Take a look at the key insights from the thorough analysis of the European security and economics situation by John Alam, Urus Advisory.
Geopolitical risks in the short-medium term in Europe
USA: EU trade war, potential for conflict in Middle East and change in Ukraine policy all due to forthcoming Trump admin. There is also an unofficial American policy to cannibalise European industry and talent for its own ends, with America benefitting from relocating human and physical capital from the beleaguered EU to the USA, a process which will likely accelerate under Trump.
Ukraine and Russia: The war’s continuation means for continued disruption and chaos for EU countries, with continuing major spillover effects of the war on European security and economies via an increased burden of defence funding, hybrid warfare from Russia, and no end in sight to high energy prices with Russia out of the picture. Europe will most likely have to deal with both security and reconstruction as America pivots east.
Within Europe: German economy on the rocks, the quiet energy crisis, the political failures of establishment parties in France + Germany, and ailing demographics of the continent as a whole all present severe internal threats to Europe’s fundamental viability.
Lessons of war:What the EU must learn from Russia-Ukraine.
Large conventional militaries have a place in the 21st century, and manufacturing capacity and a military-industrial complex are essential for modern warfare. European efforts must match those of Russia, USA, China by consolidating in order to remain competitive. Of the top 10 defence contractors, 6 are American, 3 Chinese and 1 British. The largest European defence contractor is Airbus which is not primarily a defence contractor anyway.
Large, transnational supply chains are heavily vulnerable to sanctions/disruption: EU has an advantage due to Schengen allowing relatively small countries to integrate their supply chains and economies but this has led to its own security issues. Russia has also demonstrated a credible capability for long-range strikes to hypothetically damage key sites/ports via precision weapons, and instability in the Red Sea has severely throttled trade through there.
Learning from Russian successes and failures.
Russia has maintained the ability to build large amounts of advanced equipment by managing to either source components domestically or overland from friendly countries and has dispersed its own military production capabilities across the country, ensuring redundancy.
Similarly, manpower generation is key and even Russia’s haphazard mobilisation capabilities exceed those of many EU nations with exceptions (Finland, Austria) and possibly even the USA, with a recent study suggesting that it may take the latter 6 months to mobilise 100 000 troops in a best case scenario.
On the other hand, Russia has experienced considerable difficulties in organisation within the armed forces themselves, partly as a consequence of transitioning from a peacetime force to a war footing. Armed forces and defence ministries must maintain readiness and be audited and examined regularly to improve functionality, and remove corrupt and incompetent elements.
Future EU actions: What should be done?
Importance of a European defence strategy and coordination: NATO is too dependent on the Americans who are fickle and self-interested, and are keen to use Europe as an arms market, but their own stockpiles are depleted from global commitments and their (separate) strategic priorities in the Pacific, so cannot be relied upon. Existing bodies and structures in the EU have proven unwieldy and are not taken seriously domestically or abroad. Furthermore, this lack of EU centralised strategy has effectively let the US and UK run Ukraine policy, much like how the EU failed in Yugoslavia in the 1990s.
European energy strategy: Europe needs an energy strategy that functions in a post-Russia world. Existing partners such as Azerbaijan must be utilised to their maximum extent, while new partners such as the Central Asian countries can also be brought into the mix. LNG is not a panacea given the high prices of transport and the infrastructure needed relative to pipeline gas. Fortunately, Germany is actually rebuilding civilian nuclear capabilities, but much economic damage will have been done by then.
Establishment parties have to restore faith in liberal democracy lest radical parties, Russian funded/supported or not gain further ground. AFD has taken a state government in Germany, while France had National Rally winning a plurality of votes. In Bulgaria pro-Russian parties are an obstacle to actually forming a coalition to end the 4 years of chaos and 7 parliamentary elections.
Implications for peace and the EU: Various scenarios
Both Russia and Ukraine are edging towards peace, especially with the wild card in the White House starting from Jan 2025. Russian economy overheating while Ukrainian force generation looks increasingly exhausted. How this peace shapes up will affect what happens next:
Russia ‘forgiven’: Best case scenario for EU economically, Russia and EU rebuild trade relations, and the former economic model of Germany becomes more viable. Both parties are able to undo some of the economic damage the war dealt to their economies. Very unlikely scenario but possible if Trump softens western attitudes to Russia and Russia is willing to compromise on Ukraine, they have shown some interest in sanctions relief given their own economic woes.
Status quo: Limited Russian gains or Ukrainian victory. The large and battle-hardened Ukrainian military will be a continued obstacle to Russian expansionism and stand in the way of further Russian gains, if Europe continues their financial and military support. Continued issues with European energy security. European posture remains hostile but direct confrontation remains unlikely. Most likely scenario given the reluctance of Russia and EU to massively escalate and limited strategic autonomy of Europe from U.S. Still, Europe faces continued issues such as high energy prices, a declining industrial and manpower base, military issues and a lack of defence-industrial capabilities. This is the most likely scenario. There will be continuing European engagement with FSU states for energy reasons and to undermine Russian interests.
Frontline Europe: Russian victory or deeper European involvement in the war/containing Russia places the EU on the front line against Russia. Remaining trade and energy links between the two parties are severed and Europe has to actively rearm in earnest, leaving to the hard choice for governments to focus on guns over butter, which will strain public finances to the extent that large cuts will be necessary. Second most likely scenario, given aversion to compromise in Russia and Ukraine.
Conclusion
In all, 2025 will see Europe having to face up to the harsh reality that “the party is over” and the post-Cold War peace dividend has expired, and that it no longer can rely on America and Ukraine to bear the full weight of strategic defence.