Global Risk Indexes (10-02-2025)

Global 98 (0 —)
MENA 98 ( —)
APAC 98 ( —)
Europe 97 ( —)
Africa 97 ( —)
AMERs 98 ( —)
Markets 99 ( —)
Markus Schmidt, Europe region analyst at Worldwise Analytica

Markus Schmidt

Analyzing Today, Anticipating Tomorrow

Europe Confronts Ukraine War Escalation, U.S. Trade Tensions, and Far-Right Political Surge Amid Mounting Global Uncertainty

Russia's war on Ukraine is escalating, with Moscow launching one of its largest drone attacks in months. Ukraine's military successfully intercepted 70 out of 151 drones, but the volume of Russian strikes highlights Kyiv's continued vulnerability to sustained aerial bombardments. The war is evolving into an attritional contest, with Ukraine's defense heavily reliant on Western military aid. Meanwhile, Russia's ability to bypass sanctions and sustain military production underscores the need for stronger enforcement of economic restrictions. Europe must intensify its support for Ukraine while ensuring sanctions compliance to limit Moscow's war capabilities.

Far-right movements are consolidating across Europe, as key leaders gathered in Madrid to promote a nationalist, anti-immigration agenda under the banner of 'Make Europe Great Again.' Figures such as Viktor Orb'n, Marine Le Pen, and Matteo Salvini praised former U.S. President Donald Trump's return to power, signaling a shift toward transatlantic cooperation among Europe's nationalist factions. The rise of the far right, coupled with digital election interference, threatens EU cohesion and democratic stability. European institutions must reinforce electoral integrity mechanisms to counter disinformation and prevent democratic backsliding.

U.S.-EU trade tensions are intensifying, with German Chancellor Olaf Scholz warning that Europe is prepared to respond 'within an hour' to any tariffs imposed by Washington. Trump's protectionist policies, combined with his demands for increased NATO defense spending, have placed European economies in a precarious position. With global supply chains already under strain, a transatlantic trade war could severely impact European industries, particularly automotive, technology, and agriculture. The EU must explore strategic economic diversification while preparing for potential trade retaliation.

Kosovo's political landscape is shifting, following Prime Minister Albin Kurti's re-election with a weakened mandate. Kurti's continued push for greater control over Kosovo's Serb-majority north has heightened regional tensions, risking further EU sanctions and complicating NATO's peacekeeping efforts. The EU must reassess its engagement strategy with Kosovo to prevent further instability in the Western Balkans.

The Baltic states have fully severed ties with Russia's power grid, marking a significant step toward European energy independence. Estonia, Latvia, and Lithuania's integration into the EU's electricity system eliminates a key vulnerability to Russian energy blackmail. However, this move also raises security concerns, as Russian sabotage of undersea infrastructure remains a credible threat. Europe must enhance infrastructure security to prevent Moscow from exploiting energy vulnerabilities.

Trump and Putin are in undisclosed communications, fueling speculation over a potential backchannel negotiation on Ukraine. Trump has repeatedly stated his intention to end the war but has not outlined a clear strategy. Russian officials insist that negotiations must acknowledge 'new realities,' implying that Moscow expects territorial concessions. If the U.S. pursues a settlement that weakens Ukraine's sovereignty, Europe must brace for strategic divergence with Washington, reinforcing its own defense policies and commitments to Kyiv.

Germany's electoral landscape is becoming increasingly polarized, with Friedrich Merz's center-right CDU emerging as the frontrunner ahead of the February 23 election. The debate over NATO defense spending has exposed divisions within German politics, as Merz signals openness to fiscal flexibility while Scholz remains committed to budgetary constraints. The outcome of the election will have profound implications for Germany's role in European security and economic stability.

Grenfell Tower's imminent demolition sparks controversy, as survivors and bereaved families argue that the structure should remain as a memorial to the victims of the 2017 fire. The decision has reignited debates over social housing policies and government accountability in the UK. With economic pressures mounting, social unrest over inequality and governance failures could further destabilize British politics.

As Europe navigates a period of unprecedented uncertainty, its leaders must take decisive action to counter security threats, economic disruptions, and political extremism. The coming weeks will be crucial in shaping the continent's response to global power shifts and internal instability.

Geopolitical Risk Assessment for the Europe
(10-02-2025)

Europe remains in a volatile geopolitical environment, facing heightened security risks, escalating U.S.-EU trade tensions, and deepening political fragmentation. Russia's military aggression in Ukraine continues to intensify, while far-right movements gain momentum across Europe, reshaping domestic politics. Economic uncertainties, including EU energy security concerns and the potential for transatlantic trade disputes, further complicate Europe's stability. As global realignments accelerate, European leaders must act decisively to safeguard security, economic resilience, and democratic integrity.

Geopolitical Risk Index

Developments to Follow for the Europe (See All Global)

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