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Weekly Forecast Monitor: Jan. 24, 2025

After taking office Monday, U.S. President Donald Trump signed several executive orders addressing domestic policy issues and vowed to place tariffs on goods from China, the EU, Canada, and Mexico. Secretary of State Marco Rubio met with foreign ministers from the Quad countries, and Trump threatened Russia with further sanctions if it refused to negotiate over Ukraine. In the Middle East, prisoner exchanges continued between Hamas and the Israel Defense Forces, and the U.S. denied Israel’s request to postpone its withdrawal from Lebanon.

The Geopolitical Hotspots Monitor examines the outlook for key geopolitical hotspots around the world. 

1 Russia/Ukraine Conflict

The Russia/Ukraine war trended toward diplomatic de-escalation and hybrid escalation scenarios as Rubio declared a sustainable peace deal in Ukraine as an official foreign policy goal of the United States and Russian President Vladimir Putin expressed openness to dialogue during a call with Trump. Meanwhile, Trump threatened additional sanctions against Russia, and Putin discussed deepening strategic cooperation with Chinese President Xi Jinping.

2 Middle East

Conflict in the Middle East trended toward diplomatic de-escalation and military escalation scenarios as Israel and Hamas continued to implement the Gaza cease-fire deal through hostage and prisoner exchanges and Israeli Prime Minister Benjamin Netanyahu ordered the IDF to remain in Lebanon beyond the Jan. 26 withdrawal deadline. Israeli forces killed at least 12 Palestinians in the West Bank city of Jenin and arrested dozens during security operations across the territory.

3 U.S./China/Indo-Pacific

Tensions in the Indo-Pacific trended toward hybrid escalation as Trump vowed to impose 10% tariffs on China on Feb. 1. He also signed an executive order delaying a national ban on social media platform TikTok. Rubio met with his counterparts from the Quad countries. Xi and Putin vowed to deepen their bilateral relationship, and U.S. allies in the Indo-Pacific expressed openness to meeting and working with China. President Ferdinand Marcos Jr. confirmed that U.S.-supplied Typhon missiles will remain in the Philippines.

4 Other Hotspots

United States/European Union

European Commission President Ursula von der Leyen said the EU wants to engage and negotiate with the Trump administration, warning against ushering in an era of harsh global competition, following his stated intent to impose tariffs on the EU, Mexico, and Canada. Forecast – hybrid escalation scenario

South Korea

President Yoon Suk Yeol attended his impeachment trial, agreeing to present his own defense, while officials from the Corruption Investigation Office formally requested that prosecutors indict Yoon as part of the ongoing insurrection investigation against him. Forecast – political destabilization scenario

Colombia

Government forces were sent to intervene in the northeastern Catatumbo region after violence erupted between armed rebel groups seeking to gain control of drug trade routes there, resulting in 100 deaths and the displacement of an estimated 20,000. Forecast – security destabilization scenario

The Global Connectivity Tracker examines the impact of geopolitical dynamics on key themes like trade, technology, and energy/climate.

Topics
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1

Global

Climate

Risk level: High

Global carbon dioxide emissions have continued to rise despite the climate targets set in the Paris Agreement.

What Happened

A report produced by risk management analysts at the Institute and Faculty of Actuaries warned that the global economy faces losses of gross domestic product of as much as 50% from current levels by 2090 due to the effects of climate change, including the risks of severe weather events, rising temperatures, and the breakdown of natural systems that support human life.

Significance/Outlook

The report, published after the announcement that global temperatures had surpassed the warming threshold of 1.5 degrees Celsius above preindustrial temperatures that signatories to the Paris Agreement on climate change had set as a target, predicts that a temperature rise to 3 degrees or more by 2050 would result in 4 billion deaths, cause state failures and lead to societal breakdowns. The report’s authors contend that previous risk assessment analyses of the effects of climate change vastly underestimated the impact of environmental degradation and urge global leaders to intensify efforts to decarbonize the economy. The report’s methodology differs from current economic projections by accounting for tipping points, such as oceanic acidification, thawing permafrost, accelerated loss of polar ice sheets, extreme drought, and more intense wildfires, that could exacerbate the effects of climate change.

2

United States

Energy

Opportunity Level: Medium

Risk level: High

Energy emergency plans will support the domestic fossil fuel production to fulfill rising energy demand for next-generation technologies, lower energy bills, create more jobs and increase the LNG exports to Europe to replace Russian gas but at the expense of the global climate. The U.S. withdrawal from the Paris agreement will have an impact on both short and long-term global emission targets since the U.S. is the second-largest emitter of greenhouse gases after China and the action may spur other countries to leave the agreement.

What Happened

Trump signed executive orders to boost oil and gas production in the United States and pull out from the U.N. Paris climate agreement.

Significance/Outlook

Trump’s plan calls for pro-fossil fuel measures and initiatives to boost U.S. energy production, reversing a hold on LNG exports and lifting oil and gas drilling limits in Alaska. The plan also calls for the acceleration of approvals for oil, gas, and power projects. This will result in an increase in energy supply for high-energy-demand industries such as AI data centers, a reduction in the cost of energy for consumers, and expansion of U.S. energy exports to Europe and elsewhere. On the other hand, giving up on initiatives that involve renewable and clean energy, and the suspension of IRA grants for clean energy programs will lead to an increase in emissions of greenhouse gases and global warming. The frequency and duration of weather disasters will increase, and the number of weather disasters that cost billions of dollars will continue to rise.

3

U.S./China/Greenland

Critical Minerals

Opportunity Level: Medium

If the U.S. buys rare earth elements from Tanbreez and builds a domestic processing facility, it will be able to compete with China in that sector.

What Happened

U.S. and Danish officials have advised Greenland’s largest rare earths mining developer, Tanbreez Mining, not to sell its project to Chinese companies.

Significance/Outlook

Trump expressed interest in acquiring Greenland, a strategically located Danish semi-autonomous island with abundant minerals: rare earths and graphite used for EV batteries, as well as nickel, zinc, gold, diamonds, iron ore, titanium-vanadium, tungsten, and uranium. Gardar province in southern Greenland contains three of the country’s most significant rare earth element deposits. Rare earth elements are used in magnets for wind turbines, electric vehicles, and missile systems. China dominates the rare earths market as the world’s top producer and refiner, The U.S. and the West have been attempting to limit China’s near-total monopoly over extraction and processing.

4

United Arab Emirates/Philippines

Energy

Opportunity Level: High

This collaboration offers significant benefits for both the Philippines and the UAE. It supports the Philippines in achieving its ambitious energy targets while reinforcing the UAE’s commitment to advancing the global renewable energy transition.

What Happened

The United Arab Emirates’ state-run energy company Masdar has entered the Philippines market by signing a $15 billion renewable energy deal.

Significance/Outlook

The agreement focuses on developing solar, wind, and battery energy storage systems with a capacity of up to 1 gigawatt (GW) by 2030 and an expansion target of 10 GW by 2035. It will help accelerate the Philippines’ energy transition, aiming to increase renewable energy’s share of all generation to 35% by 2030 and 50% by 2040. Additionally, the Philippines has introduced full foreign ownership in its renewable energy sector and plans to auction more projects, including hydro and geothermal energy, under its green energy program. This collaboration bolsters Masdar’s presence in Southeast Asia and advances the region’s renewable energy transition while supporting the Philippines’ climate goals and energy diversification.

5

Russia/China

Oil

Risk level: Low

While China’s diversification of oil imports enhances its energy security and balances its geopolitical positioning, it simultaneously poses a risk to global efforts aimed at isolating Russia and weakening its economy.

What Happened

Russia became China’s top oil supplier in 2024.

Significance/Outlook

China’s oil imports from Russia reached a record high of 108.5 million metric tons in 2024, delivered via pipelines and sea. This shift coincided with a 9% reduction in Chinese oil imports from Saudi Arabia, attributed to higher Saudi crude prices. However, Saudi shipments saw a slight rebound in the fourth quarter as Iranian supplies decreased and prices declined. Additionally, imports from Malaysia, the transshipment hub for sanctioned oil, rose by 28%, while imports from Venezuela reached 30,000 barrels per day. This pattern shows China’s strategic shift toward discounted oil amid global sanctions on Moscow and underscores deepening Sino-Russian energy ties.