Money Matters

Six ways economics will be driving foreign relations this year.

1 Sudan and China Despite international outrage at the Darfur genocide, oil-rich Sudan continued to receive billions in investment from China (and others). But when their trade relationship began to cast a shadow on the Olympics, China used its economic leverage to force Sudan to accept a peacekeeping force. Despite that, expect their business ties to continue to thrive in 2009.

---

2 Kashmir, India, and Pakistan After decades of armed conflict in the contested territory of Kashmir, India and Pakistan opened the first trade route across the much-militarized border in October. Trucks carrying apples, nuts, and carpets crossed the border for the first time in 60 years. Still, tensions are expected to flare, as the Kashmiri separatists have called for a boycott of the local legislative elections in November and December.3 Turkey and the European Union Despite the divisiveness of President Abdullah Gül-a conservative Muslim in the largely secular Turkey-Turkey's business community threw its weight behind him for a few simple reasons: Under Gül's party, Turkey enjoyed six years of economic growth, became the sixth-biggest economy in Europe, and is considered stable by international credit-rating agencies. Expect the E.U. to be increasingly accepting of letting Turkey into the Union in coming years.

4 China and India Since the Sino-Indian war of 1962, reclaiming territory and demarcating borders has been an obsession on both sides-as has India's friendliness toward Tibetan exiles. Recently, however, the neighbors have chosen economics as a way to make nice, with trade growing from $3.6 billion in 2001 to $39 billion in 2007. In late 2008, they decided to join hands to deal with the financial crisis throughout 2009.5 The E.U. and Russia (and Georgia) It's hard to imagine that Russia would have attacked Georgia unless it thought Europe's dependence on Russian crude would keep it from getting too involved. And Russia was right: The E.U. barely whispered a word about sending troops to the region. Although the E.U. briefly stopped its talks with Russia on new partnerships,it since resumed them.

6 Cuba and the E.U. Although the E.U. imposed sanctions against Cuba five years ago, it's now paving the road to friendship with euros. This year, the E.U. extended $2.6 million in emergency hurricane relief, with a promise of $39 million more in 2009. Cuba and the E.U. have since pledged new cooperation in trade, the environment, science, and technology.