On the edge: How ongoing wars and rising tensions will shape 2025

The year gone by had been more geopolitically charged than the year before. And going by the trends, we expect the upcoming year to see many of these geopolitical events evolve further for good or worse. Pertinent among these are the ongoing conflicts in Ukraine and Gaza, the political-strategic change in US administration with Trump Presidency 2.0 and the shifts in policies and diplomacy it brings, and on the trade front, the geoeconomic confrontation with Trump’s potential tariff war and its impact on global trade, as well as the rising technopolitical confrontation between countries leading to increased cyberattacks both in scale and scope and the consequent rising costs for states, industries, and corporations to build resilient and secure systems and networks to protect their assets.

The Russia-Ukraine conflict that is still raging has seen an even more grave intensity with the recent provocation of Russia’s use of hypersonic ballistic missiles and the bombing of a train in Ukraine that came from Romania with British Storm Shadow missiles and the US-made Army Tactical Missile System. The 34-month-old war seems nowhere near to subside in the next year and will continue to have wider geopolitical repercussions in the Eurasian region as well as in and across the Atlantic. If Ukraine sees several nations only offering lip service support, it may lead to territorial losses for the country and will see an emboldened Russia, which could renew its vision of the Soviet Union—keeping its balance of power in the region intact. On the other side, if we see greater US and EU military and economic support through NATO to Ukraine, it might further escalate the conflict, spilling over to Europe.

The other ongoing war between Israel and Palestine has entered its second year and has spiralled to neighbouring regions of Lebanon and Iran. This has brought loss of life, destruction, as well as strained relations in the region. We also saw Iran and Saudi Arabia improving their relations, leading to reduced hostilities between them. This ongoing conflict can potentially disturb the geopolitical calculations, with Arab countries taking a hard stance against Israel and the US (the latter supporting the former) in the region where Iran is ardently backing the Palestinian cause. This can have serious consequences for the energy security and shipping routes in the regions that could see disruption. The recent developments in the Syrian civil war with the ouster of President Bashar al-Assad, which, although it brings an end to the iron-fist regime, leave uncertainty looming large, giving radical Islamists a free run in the war-torn country.

The result of the US elections will have widespread political-strategic ramifications globally. President-elect Donald Trump coming to office in January 2025 will add another dimension to the ongoing conflicts. He would use all means possible to see an end to the wars quickly. This will validate his leadership and reassert US dominance on global issues. Under Trump we might see a more hawkish stance towards world affairs. Particularly revising its stance towards China—albeit with a more aggressive approach. All signals suggest that Trump’s presidency 2.0 will see a revision of its policies that he had during his first term and might signal hard posturing on various issues, be it on immigration, climate change, NATO’s defence spending by EU partners, or a unilateral approach towards its stance on multilateral institutions, among others.

The year gone by and the year to come will see heightened trade tensions and their impact on trade facilitation across borders. Along with the rapid decline in EU-Russia trade, we will see a spike in US-China trade tensions. Tariffs on goods exchanged between the US and China have increased up to six times since 2017, and globally, trade interventions have surged 12-fold since 2010. With Trump expected to take a further hard stance towards China, it will have ramifications on global trade flows. While countries like Vietnam, India, and Mexico may likely benefit from this Sino-US rivalry on the trade front, increasing the cost of supply chain, sourcing, and transportation will ultimately have consequences for the consumers globally.

On the technology front, we can expect greater competition between China and the US. With the former decoupling its technological reliance on the US, while the latter vehemently protecting its tech companies (like GAFAM) from threats of knowledge spillover and cyberwarfare. We will continue to see greater malware attacks towards specific countries and entities that could disrupt cyber infrastructure. Hence, marketplaces for hacking tools and data are growing. In 2020, the economic cost of cybercrime, including direct, indirect, and upstream systemic costs, was estimated to be in the range of $4 to $6 trillion. In that context, the cybersecurity industry could become an arena where cyberattacks are becoming more frequent, complex, and costly. In fact, it can be predicted that the warfare between the two countries may not be a kinetic warfare but instead could take the form of a trade war or cyberwar. Hence, governments and companies need to be more alert when it comes to cybersecurity and protecting their critical and strategic assets from cyberattacks. The coming years will see greater investments in building more resilient and secure networks to weather these threats. Studies have also identified generative artificial intelligence as one of the most significant technology trends unfolding today. Specific focus will be on cybersecurity for the internet of things and operational technology, along with stress on two segments of data protection and network security.

To sum up, the year ahead will see geopolitical risks further intensifying before parties eventually and hopefully choosing diplomacy over war. We expect greater US-China rivalry over trade and technology that will further reshape the dynamics between these and other nations. Trump’s presidency may also posit challenges even with its traditional allies (the EU and UK) over NATO funding, trade, as well as different visions towards multilateral forums. This will entail ‘decoupling’, ‘derisking’, and ‘reshoring’ of trade and investment in a fragmented world order where trade reorients toward flowing between geopolitically aligned economies. Lastly, in the year ahead we expect a specific focus on technology-linked and -driven industries such as e-commerce, cloud services, electric vehicles, semiconductors, AI software and services, robotics, immersive reality, etc. This will drive greater investment and growth for the global economy.

Mohit Anand is a Professor of International Business and Strategy at EMLYON Business School, France. Rajesh Mehta is a leading consultant and columnist working on market entry, innovation and public policy. The views expressed in the above piece are personal and solely those of the authors. They do not necessarily reflect Firstpost’s views.