Europe Confronts Ukraine War Escalation, U.S. Tariff War, and Political Instability Amid Rising Security Threats
Russia's war in Ukraine is becoming deadlier for civilians, with U.N. reports confirming that short-range drones are now the leading cause of non-combatant deaths. In January alone, 139 civilians were killed and 738 wounded, highlighting the devastating impact of aerial warfare. Ukraine and Russia each produced over a million drones in 2024, transforming these weapons from reconnaissance tools into primary battlefield assets. The EU must accelerate drone defense capabilities and electronic warfare countermeasures to protect civilians.
The U.S.-EU trade war is intensifying, as President Donald Trump's latest tariffs on steel and aluminum send shockwaves through European industries. German automakers, British aerospace firms, and Italian manufacturers face rising costs, fueling fears of an economic downturn. European leaders are now considering retaliatory measures, but the risk of further escalation remains high. The EU must balance countermeasures with diplomatic engagement to avoid a prolonged economic conflict.
Germany's financial sector is under pressure, as Commerzbank fights off a takeover attempt by Italy's UniCredit. The battle has become a political flashpoint, with Chancellor Olaf Scholz and German regulators opposing foreign ownership of one of the country's last major commercial banks. The outcome will have lasting implications for Germany's financial sovereignty and the broader European banking sector.
Italy's mafia remains a potent force, with 130 arrests in Palermo exposing the continued influence of Cosa Nostra. Despite decades of crackdowns, the group has adapted by using encrypted communications and online gambling operations to fund its activities. The resurgence of organized crime poses risks to EU financial security, as illicit funds continue to flow through European banking networks.
Sweden's counterterrorism efforts are intensifying, following the arrest of a suspect accused of planning an Islamist-inspired terrorist attack. The operation highlights Sweden's ongoing struggle with radicalization, especially after last year's Quran burnings triggered global jihadist threats. The EU must enhance intelligence-sharing and counter-extremism measures to prevent future attacks.
Ukraine is moving to secure its energy future, with parliament approving the purchase of two Soviet-designed nuclear reactors from Bulgaria. The move aims to compensate for the loss of the Zaporizhzhia nuclear plant, now under Russian occupation. However, some lawmakers argue that purchasing Russian-designed technology during wartime is problematic. The EU should support Ukraine's long-term energy independence by investing in Western-built nuclear infrastructure.
Greenland's rare earth mining debate is intensifying, with U.S. interest in the Kvanefjeld deposit growing amid Trump's renewed push for strategic Arctic resources. The upcoming Greenlandic elections will determine whether the mining ban on uranium-rich deposits is lifted, potentially reshaping global supply chains for critical minerals.
Poland is confronting a new Russian airspace violation, as a Russian Su-24MR military jet entered Polish airspace near Gdansk Bay. While Moscow claims the incident was due to a navigation failure, Polish officials view it as part of Russia's ongoing pattern of testing NATO defenses. The EU must reinforce Baltic air policing efforts to deter future incursions.
The far-right Freedom Party (FPÖ) is struggling to form a government in Austria, as coalition talks with the center-right People's Party ('VP) face significant hurdles. With FP' leaders demanding control of key ministries, opposition to the far right is mounting within Austria's political establishment. The EU must closely monitor these developments, as a FP'-led government could shift Austria's stance on Russia sanctions and immigration policies.
Europe is facing a period of heightened uncertainty, as security threats, economic tensions, and political instability converge. Strategic decision-making will be crucial in ensuring long-term stability and resilience in the face of evolving geopolitical challenges.
Geopolitical Risk Assessment for the Europe
(12-02-2025)
Europe is grappling with a mix of security threats, political instability, and economic uncertainty. Russia's war on Ukraine continues to escalate, with drone warfare now the deadliest threat to civilians. The U.S.-EU trade conflict deepens as tariffs disrupt industries, while Germany's financial sector faces upheaval over the battle for Commerzbank. Meanwhile, Italy's mafia resurgence highlights persistent organized crime risks, and Sweden's counterterrorism efforts underscore growing concerns over Islamist extremism. The EU must navigate these challenges carefully to safeguard regional stability.
Geopolitical Risk Index
Developments to Follow for the Europe (See All Global)
Previous Briefings
- Europe Confronts Ukraine War Escalation, U.S. Tariff War, and Political Instability Amid Rising Security Threats - (12-02-2025)
- Europe Faces Heightened Geopolitical Strains as Ukraine War Intensifies, U.S. Trade Pressure Grows, and Political Divides Deepen - (11-02-2025)
- Europe Confronts Ukraine War Escalation, U.S. Trade Tensions, and Far-Right Political Surge Amid Mounting Global Uncertainty - (10-02-2025)
- Europe Faces Geopolitical Inflection Point as Hybrid Warfare, Economic Pressures, and Political Fractures Intensify - (09-02-2025)
- Europe Faces Ukraine Escalation, U.S. Political Pressure, and Economic Struggles Amid Growing Security Concerns - (08-02-2025)
- Europe Faces Escalating Hybrid Warfare, Economic Turbulence, and Political Instability - (07-02-2025)
- Europe Confronts Hybrid Warfare, U.S. Trade Conflicts, and Political Upheaval Amid Global Power Struggles - (06-02-2025)
- Europe at a Breaking Point: Russia's Hybrid Warfare, U.S. Trade War, and Political Polarization Threaten Continental Stability - (05-02-2025)
