By any measure, 2025 will be remembered as a tipping point. Violent armed conflict escalated in many areas, notably Ukraine, Israel-Gaza-Iran-Lebanon, Pakistan-India, Thailand-Cambodia, Venezuela, Sudan, Ethiopia and Myanmar. It was also among the three hottest years on record and one of the most expensive for natural disaster costs.

Meanwhile, US President Donald Trump’s tariff wars inflicted trade uncertainty and strategically shifted global supply chains. Technology witnessed massive leaps in artificial intelligence, semiconductors and other fields. Financial markets saw record highs and the price of gold and silver surged.

Last month, the European Union announced an indefinite freeze on Russian assets, estimated to be worth around €210 billion (US$246.5 billion). The Russian Central Bank responded by declaring a lawsuit in Moscow courts seeking US$230 billion in damages from Euroclear, the Belgian financial clearing house that holds most of its assets.
Freezing sovereign assets is a legal and existential nightmare for Europe as a financial centre: who would dare put their money in Europe if it can be taken away, either in service of a US directive or arbitrary European interests? Remember, Europe has not legally declared war on Russia, and Ukraine is neither a member of the EU nor Nato, the transatlantic security alliance.

Russia’s 2022 incursion into Ukraine shattered decades of post-war peace in a Europe which, having wasted industrial and colonial wealth through two world wars, had found peace and prosperity through union. But even before this, things were going awry.

In a 2012 interview, a few years after the global financial crisis, Angela Merkel, then the German chancellor, revealed the core dilemma in Europe, which has one of the world’s most generous welfare systems. “If Europe today accounts for just over 7 per cent of the world’s population, produces around 25 per cent of global GDP and has to finance 50 per cent of global social spending, then it’s obvious that it will have to work very hard to maintain its prosperity and way of life,” she said.

01:02

J.D. Vance says ‘threat vis-a-vis Europe is not Russia, it’s not China’

J.D. Vance says ‘threat vis-a-vis Europe is not Russia, it’s not China’