US-China Strategic Competition

US-China relations are marked by intensified competition, with both sides going to great lengths to push the balance of power  in their favor. The incoming Trump administration has signaled tightened technological and economic collaboration and reinforced support for Taiwan. These steps are likely to provoke a strong Chinese response. Ongoing friction in the South China Sea – especially around the Philippines – and China’s record naval and coast guard presence near Taiwan are examples of hotspots where military confrontations may occur. China also seems intent on matching US and Russian nuclear capabilities.

The US and China are competing to secure dominance in advanced technologies too. Washington aims to maintain its lead by expanding export controls and restricting critical investments, while Beijing stands ready to retaliate through its own leverage points – rare earth elements (REE), dual-use technology, and controlled supply chains. The logic driving both sides is edging towards zero-sum: cooperation is giving way to parallel technology ecosystems designed to promote relative gains and reduce dependence on the rival. Under these conditions, the prospects for sustained US-China collaboration in AI or other cutting-edge domains are exceedingly slim.

So what for businesses?

Businesses now face a harder-edged environment where political and military tensions directly influence commercial decisions. As Washington and Beijing maneuver for advantage, the risk of sudden policy shifts, trade restrictions, and technological “firewalls” increases. Companies that once relied on stable, interdependent supply chains may find themselves compelled to restructure sourcing networks and develop contingency plans for abrupt shortages of critical inputs—ranging from advanced semiconductors to rare earth elements. Infrastructure may become a pawn in broader strategic games, subject to sabotage or sudden blockades, driving up insurance costs and operational uncertainty. Amid escalating competition and diminishing cooperation, businesses cannot assume that long-term investments in emerging markets or reliance on complex transnational production lines will remain immune to geopolitical calculations. In this shifting landscape, companies must treat security risks – espionage, forced decoupling, and potential flashpoints near strategic chokepoints – as natural elements of strategic planning.

Russia-Ukraine war

The war in Ukraine remains the largest armed conflict in Europe since WWII, and mistrust between Russia and Western countries is at a low level not seen since the Cold War. Russia has increased its reliance on grey zone tactics  (operations where attribution is difficult and plausible deniability is maintained), seemingly  conducting sabotage and espionage operations across Europe to test and exploit vulnerabilities. To bolster Ukrainian defenses and improve its bargaining position, NATO countries and other Western allies continue to support Ukraine with military materiel while also reducing their restrictions on its use against Russia.  Russia’s concern over Western encirclement is growing, and Putin has increased his nuclear saber-rattling. As the war is taking its toll on the Russian economy and military capabilities, Putin is likely to seek further military and economic support from countries who challenge the current world order, such as Iran, China, and North Korea.

So what for businesses?

The incoming Trump administration has pledged to deliver a swift resolution to the war. However, both the path to and the details of such an outcome remain unclear. For businesses worldwide, these conditions underscore the importance of sound risk management and planning for various scenarios. Critical infrastructure – such as ports, pipelines, data centers, and telecommunications hubs – could be targeted or indirectly affected by sabotage, espionage, and other covert operations. Firms operating in or dependent on European markets may need to prepare for sudden supply chain disruptions, energy shortages, and regulatory uncertainties.  Companies exposed to such risks should adjust their strategies, reinforcing contingency plans, diversifying suppliers, enhancing cybersecurity measures, and closely monitoring geopolitical developments to mitigate potential impacts on operations and future investments.

Middle East Realignment

The Middle East’s strategic landscape has shifted significantly over the past year, with key players either consolidating or losing influence. Israel has intensified military operations against militant groups, bolstering its regional security posture and reshaping dynamics in Palestine, Lebanon, and Syria. The collapse of the Assad regime has dismantled long-standing alliances, leaving a power vacuum that neighboring states and non-state actors are vying to fill. Iran, once a dominant force through its extensive proxy network, now faces mounting pressure from rival regional players. With dwindling resources, its ability to exert influence in key areas such as Palestine, Lebanon, and Syria are steadily diminishing. Meanwhile, Saudi Arabia has embraced economic diplomacy and regional collaboration, leveraging energy partnerships and reduced tensions with Iran to solidify its growing influence. Türkiye, emboldened by its expanded presence in northern Syria, is asserting itself more aggressively as a regional power, balancing NATO obligations with independent ambitions.

The U.S. remains a decisive external player, brokering agreements like the recent Lebanon deal. In the meantime, Russia’s influence wanes as it focuses on challenges elsewhere. Unresolved tensions in Gaza and Syria, alongside disputes over oil and gas corridors, continue to fuel instability, highlighting the need for close monitoring of evolving dynamics.

So what for businesses?

For businesses, shifting power dynamics and rising insecurity highlight the need for robust risk management and strategic planning. Energy infrastructure, shipping routes, and logistical networks in the Middle East face growing risks of sabotage, disruption, and sudden policy shifts. Companies dependent on reliable supply chains and stable transit must adopt contingency measures, including diversification, enhanced threat monitoring, and expanded insurance coverage. Navigating this volatility requires constant tracking of political and security developments to protect operations and minimize exposure.