Global Risk Indexes (25-02-2025)

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

Markus Schmidt

Analyzing Today, Anticipating Tomorrow

Europe Faces Strategic Isolation as U.S.-Russia Talks Advance, Germany’s Political and Economic Crisis Deepens, and Security Threats Escalate

The U.S.-Russia peace negotiations are accelerating, with Europe sidelined. Vladimir Putin has stated that European participation in talks will be ‘needed eventually,’ but for now, Moscow and Washington are focused on ‘building trust.’ This is a clear signal that the U.S. and Russia are shaping the future of Ukraine without European input. European leaders are growing increasingly alarmed at the prospect of a settlement that forces Ukraine into territorial concessions, effectively legitimizing Russian gains and weakening NATO’s credibility.

Germany’s political crisis deepens following the election, as far-right and far-left parties gain unprecedented influence. The AfD’s rise to second place has shaken the German political establishment, while the Left Party has also surged. Together, these two anti-establishment forces now hold enough parliamentary seats to block military spending increases, potentially limiting Germany’s ability to meet its NATO commitments. This presents a major strategic dilemma: with the U.S. pressuring Europe to take more responsibility for its own security, Germany may be unable to respond effectively due to internal political divisions.

Germany’s economy has officially entered a technical recession. The latest data confirms that GDP contracted by 0.2% in the last quarter of 2024, marking the second consecutive annual decline. Exports fell by 2.2%, the sharpest drop since the pandemic, reflecting worsening trade conditions amid the escalating U.S.-EU trade war. The conservative-led government of Friedrich Merz now faces enormous pressure to stabilize the economy, but with AfD and the Left Party opposing economic liberalization measures, significant reforms could be difficult to implement.

U.S. Senate leaders introduce a bipartisan resolution demanding Ukraine’s participation in peace talks, reflecting a split within Washington. While the Trump administration is moving forward with bilateral negotiations with Russia, a bipartisan group of U.S. senators is pushing back, arguing that any settlement must include Ukraine. This highlights a growing divide within Washington, where Trump’s transactional approach is being met with resistance from both Democrats and some Republicans.

Russia is expanding its hybrid warfare operations across Europe. Polish and allied NATO aircraft were activated in response to Russian airstrikes near the Polish border, underscoring the heightened security risks facing NATO’s eastern flank. Meanwhile, Italy has been hit by another wave of Russian cyberattacks targeting financial institutions, and investigations into suspected Russian-linked sabotage of Mediterranean oil tankers are ongoing. These actions point to a broader Russian strategy aimed at destabilizing Europe while shaping the battlefield in Ukraine.

The United Nations Security Council adopts a U.S.-drafted resolution on Ukraine that avoids condemning Russia, further angering European allies. The resolution, which takes a neutral stance and merely calls for a ‘lasting peace,’ has been seen as a major shift in U.S. policy. European diplomats are increasingly frustrated with Washington’s approach, arguing that the lack of explicit condemnation of Russian aggression weakens Ukraine’s negotiating position and undermines European security interests.

Bulgaria seeks final approval to join the eurozone, amid growing domestic opposition. The country’s finance minister has confirmed that Bulgaria has met the inflation criteria for euro adoption, but nationalist protests have erupted against the move, reflecting fears of rising prices. The debate over Bulgaria’s eurozone accession is part of a broader European challenge: how to balance economic integration with rising nationalist sentiment.

The investigation into undersea sabotage in the Baltic Sea suggests possible Russian involvement. Finnish authorities have confirmed that damage to the C-Lion1 telecoms cable may have occurred as early as January, with investigators still probing whether the incident was intentional. With NATO on high alert for maritime threats, this case underscores the vulnerability of Europe’s critical infrastructure to hostile actions.

Europe is facing an existential moment, as economic uncertainty, security threats, and political instability converge. With transatlantic relations in flux, European leaders must urgently define a strategy to safeguard the continent’s geopolitical interests.

Geopolitical Risk Assessment for the Europe
(25-02-2025)

Europe’s geopolitical crisis continues to intensify as U.S.-Russia negotiations advance without European involvement, raising fears that Washington may concede to Russian territorial claims at Ukraine’s expense. The German elections have left the country deeply divided, with the far-right AfD securing a historic second-place finish, while the Left Party and AfD together now hold enough parliamentary power to block defense spending increases. Meanwhile, Russian hybrid warfare is escalating, with undersea infrastructure sabotage, cyberattacks, and political interference. The economic outlook remains fragile, as the U.S.-EU trade war shows no signs of de-escalation and Germany officially enters a technical recession. European leaders are now forced to reconsider the continent’s strategic autonomy as transatlantic relations become more unpredictable.

Geopolitical Risk Index

Developments to Follow for the Europe (See All Global)

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