Global Risk Indexes (26-02-2025)

Global 98 (-1 ▼)
MENA 99 ( —)
APAC 98 ( —)
Europe 99 ( —)
Africa 97 (-1 ▼)
AMERs 98 ( —)
Markets 99 ( —)
Markus Schmidt, Europe region analyst at Worldwise Analytica

Markus Schmidt

Analyzing Today, Anticipating Tomorrow

Europe at the Breaking Point: U.S.-Russia Talks Advance Without EU Input, Economic Crisis in Germany Deepens, and Security Threats Escalate

The United States and Russia are advancing peace negotiations without European involvement, sparking fears of a settlement that undermines NATO. Moscow has welcomed Washington’s more ‘balanced’ approach, reflecting the dramatic shift in U.S. policy under Trump. European diplomats are alarmed that the U.S. is now negotiating from a position of neutrality rather than as a firm supporter of Ukraine, which could lead to a settlement that weakens NATO’s eastern defenses. With European leaders scrambling to react, a growing consensus is emerging that the continent must assert greater strategic autonomy before Washington makes irrevocable decisions.

Germany’s economic outlook is worsening, with consumer sentiment plunging to its lowest level in over a year. A new survey shows that Germans are deeply pessimistic about the future, as inflation, industrial slowdowns, and the deepening U.S.-EU trade war erode confidence. This economic instability is feeding into political uncertainty, with post-election coalition talks still unresolved. The conservative-led government of Friedrich Merz is under immense pressure to stabilize the economy, but opposition from the far-right AfD and the Left Party is complicating efforts to pass major policy reforms.

The U.S.-EU trade war is escalating, threatening to push Europe further into economic downturn. Trump’s latest round of tariffs on European cars and agricultural products has prompted Brussels to consider retaliatory measures. However, European economies—already struggling with high inflation and sluggish growth—are ill-prepared for an extended trade confrontation. The European Commission’s plan to roll back corporate regulations in an attempt to boost competitiveness reflects growing concerns that EU businesses are losing ground to China and the U.S.

Britain announces a dramatic increase in defense spending to 3% of GDP by 2029, while cutting foreign aid. Prime Minister Keir Starmer’s decision reflects growing European fears that U.S. security commitments are no longer reliable. By redirecting funds from international development to defense, the UK is signaling a shift towards a more militarized foreign policy. The move has been condemned by humanitarian organizations, but it has been welcomed by NATO officials as a necessary step to fill gaps in European defense capabilities.

Russia is intensifying hybrid warfare operations across Europe. New cyberattacks on Italian financial institutions, intelligence operations in Germany and Poland, and increased maritime sabotage suggest a coordinated Russian effort to destabilize the continent. Meanwhile, NATO forces in Poland were placed on high alert after Russian airstrikes came dangerously close to the border, raising the risk of accidental escalation. The European Commission is pushing for increased investment in cybersecurity and energy infrastructure protection, but questions remain over whether the EU’s response is robust enough to counter Moscow’s aggressive tactics.

The United Nations Security Council has adopted a U.S.-drafted resolution on Ukraine that avoids condemning Russia, further straining transatlantic relations. European officials are deeply frustrated that Washington is now prioritizing ‘neutrality’ over its traditional support for Ukraine. The failure of the U.S. to push a stronger resolution at the U.N. General Assembly—where European nations successfully passed a more favorable motion for Ukraine—highlights growing transatlantic rifts.

Ukraine is facing an unprecedented wave of drone attacks as Russia steps up military pressure. Over 200 drones targeted Ukrainian infrastructure overnight, marking the most extensive air assault in months. Ukrainian air defenses are being stretched thin, and President Zelenskiy has urgently called for increased European military assistance. If Russia continues to escalate airstrikes, it could force NATO into difficult decisions about providing more direct military support.

Hungary is once again using its veto power to block EU sanctions on Russia, demanding exemptions. Viktor Orbán’s government is insisting that eight individuals be removed from the sanctions list and is calling for fresh guarantees on Ukraine gas transit talks. This latest obstruction highlights the persistent challenge of EU unity in dealing with Russia, as Hungary continues to use its leverage to extract concessions.

As Europe grapples with economic instability, security threats, and geopolitical marginalization, the coming weeks will be decisive in determining whether the continent can assert its strategic autonomy or be relegated to a secondary role in shaping global events.

Geopolitical Risk Assessment for the Europe
(26-02-2025)

Europe’s geopolitical landscape is entering a period of extraordinary uncertainty, as U.S.-Russia negotiations continue to bypass European leaders, threatening NATO’s credibility and the security architecture of the continent. The economic crisis in Germany is deepening, with consumer sentiment plummeting as recession fears mount. The U.S.-EU trade war is escalating, further straining transatlantic relations. Meanwhile, European security concerns are intensifying, with increased Russian hybrid warfare, sabotage, and intelligence operations. The UK’s decision to dramatically boost defense spending while slashing foreign aid underscores Europe’s shifting priorities in response to mounting global instability.

Geopolitical Risk Index

Developments to Follow for the Europe (See All Global)

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