Global Risk Indexes (31-01-2025)

Global 98 (+1 ▲)
MENA 96 (+1 ▲)
APAC 97 ( —)
Europe 99 (+1 ▲)
Africa 98 ( —)
AMERs 97 ( —)
Markets 99 (+2 ▲)
Markus Schmidt, Europe region analyst at Worldwise Analytica

Markus Schmidt

Analyzing Today, Anticipating Tomorrow

Europe Faces Existential Geopolitical Test Amid Russian Military Gains, Economic Stagnation, and Political Polarization

The Ukraine war reaches a turning point as Russian forces encircle Pokrovsk, bringing them closer to breaking Ukraine's eastern defensive line. This marks one of the most significant advances since the fall of Bakhmut, highlighting Russia's ability to exploit manpower advantages and supply chain weaknesses in Ukrainian forces. If Pokrovsk falls, it could pave the way for a deeper Russian push into the Dnipropetrovsk region, further pressuring Kyiv's logistics and stretching NATO's already complex military commitments. Europe must now move beyond incremental aid packages and transition into a wartime economy, increasing weapons production, improving logistical chains, and ensuring that Ukraine does not fall victim to a slow Western policy response.

Hybrid warfare intensifies, with China and Russia exploiting Europe's internal divisions through cyber operations and disinformation campaigns. China's Spamouflage network continues targeting Spanish political discourse, while Russia's latest influence operations aim to weaken public support for Ukraine by exploiting economic anxieties. These hybrid threats are no longer just nuisances but strategic tools designed to manipulate European decision-making at the highest levels. A fragmented and reactionary response from European institutions will only embolden adversaries. The EU must fast-track legislation that compels social media platforms to crack down on disinformation, expand its cyber-defense partnerships with NATO, and strengthen intelligence-sharing mechanisms among member states.

Political polarization deepens across Europe, with France and Norway emerging as key flashpoints. In France, Marine Le Pen's National Rally is capitalizing on judicial battles and economic discontent to expand its influence, threatening the traditional centrist dominance of French politics. Meanwhile, Norway's government collapse over EU energy policy reveals a broader undercurrent of Euroscepticism that could destabilize Europe's energy transition plans. The fragmentation of political systems in core EU states raises questions about the bloc's ability to maintain policy continuity in key strategic sectors, from defense to climate change. If these trends persist, the European Council may find itself paralyzed, unable to push forward much-needed reforms.

Economic stagnation threatens Europe's global competitiveness, as the Eurozone teeters on the edge of recession. Germany's industrial decline, coupled with high debt burdens in France and Italy, has sent shockwaves through the European Central Bank's decision-making process. While rate cuts are being considered, they may not be enough to counteract weak investment and declining consumer confidence. Simultaneously, Trump's tariff threats and the increasing influence of BRICS trade alternatives are eroding Europe's ability to dictate global financial policies. The EU must move swiftly to diversify its trade relationships, strengthen domestic industries, and establish greater strategic autonomy in critical sectors such as energy, semiconductors, and defense.

The African geopolitical landscape is shifting, with direct implications for European interests. France's diminishing influence in the Democratic Republic of Congo and Rwanda signals a declining ability to shape African security dynamics. At the same time, Russia's Wagner Group and Chinese financial expansionism are filling the power vacuum left by European disengagement. This shift is not only affecting resource access but also migration patterns, as instability in Africa has a direct correlation with asylum applications in Europe. Without a strategic re-engagement policy, Europe risks losing its foothold in one of the world's most resource-rich and strategically vital regions.

Energy security remains fragile, with Ukraine facing a looming energy crisis as Russian strikes deplete its gas storage capacity. Moldova's continued dependence on Russian gas further complicates the region's energy security calculus. While short-term fixes, such as coal shipments from Ukraine, provide temporary relief, a comprehensive European energy strategy must focus on rapid diversification, expanded nuclear investments, and a renewed push for hydrogen infrastructure to ensure long-term sustainability.

Europe is at a defining moment. The current crises are not isolated disruptions but symptoms of a broader power transition in the global order. If Europe fails to adapt'by reinforcing its defense capabilities, insulating its economy from external shocks, and countering internal political fragmentation'it risks diminishing its role as a strategic actor on the world stage.

Geopolitical Risk Assessment for the Europe
(31-01-2025)

Europe is facing a confluence of security, economic, and political crises that threaten to reshape its strategic landscape. The rapid deterioration in Ukraine, escalating hybrid warfare threats from China and Russia, economic stagnation in the Eurozone, and deepening political fragmentation within EU states all point toward a period of prolonged instability. The continent must adapt with decisive military support for Ukraine, economic resilience-building, and reinforced democratic safeguards to counter internal and external pressures.

Geopolitical Risk Index

Developments to Follow for the Europe (See All Global)

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