🌍 Did Yemen just change everything?

In a shock tweet, President Trump has announced he’ll now allow Nvidia to sell its cutting-edge H200 AI chips to China after all, in return for a 25% cut payable to Uncle Sam. These chips are ~ten times faster than the throttled H20 chips Trump re-authorised in July.

Intrigue’s initial take: This administration has wavered between two rival philosophies:

And funnily enough, Trump’s own justice department just boosted that second view, arresting two of China’s H200 smugglers for “funneling cutting-edge AI technology to those who would use it against American interests.” Turns out the US will now sell it instead.

Anyway, poorly-timed DOJ announcements aside, Trump is clearly now siding with that first view above, hence the 3% bump in Nvidia shares. And while he still nods to the national security risks (Nvidia’s newer Blackwell and Rubin chips won’t be included), we might’ve just witnessed a massive, US-backed expansion in China’s own AI compute.

The bit we’re left figuring out is what (if anything) the US might get in return.

Hang around your family long enough this holidays and you’ll start to hear about the good old days when unverified folks trudged 12 miles to school. So this is your chance to one-up them with a nuanced 1980s reflection on when Yemen used to be two countries:

The two later unified as today’s Republic of Yemen in 1990 before civil wars broke out in 1994 and 2014 — even the UN’s 2022 ceasefire couldn’t stop Yemen effectively splitting back into a Houthi north (including the capital), and a grab-bag of factions in the south.

But there’s been a massive development over the last week: one of those southern factions, sexily named the Southern Transitional Council (STC), just swept across all eight governorates of what used to be South Yemen!

And here’s why that matters:

The STC leader (Zubaidi) now stands unchallenged from the Arabian Sea to the Omani border, controlling 80% of Yemen’s oil reserves — the engine for any functioning state.

Now, lest you think it’s all honey and bint al-sahn, he also inherits an economy in freefall, plus locals still angry after (say) his violent crackdown on women protesting unpaid salaries.

But what does Zubaidi want? He’s already hoisting South Yemen’s old blue-and-red flag, so a declaration of independence seems inevitable though a referendum might come first.

Interestingly, he also just told Emirati outlets he’d sign any independent South Yemen onto Trump’s Abraham Accords to recognise Israel — a nudge for Trump’s early backing.

But why speak first to Emirati media…?

This is a yuuuuuge win for the Emiratis:

First, while the STC has genuine roots (Zubaidi used to be Aden’s governor), the STC is basically an Emirati creation. We’re talking UAE funding, training, arms, and even salaries.

Second, this means the UAE now not only has de-facto influence over a vast, resource-rich region (conveniently days after pledging $1B to help Yemen’s oil sector), but also…

Third, the UAE now gets influence over Yemen’s half of one of the world’s most strategic chokepoints: the Bab El-Mandeb Strait. Before the Houthis started attacking random ships, this narrow stretch carried 10-15% of global seaborne trade!

But for every ‘winner’, there’s…

Guess who effectively created south Yemen’s losing faction? That’s right, the Saudis were long hosting the leader-in-exile, paying his salary, and even guarding his Aden palace!

Why? Both the Saudis and Emiratis wanted to counter the Iran-backed Houthis up north, but these two regional rivals backed different factions, and eventually pursued different strategies: the young Saudi crown prince ultimately opted for a political settlement with the Houthis to stabilise the borders, while he pursued his big domestic transformation.

But with Saudi forces retreating, the crown prince’s grand strategy now looks in disarray.

So Intriguers, we might be witnessing a Yemen rushing back to the 80s.

To call Yemen a failed state almost misses the point: Yemen was, if anything, always more of a state in construction, and now it’s devolving back to two states in construction.

But for the rest of us it’s still worth asking… does any of this really matter? Sure.

First, Yemen’s state-owned oil producer has now halted production, fuelling energy market jitters (even if Yemen’s output is pretty modest).

Second, Iran has always seen Yemen’s Houthis as its cheapest proxy: a few hundred million a year to pin down your Saudi and Emirati rivals, pressure your Israeli foes, and draw The Great Satan into costly Red Sea patrols. So while this UAE consolidation might pose more of a threat to the Houthis longer term, these anti-Houthi forces are still busy.

Then third, it all hints at our multipolar world’s reversion to proxy wars: the Emiratis are learning in Yemen what it’s like when a proxy strategy works, while learning the opposite over in Sudan where UAE-backed RSF paramilitaries keep committing atrocities.

Then finally, it’s another reminder how brittle our world order is, with Yemen now joining (say) Syria, Myanmar, the Sahel, and beyond as a stark reminder of just how quickly a seemingly stable stalemate can collapse.

Sound even smarter:

Intrigue’s commodities corner is back

They say a picture is worth a thousand words, but the photo above contains just one.

By photographer Frederick Charles, ‘A Banner Day’ is one of 80 artworks containing a hidden puzzle hanging in the offices of NYC hedge fund PDT Partners. Bloomberg recently did a feature on them, but the above piece really caught our eye given its Intrigue vibes.

Can you figure out the five-letter word from the picture?

Hint: You might want to brush up on your flag knowledge!

(Solution at the bottom)

Yesterday’s poll: What do you think about Australia's age limits for social media?

👍 Good stuff - we've got to protect the kids (69%)
😠 It's a mess - unworkable and counter-productive (28%)
✍️ Other (write in!) (3%)

Your two cents: