing demand for affordable vehicles rather than premium – read: Tesla – imports.

BYD’s strategy to expand its footprint increasingly extends beyond vehicle sales. Reuters reported that the firm is expanding deployment of its assisted-driving technology while investing heavily in autonomous-driving chips and software. Tesla, meanwhile, continues to wait for broader regulatory approvals for some advanced driver-assistance functions in China and it is likely only a matter of time before claims of protectionism arise.

South Korea meanwhile presents a much different picture. The country already possesses extensive charging infrastructure coupled in large part to a mature automotive sector led by Hyundai and Kia – global motoring brands. Tesla in Korea remains one of the strongest-selling imported brands, but Chinese-made EVs are rapidly establishing a solid foothold. Because of this, industry discussions reported by Korean market observers have suggested that Chinese-built vehicles - including Teslas manufactured in China - and models from BYD, are capturing a growing share of imports.

In comparison, neighbouring Japan remains a relative laggard in EV adoption. Consumer demand has been slower than in China or South Korea, while domestic manufacturers have continued to focus heavily on hybrids and there has been some pushback against all-out EVs. However, charging networks are expanding gradually, but battery-electric vehicles still represent a comparatively small share of overall sales.

Chinese brands, for political reasons even if this is denied, have made limited inroads, although competition is expected to intensify as lower-cost imports arrive.

On the subcontinent, India represents one of Asia’s most important long-term growth opportunities. New Delhi has introduced manufacturing incentives, tax breaks and support schemes designed to create a domestic EV ecosystem. This has seen local manufacturers including Tata Motors and Mahindra & Mahindra ( a firm also making headway across Asia with its petrol-powered vehicles) establish strong positions, while global and Chinese brands seek entry into the market although politics again is likely to play a role in keeping them out for a while at least.

The challenge in India though remains infrastructure. Analysis shared through India’s automotive community highlights the reality that public charging availability remains well behind vehicle sales growth, and while demand is expanding quickly in some of India’s biggest cities, charger deployment is struggling to keep pace.

Elsewhere in South Asia, adoption remains uneven. Pakistan is pursuing EV policies and assembly projects but faces infrastructure constraints and electricity supply challenges. Bangladesh meanwhile is witnessing growth in electric two-wheelers and three-wheelers rather than passenger cars. Sri Lanka and Nepal are seeing increasing EV imports, supported by lower fuel-import costs and a raft of government incentives, although, like India and other nations on the subcontinent, charging networks remain few and far between.

Southeast Asia on the other hand has emerged as one of the most competitive EV battlegrounds on the continent. Thailand has become a regional manufacturing hub, attracting major investment from BYD, Great Wall Motor and other Chinese groups. As a result, Bangkok has backed adoption through tax incentives and support for local production. Because of this, Chinese brands now dominate much of Thailand’s EV market.

Vietnam is pursuing a more nationally focused strategy through domestic champion VinFast – a brand now seen increasingly across Asia. The company has rapidly expanded charging infrastructure and established a nationwide presence, making Vietnam one of the few countries in the region where a local brand is leading the transition – for now.

To the south, Indonesia with the largest population in Southeast Asia, is perhaps the most strategically important market. The government has recently sought to leverage the country’s vast nickel reserves to build a complete EV supply chain, from mining through battery production and vehicle assembly. Reporting by The Jakarta Post on this has highlighted how Jakarta’s industrial strategy is increasingly tied to battery manufacturing and downstream nickel processing.

In turn, the country is also investing heavily in its own charging infrastructure and analysts cited by Indonesia’s state-owned news agency Antara claim that government incentives tied to nickel-based batteries are intended to deepen domestic industrial integration while at the same time strengthening the broader EV ecosystem.

Malaysia, Singapore and the Philippines are all making progress but are moving at different speeds. Singapore has developed one of the region’s most ambitious charging roll-outs, backed by strong government policy and urban planning. Malaysia to the north is expanding public charging corridors while attracting manufacturing investment, and the Philippines is playing catch-up, but is seeing rising interest in electrification, particularly in the form of public transportation fleets. Displacement of the nation’s roughly 250,000 jeepneys will take some doing though.

Mixed into all of this across the region is the position of Tesla which can be summarised as ‘mixed’ at best. The company retains considerable brand value thanks to the ever present PR surrounding its CEO – and to some extent remains influential in some areas, notably Taiwan.

However, Tesla is increasingly confronting rivals that combine lower prices, local manufacturing and extensive state support – and losing.

BYD’s scale, Geely’s budget offerings and the emergence of new Chinese technology-focused manufacturers have fundamentally altered the competitive landscape of Asia vis-a-vis EV sales. Reports from Reuters, Caixin and regional media to this end thus suggest the centre of gravity in Asia’s EV market is shifting away from Tesla and decisively towards Chinese brands – the result being an Asian EV transition that looks markedly different from the one envisioned a decade ago.

China’s BYD captures 35% of Africa EV market, as latecomer rival Tesla bets on Morocco

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By Brian Kenety June 3, 2026

Chinese automaker BYD Company Ltd (SZSE:002594; HKEX:1211) has significantly strengthened its presence in Africa’s emerging electric vehicle (EV) market, increasing its market share to 35% in 2025 from just 4% two years prior, according to the Global EV Outlook 2026 report, published by the International Energy Agency (IEA), which predicts a continental bump in sales owing to the prolonged closure of the Strait of Hormuz.

China’s biggest carmaker, pure-play EV manufacturer – and now the world’s biggest EV maker by unit sales – aims to sell 1.3mn cars outside of its home market in 2026, which would represent an increase of nearly 25% from its 2025 overseas sales. While Asian and Latin American markets are the main focus on its expansion drive, BYD is targeting sales several African countries, including by building charging station infrastructure.

In major electric car markets, such as Europe and the United States, the share of Chinese imports in sales is still relatively limited due to trade measures, consumer preferences and large domestic electric car manufacturing capacity. But “outside these two major markets, Chinese imports accounted for 55% of electric car sales in 2025, up from about 10% in 2021”, the report says, and many countries in Africa now “import more than 80% of their electric cars from China”.

A prolonged high oil price environment is likely to boost the outlook for EV sales in Africa. In emerging market and developing economies (EMDEs), increased gasoline and diesel prices have a larger impact on household incomes since average incomes are lower compared to advanced economies. And so “oil-importing EMDEs across the world have some of the strongest incentives to implement policies to further speed up electric car adoption,” the report notes.

Electric vehicle adoption across Africa remains concentrated in a small number of markets despite rapid recent growth, with regional electric car sales rising from about 4,000 units in 2023 to roughly 25,000 in 2025.

Last year, Egypt led the continent in total EV sales with around 7,900 units sold, followed by Morocco with 5,500 and South Africa with 3,800. Together, the three countries accounted for nearly 70% of Africa’s total electric vehicle sales during the year.

“Buying a brand new EV is not cheap, even for many African markets with slightly better disposable income,” Nigeria-based outlet TechCabal commented on the report’s finding. “BYD has intentionally targeted that group by shipping cheaper EV models in markets like Egypt and South Africa, undercutting competitors like Maxus and Toyota, which recently introduced an EV in the market.”

Morocco emerges as Africa’s EV manufacturing hub, focus of BYD’s main rival, Tesla

US electric vehicle maker Tesla (NASDAQ: TSLA) officially entered the Moroccan market in February, with a launch event in AnfaPlace Mall in Casablanca, showcasing two of its best-selling models, the Tesla Model 3 and Tesla Model Y, alongside home charging solutions.

Morocco has consolidated its position as Africa’s largest automotive manufacturing hub, producing 559,645 vehicles in 2024 (up 5% year on year) and projected to exceed 600,000 units in 2025, according to industry estimates. Output growth contrasts with a 5% y/y decline in South Africa last year (599,755 vehicles), historically the region’s dominant producer.

The North African country also hosts early electric vehicle assembly activity through Chinese and European manufacturers, providing a modest but established EV-production base. By comparison, South Africa – birthplace of Telsa’s chief executive Elon Musk – reports no local production of fully electric vehicles; the auto sector is still oriented towards internal-combustion and hybrid models.

Morocco’s logistics advantages include short shipping routes to European markets and lower transport costs. Policymakers have pursued an expansive EV-sector strategy that includes tax exemptions, reduced import duties, and broad public-charging deployment, with close to 1,000 charging points nationwide.

“Its proximity to Europe — South Africa’s largest target market for exported vehicles — gives Morocco a geographical advantage in terms of supply chains and shipping fees. The country is also ahead of South Africa in EV production, producing 40,000 to 50,000 units in 2024, with plans to increase this. South Africa has not yet produced a single fully electric car,” writes south Africa-based MyBroadband.

Meanwhile, BYD has announced plans to expand its dealership network in South Africa to 35 locations by the first quarter of 2026, having initially set an end of year target. The Chinese company also plans to deploy between 200 and 300 fast-charging stations in Africa’s most industrialised country by the end of 2026. Meanwhile, Chinese OEM Sany is planning to expand production in South Africa.

In December, Eskom Holdings SOC Ltd, South Africa’s state-owned electricity utility responsible for power generation, transmission and distribution, formalised a partnership with BYD Auto South Africa, to expand the country’s public EV charging network.

The cooperation is anchored in a Memorandum of Cooperation signed earlier in 2025, setting out joint objectives to support EV infrastructure development and broaden market uptake. BYD reaffirmed its commitment to the agreement during the launch in Johannesburg of its Sealion 5 Super Plug-in Hybrid SUV, priced from ZAR499,900 (about $26,700), positioning it below many plug-in hybrid electric vehicles currently on sale, which are often priced above ZAR600,000 (around $32,000).

Uganda and Kenya lead Africa’s electric motorcycle growth

Globally, two- and three-wheelers (2/3Ws) remained the most electrified road transport segment in 2025, with about 10% of the global fleet now electric, according to the Global EV Outlook 2026. Sales of electric 2/3Ws increased almost 15% to reach 11mn globally in 2025, representing around 15% of total 2/3W sales. Swapping systems for 2/3Ws are deployed in several African countries, including Kenya, Rwanda and Uganda.

“Sales of electric 2Ws have grown markedly in Africa, from less than 1 000 in 2020 to around 70 000 in 2025,”the report says. “The use of 2Ws for ride-hailing, delivery and other commercial applications – where purchase decisions are especially cost-sensitive – has helped drive up the sales of electric 2Ws, especially in countries such as Uganda and Kenya. Battery-swapping is also being deployed to support the uptake of electric 2Ws used for commercial services in some markets in Africa.”

Uganda has become one of Africa’s fastest-growing markets for electric 2Ws, with sales exceeding 30,000 in 2025, having risen sharply from a low base in 2024. “Key to growth was the rapid scale-up of financing programmes for 2W purchases, led by Kenya-headquartered Spiro, which reported a large rollout in 2025, supported by an expanding battery-swapping network,” the report said.

“Zembo Motorcycles, a company focused on electric 2Ws, which provides battery swaps, secured $1mn in funding from the Dutch entrepreneurial development bank FMO in order to acquire batteries and chargers. Policy measures have complemented private-sector scaling. Uganda’s national e‑mobility agenda includes fiscal incentives intended to attract investment in domestic assembly and manufacturing, including income tax holidays and VAT exemptions for eligible domestically manufactured electric vehicles (EVs) and charging-related equipment.”

In Kenya, high gasoline prices relative to electricity prices, combined with the large share of the population with reliable access to electricity, make a strong economic case for electric 2Ws, the report said. “As a result, year-on-year electric 2W sales more than tripled in 2025, reaching over 25 000 and representing around 15% of new 2W registrations. This rapid growth occurred even despite relatively limited policy support, although in 2025 the government confirmed that domestically assembled electric models would continue to be VAT exempt.”

In South Africa, however, fully electric vehicle sales still represented less than 1% of total new-car sales in 2025. Plug-in hybrid electric vehicles (PHEVs) recorded stronger momentum, accounting for more than 70% of total electric vehicle sales in the country.

Smaller but growing EV markets are also emerging in Ethiopia, Mauritius, Rwanda and Nigeria, reflecting increasing government support, fuel-import pressures and expanding interest in lower-cost electric mobility solutions.

Africa’s used-car market complicates EV transition

At the same time, Africa’s automotive market remains heavily dependent on used vehicle imports from major producing economies including Germany, Japan and the United States. Industry estimates suggest around 60% of annual additions to Africa’s vehicle stock consist of imported used cars, complicating efforts to accurately measure EV adoption across the continent.

Analysts say official registration and sales data often fail to distinguish between new electric vehicles, used imports and so-called zero-mileage exports, making comparisons across African markets difficult.

Ethiopia illustrates the data challenge. Estimates suggest cumulative retail sales of new EVs between 2021 and 2025 totalled only slightly above 2,000 units. However, Ethiopia’s vehicle licensing authority has reported cumulative electric-car sales of around 15,000 units between 2022 and 2024, claiming roughly half of all new cars sold in 2024 were electric.

Domestic manufacturing initiatives are also beginning to emerge. Neo Motors, Morocco’s domestic automaker, launched sales of its first electric model at the start of 2026 as the country seeks to position itself as a regional EV production hub alongside its expanding automotive export industry.

 

Hungary’s battery boom is causing a water crisis

Former Prime Minister Orban promised Chinese battery manufacturers unlimited water for their factories. Now Hungary is running out of water. / bne IntelliNewsFacebook

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By Ben Aris in Berlin June 2, 2026

Hungary’s ambition to become Europe’s electric vehicle battery hub is colliding with a growing environmental reality: the country is running short of water, Center for European Policy Analysis (CEPA) said in a report.

After years of courting Chinese manufacturers with generous incentives and streamlined approvals, Budapest is being forced to reconsider the balance between industrial growth and resource security as severe drought grips large parts of the country. The shift has become one of the first major tests for the newly installed Prime Minister Peter Magyar following his recent election victory in April.

Hungary faces what officials describe as an “unprecedented water crisis.” Years of below-average rainfall, falling groundwater levels and growing industrial demand have combined to place increasing pressure on water supplies. The problem has been magnified by the rapid expansion of battery manufacturing, one of the most water-intensive industrial processes.

During Viktor Orban’s 16 years in power, Hungary actively positioned itself as a European centre for electric vehicle production, attracting some of China’s largest battery manufacturers. The government said Chinese investment commitments reached $16bn, helping transform the country into a critical link in Europe’s EV supply chain. However, climate pressures are starting to get in the way of that vision.

April brought exceptionally dry conditions across the country, with rainfall during a recent 90-day period running 20mm-70mm below average, CEPA reports. The agricultural consequences have been severe. Last year, drought destroyed 550,000 hectares of farmland, while more than 90% of Hungary’s territory is now considered vulnerable to severe drought damage. Farmers warn that crop yields are becoming increasingly difficult to sustain without major intervention.

At the centre of the debate are the large battery factories built or planned by Chinese manufacturers. Battery production requires substantial quantities of fresh water for refining, cooling and manufacturing processes. Critics argue that industrial consumption is increasingly competing with agricultural irrigation and household needs.

The most prominent project is the giant Debrecen battery complex being developed by Contemporary Amperex Technology Co. Limited (CATL), which has become a symbol of Hungary’s industrial transformation. The company began battery cell production at its factory near Debrecen on May 6 after securing the necessary permits and has said it complies with existing regulations and will adapt to any future legislative changes.

The new government is signalling that the regulatory environment is about to become significantly tougher.

Under Orban, environmental approvals for battery projects were frequently accelerated. Magyar’s governing Tisza Party has pledged to subject future projects to standard regulatory reviews and to conduct a comprehensive reassessment of existing developments, including CATL’s 546-acre Debrecen site.

The government has also indicated that drinking water supplies and agricultural irrigation will take priority over industrial consumption. Battery producers may be required to fund their own grey-water recycling systems and face tighter monitoring of pollution and environmental compliance.

Officials are considering the creation of an independent regulator focused on heavily polluting industries, particularly battery manufacturers. The government has also warned that repeated violations involving water contamination, air pollution or hazardous industrial chemicals could result in substantial penalties or operational suspensions.

The changing political climate is already being noticed by investors. Chinese electric vehicle manufacturer BYD (1211.HK) has reportedly instructed contractors working on its Hungarian factory to comply fully with local labour regulations, a move widely interpreted as reflecting expectations of stricter oversight under the new administration.

Despite the tougher rhetoric, Magyar has made clear that Hungary will not abandon its battery strategy entirely. The sector remains an important source of investment, exports and employment at a time when Europe’s automotive industry is undergoing a profound transition towards electrification.

Instead, the government appears to be seeking a middle path: preserving foreign investment while imposing greater environmental accountability.

The centrepiece of that approach is a new water management strategy focused on two priorities: greater public involvement in conservation programmes and a broader ecological restructuring aimed at reducing pressure on water resources. Officials are also examining large-scale water retention projects, reversing decades of policy that concentrated on draining excess water from the country through the Danube and Tisza river systems.

For Chinese investors, the implications are clear. The era of automatic approvals and light-touch oversight is ending. Future growth in Hungary’s battery sector will increasingly depend not only on labour costs and market access, but also on the availability of one of the country’s most constrained strategic resources: water.

As Hungary’s drought intensifies, the question facing policymakers is no longer simply how many battery factories the country can attract, but whether its natural resources can support them. In that sense, the country’s water shortage has become a test of a broader issue confronting governments across Europe: how to reconcile industrial policy with environmental limits.

WAIT, WHAT?!

Iran seeks Japanese help in rebuilding war-damaged oil sector

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By bne IntelliNews June 2, 2026

Iranian President Masoud Pezeshkian has asked Japan to participate in reconstructing infrastructure damaged in recent US-Israeli attacks, including refineries, in exchange for efforts to restore normal shipping through the Strait of Hormuz, IRNA reported on June 1.

“Iran will do everything in its power to normalise maritime traffic through the Strait of Hormuz… and hopes that with the return of normal conditions, greater opportunities will emerge to utilise Japan’s technical and engineering capabilities in reconstruction and development projects for Iran’s damaged refineries, ports and economic infrastructure,” Pezeshkian said during a telephone conversation with Japanese Prime Minister Sanae Takaichi.

The Japanese government says around 40 Japan-linked vessels, including oil tankers, chemical carriers, LNG carriers and car carriers, have been stranded in the Persian Gulf since early March, when Iran almost shut the Strait of Hormuz to shipping a few days after the military assault launched against the country on February 28, a conflict that lasted 39 days.

So far, two oil tankers linked to Japanese energy companies have passed through the strait.

Disruptions to traffic through the strategic waterway, which carries around 20% of global oil and LNG supplies, pushed oil prices from around $70 a barrel to above $100 and triggered fuel and petrochemical shortages in energy-dependent Asian economies in the Persian Gulf region, including Japan.

Before the war, as many as 140 vessels crossed the maritime corridor each day on average. That figure later fell to below 10 ships daily, most of them linked to Iran.

Since last week, however, the Revolutionary Guards have allowed an average of 30 vessels per day to transit through a route designated by Iran, raising hopes of easing tensions, although hundreds of ships remain stranded around the strait.

Pezeshkian said Iran was fully prepared to facilitate maritime traffic and would seek to ensure that “the passage of Japanese vessels is made possible without problems and with greater ease”.

Whether Japan will assist in rebuilding Iran’s damaged infrastructure remains uncertain.

Before the United States reimposed sanctions on Iran in 2018, Japan was a major buyer of Iranian crude and an important trading partner. However, Tokyo swiftly scaled back commercial ties with Tehran after the sanctions were reinstated, citing the risk of US penalties and compliance with the restrictions.

As long as sanctions remain in place, Japan appears unlikely to take part in reconstruction projects in Iran.

In response to Pezeshkian’s request, Takaichi limited her remarks to expressing appreciation for Iran’s cooperation in facilitating the passage of Japanese vessels through the energy conduit.

In mid-March, Israel bombed gas processing facilities in Asaluyeh in Iran’s southern Bushehr province, knocking at least two refineries out of operation.

According to two Iranian lawmakers, the attack wiped out around 30% of Iran’s gas production capacity, equivalent to 300mn cubic metres per day, and caused about $4bn in damage to installations in the Asaluyeh energy hub.

ALBANIA

Protesters break through police cordon in Tirana as anger grows over Trump-linked resort project

Protesters hold up a giant flamingo sign to highlight potential damage to coastal wetlands. / Lëvizja BASHKË via FacebookFacebook

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By bne IntelliNews June 2, 2026

Hundreds of protesters marched on Albania’s government offices on June 2 as a third consecutive day of demonstrations in the capital against a planned luxury resort in the protected Zvërnec coastal area escalated, with some demonstrators breaking through a police cordon outside the prime minister’s building. 

The protests are part of a wider mobilisation against a $4bn tourism development backed by investors linked to Jared Kushner, the son-in-law of US President Donald Trump. The project would cover parts of the Vjosa-Narta wetland ecosystem and the uninhabited Adriatic island of Sazan, areas environmental groups say are among the most ecologically sensitive in the Balkans.

Crowds gathered earlier in Skënderbej Square before marching to the interior ministry and then to the Prime Minister’s Office, chanting slogans including “Albania is not for sale” and “Albania belongs to Albanians,” while holding placards reading “Hands off Vjosa-Narta.”

During the rally, sections of the crowd pushed through security barriers at the entrance to the government compound, prompting brief clashes with police, according to local media reports. Protesters demanded the resignation of the government and the repeal of legislation on strategic investments and development in protected areas.

Environmental NGOs have warned that construction could damage biodiversity, including bird migration routes and habitats for flamingos, sea turtles and other protected species. Excavation work began earlier this year, triggering public outrage.

The government has defended the project, arguing it is part of a broader strategy to expand high-end tourism and attract foreign investment. Prime Minister Edi Rama has said the development complies with legal and environmental requirements, and that Albania should position itself as a regional tourism destination.

“I want to make Albania a country that is a destination to be envied in the region, and this project is part of this effort,” Rama said earlier this week, reported Top-Channel TV.

Authorities have also rejected claims that the site is fully protected, while acknowledging that environmental assessments are ongoing. Rama has insisted the project will proceed, saying there is “no chance that the investment will stop as long as I am here”. 

The development, promoted by investment firm Affinity Partners, includes plans for up to 10,000 hotel rooms across roughly 2.5 square kilometres of coastal land. Kushner’s firm has previously pursued large-scale tourism projects in the region.

The Special Anti-Corruption Structure (SPAK) said on June 1 it has opened an investigation into changes in land status and ownership linked to the Zvërnec area in 2024, which enabled tourism development, reported Politico.

The protests intensified after fences topped with barbed wire were erected at the site in late May, blocking public access to beaches and coastal areas. Demonstrators and NGOs say this effectively privatised parts of the shoreline.

A protest took place in Zvërnec on May 30, which provoked widespread public anger after videos shared on social media showed private security guards detaining a protester. 

The following night, protesters gathered outside government buildings in Tirana demanding an end to the project and the resignation of the prime minister. Further demonstrations are planned in the capital and near the project site later this week.