This week, Israel intensified its military campaign in Gaza as the U.K., EU, and Canada threatened economic restrictions against Israel. In the Russia/Ukraine conflict, the EU and U.K. issued new sanctions against Russia, while U.S. President Donald Trump announced the U.S. would scale back mediation efforts following a phone call with Russian President Vladimir Putin. In the Indo-Pacific, the EU proposed tariffs on China in alignment with Washington, while China expressed disapproval of U.S. plans to build a new missile defense system and to ban the use of Chinese microchips in the U.S.
Weekly Forecast Monitor: May 23, 2025
The Geopolitical Hotspots Monitor examines the outlook for key geopolitical hotspots around the world.
1 Russia/Ukraine Conflict
Summary
The Russia/Ukraine war trended toward hybrid escalation as the U.K. and the EU announced new sanctions against Russia. After a two-hour call on May 19 between Trump and Putin that failed to achieve a 30-day ceasefire agreement, Trump indicated he would scale back his efforts to mediate peace talks, claiming Russia and Ukraine would begin direct negotiations “immediately” – a claim not backed by Moscow or Kyiv. On a separate call with Ukrainian President Volodymyr Zelenskyy and other key European leaders, Trump stated Putin does not want to end the war because he believes he is winning. Trump also told European leaders that the Vatican may host the next round of peace talks, tentatively scheduled for June, and that the U.S. would participate, but the Kremlin denied that claim. Putin visited Kursk, and Ukrainian officials ordered evacuations of population centers ahead of an expected Russian offensive in Ukraine’s Sumy region. Russia conducted strikes against cities across Ukraine, including the largest drone attack of the war.
2 Middle East
Summary
The Middle East trended toward hybrid escalation as the U.K. paused free trade negotiations with Israel and, along with Canada and France, threatened sanctions over Israel’s humanitarian blockade of Gaza and ongoing offensive. The EU voted to review its economic and diplomatic relations with Israel, citing humanitarian violations in Gaza and the West Bank. Meanwhile, Israeli Prime Minister Benjamin Netanyahu declared Trump’s proposal to facilitate the permanent relocation of Gaza’s Palestinian population an official goal. U.S. officials said Israel is preparing to strike Iranian nuclear infrastructure if the U.S. and Iran fail to secure a deal. U.S.-Iranian nuclear talks are scheduled to resume May 23 in Rome. Iranian officials expressed optimism that a deal can be reached but warned they would not agree to completely cease uranium enrichment. Israel killed at least three Hezbollah militants with drone strikes in Lebanon.
3 U.S./China/Indo-Pacific
Summary
The Indo-Pacific trended toward hybrid escalation as a member of the European Parliament stated the EU was open to joining the U.S. in imposing tariffs on China if Washington pulls back on tariffs against the bloc. China imposed new duties on imported plastics following a yearlong antidumping investigation. Beijing expressed strong concern about the U.S.’s new “Golden Dome” missile defense plans and vowed retaliation if Washington goes ahead with plans to ban the use of Huawei microchips in the U.S. French President Emmanuel Macron visited several Southeast Asian countries to pitch trade with France and the EU as a stable alternative in light of U.S.-China trade tensions. The Chinese People’s Liberation Army’s 73rd Group conducted amphibious landing drills on the southeast coast of Fujian province on the first anniversary of Taiwanese President Lai Ching-te’s inauguration.
4 Other Hotspots
European Union/United Kingdom
The European Union signed a deal with the United Kingdom for the first time since Brexit, covering areas such as fishing, defense, energy, and trade. The British government and European Commission hailed the deal as a positive first step toward resetting EU-U.K. relations after Brexit, while the U.K.’s conservative parties decried the agreement as a “surrender” to the EU. Forecast – diplomatic de-escalation scenario
Romania
Bucharest Mayor Nicusor Dan defeated right-wing nationalist candidate George Simion in the country’s presidential election with 53.6% of the vote on a pro-EU platform. Forecast – political stabilization scenario
India/Pakistan
Indian Prime Minister Narendra Modi confirmed that Pakistan would not receive any water from rivers over which India has rights, maintaining the decision made shortly after a militant attack in Kashmir to suspend the Indus Waters Treaty, which provides water for 80% of Pakistan’s farms. Forecast – hybrid escalation scenario
The Global Connectivity Tracker examines the impact of geopolitical dynamics on key themes like trade, technology, and energy/climate.
1
United States/United Arab Emirates
Energy
This deal establishes a historic U.S.-UAE AI partnership and encourages considerable investment by both in sophisticated semiconductors and data centers. Cooperation in the areas of artificial intelligence and advanced technology will be enhanced through this alliance. This partnership shows the UAE’s commitment to innovation and collaboration in artificial intelligence, boosting its position as a hub for research and development.
What Happened
Abu Dhabi National Oil Company (ADNOC) CEO Sultan Al Jaber said the U.S. and UAE plan to invest $440 billion in energy by 2035.
Significance/Outlook
The agreement, struck during President Donald Trump’s visit, will see the UAE invest in U.S. energy and technology with reciprocal U.S. investments worth $60 billion in UAE energy projects. The UAE project will include an AI data center in Abu Dhabi, the largest outside the U.S. ADNOC’s new energy investment arm, XRG, has already shifted natural gas and green energy assets to the U.S., including an Exxon hydrogen and ammonia production project and a large liquified natural gas project in Texas.
2
United States/China/Saudi Arabia/Australia
Critical Minerals
What Happened
U.S.-Chinese competition over rare earth elements intensified as U.S.-based rare earth company MP Materials signed a memorandum of understanding with Saudi Arabian mining company Maaden and China’s Shenghe Resources announced it will acquire Australia’s Peak Rare Earths to expand its raw material access.
Significance/Outlook
The MP Materials-Maaden agreement, reached at the U.S.-Saudi Investment Forum in Riyadh, outlines joint efforts across mining, separation, refining, and magnet production, supporting Saudi Arabia’s broader push to expand its mining industry and diversify its economy. In a parallel development, China’s Shenghe Resources announced a $101 million deal to acquire Australia’s Peak Rare Earths, which will give China strategic access to the Ngualla mine in Tanzania, one of the world’s largest undeveloped sources of bastnäesite, a mineral used in high-performance magnets. If completed, the deal will strengthen China’s control over upstream supply amid rising global competition for rare earths.
3
France/Germany
Nuclear Energy
What Happened
The German government has pledged to drop its opposition to labeling nuclear energy as a low-carbon energy source and allow French proposals that equate atomic power with renewable energy in European Union laws.
Significance/Outlook
The German shift on nuclear energy, which comes as Chancellor Fredrich Merz settles into office, is expected to bring the EU’s two largest economies into alignment and clear a hurdle that had blocked agreement on new EU policies and hindered the bloc’s response to energy crises. The two countries had long been at odds over the role of nuclear power in the European energy mix, and this rapprochement comes amid increasing acceptance across the continent of nuclear energy as a low-carbon alternative to fossil fuel-fired electricity generation. Germany’s shift leaves Austria as the only major EU member to continue to oppose nuclear energy.
4
China
Critical Minerals
What Happened
Chinese regulators’ slow approval of rare earth export shipments is threatening global supply chains.
Significance/Outlook
After restricting shipments of samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium in response to U.S. tariffs, China resumed exports, but the slow speed of resumption is causing delays that will affect manufacturing companies and industries all over the world. The restrictions can pose a special threat to the U.S., particularly regarding the defense technology industry because of China’s virtual monopoly over the supply of worldwide heavy rare earths processing. The U.S. materials reserve holds 2,500 tons of REEs.
5
Taiwan
Nuclear Energy
Extending the lifespan of Taiwan’s nuclear power plants to 60 years could enhance its energy security and stability. However, it also raises safety concerns and may delay investment in renewable energy, while reliance on liquefied natural gas imports, which are delivered via vulnerable maritime routes, could expose the country to further strategic and supply risks.
What Happened
Taiwan’s legislature passed an amendment to the Nuclear Reactor Facilities Regulation Act, extending the maximum operating license for nuclear reactors from 40 to 60 years.
Significance/Outlook
The amendment passed with 60 votes from opposition parties, the KMT and TPP, against 51 votes from the ruling DPP, which stressed the importance of public consensus, safety assurances, and a clear waste management plan. While the amendment is now law, any extension of a reactor’s lifespan requires operators to first undergo a full safety review and receive regulatory approval from the Nuclear Safety Commission. Only then can new fuel rods be ordered, a process that takes an estimated 16 to 18 months. In the meantime, reactors whose licenses have expired will remain shut down, including the Maanshan Nuclear Power Plant, which had been Taiwan’s last operational nuclear reactor until it was shut down on May 17. The move marks a potential reversal of Taiwan’s longstanding nuclear phase-out policy and could reshape the country’s future energy mix, pending regulatory outcomes.