Global Risk Indexes (01-03-2025)

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

Markus Schmidt

Analyzing Today, Anticipating Tomorrow

Europe’s Geopolitical Crisis Escalates: Trump-Zelenskiy Clash Deepens Ukraine’s Isolation, U.S.-Russia Talks Advance, and Security Threats Intensify

The fallout from the Trump-Zelenskiy clash leaves Ukraine more isolated than ever. The White House meeting, which quickly devolved into a public confrontation, has left transatlantic relations in crisis. Trump’s refusal to sign the U.S.-Ukraine minerals deal, his dismissal of Zelenskiy’s concerns, and his insistence that Kyiv must accept a negotiated settlement with Moscow have reinforced fears that Washington is abandoning Ukraine. European leaders, including French President Emmanuel Macron and German Chancellor-in-waiting Friedrich Merz, have rushed to reaffirm their support for Kyiv, but the EU’s ability to fill the void left by the U.S. remains in doubt.

U.S.-Russia negotiations continue to move forward without European involvement. The latest round of talks in Istanbul reportedly covered security guarantees for Russia and limitations on NATO expansion—both major Kremlin demands. European leaders fear that Washington may agree to Russian territorial claims, effectively rewriting the post-Cold War European security order. The growing perception that the U.S. is willing to make deals over European heads is fueling calls for greater EU strategic autonomy, but divisions within the bloc continue to hinder a unified response.

Germany’s political crisis remains unresolved as coalition talks drag on. Friedrich Merz’s attempts to form a government have stalled, with the SPD resisting his calls for a defense spending surge. The political deadlock is fueling economic uncertainty, with German industry leaders warning that delays in forming a stable government could further weaken investor confidence. The radical Left and AfD, emboldened by their electoral success, are using the situation to obstruct policy initiatives, complicating efforts to address Germany’s economic stagnation.

The U.S.-EU trade war is worsening, deepening Europe’s economic woes. Trump’s latest round of tariffs on European cars and agricultural products has drawn sharp criticism from Brussels, which is considering countermeasures. However, with Germany’s economy in recession and the Eurozone facing slow growth, Europe is struggling to mount an effective economic response. Business leaders warn that prolonged trade tensions could accelerate deindustrialization, particularly in Germany’s manufacturing sector.

Bosnia’s Serb Republic moves toward de facto secession, heightening Balkan instability. Following the sentencing of Serb leader Milorad Dodik, the Serb Republic has barred Bosnia’s national police and judiciary from its territory. The move has been condemned by EU and U.S. officials, but Dodik remains defiant, with support from Russia and Hungary’s Viktor Orbán. The crisis risks escalating into a constitutional confrontation that could destabilize the entire region.

Russia continues hybrid warfare against Europe, targeting infrastructure and cyber networks. Intelligence reports suggest Moscow was behind the recent sabotage of undersea communication cables in the Baltic Sea, while Russian cyberattacks have intensified across Europe. Italian financial institutions have been hit particularly hard, and NATO officials are warning of increasing Russian intelligence operations targeting critical energy infrastructure. These actions highlight Moscow’s broader strategy of asymmetric warfare aimed at destabilizing Europe.

British Prime Minister Keir Starmer’s defense spending hike sparks political backlash. Starmer’s decision to increase defense spending while slashing foreign aid has triggered the resignation of International Development Minister Anneliese Dodds and widespread criticism from humanitarian organizations. The move signals a shift in the UK’s foreign policy priorities, but it risks damaging British influence in global development efforts.

As Europe faces diplomatic marginalization, economic stagnation, and rising security threats, the coming weeks will be critical in determining whether the continent can assert its strategic independence or remain at the mercy of external power struggles.

Geopolitical Risk Assessment for the Europe
(01-03-2025)

Europe faces intensifying geopolitical pressures as U.S.-Russia negotiations advance without European input, raising fears that Washington may force a settlement at Ukraine’s expense. The fallout from the disastrous Trump-Zelenskiy meeting has left Kyiv more isolated than ever, with European leaders scrambling to contain the diplomatic damage. Security threats continue to mount as Russia expands hybrid warfare operations, while Bosnia’s political crisis deepens with the Serb Republic moving toward de facto secession. The ongoing U.S.-EU trade war is exacerbating economic instability, particularly in Germany, where coalition talks remain deadlocked. As Europe confronts strategic marginalization, economic stagnation, and security threats, leaders face mounting pressure to redefine the continent’s role in global affairs.

Geopolitical Risk Index

Developments to Follow for the Europe (See All Global)

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