Legacy of Trump’s Trade Wars: Laying Groundwork for Instability
The period of former U.S. President Donald Trump’s tariff wars (2018–2020) left a lasting mark on the global economic order. Trump’s administration imposed sweeping tariffs on major trading partners (from China to the EU), framing it as an “America First” strategy. In reality, these moves undermined trust in international trade rules and institutions. Globalization’s foundations – trust, agreed rules, and political stability – were shaken, as Trump’s abrupt tariff hikes and deal renegotiations introduced uncertainty (Did Trump’s tariffs kill economic populism? | Globalisation | The Guardian) (Trump’s whirlwind of uncertainty and chaos hits the global economy and the Middle East | Middle East Institute). Average U.S. tariff rates jumped to levels not seen in over a century, reaching ~10 times their previous level (Understanding the Global Macroeconomic Impacts of Trump’s Tariffs). This weaponization of trade policy triggered retaliation from other countries, spooked investors, and strained supply chains worldwide.
Trump’s tariffs initially aimed to protect U.S. industries and punish China, but they backfired economically and diplomatically. Allies like the EU and Canada were hit with steel and aluminum duties, sparking friction. China responded with counter-tariffs, and trade flows were rerouted rather than “reshored” to the U.S. Over time, the tariff crossfire contributed to higher costs for manufacturers and consumers globally (as companies passed on the import taxes) and dented global growth. By 2019, the IMF warned that U.S.-China trade tensions were dragging down world GDP. Even after Trump left office, many tariffs remained in place, cementing a more confrontational trade environment. As one analysis noted in 2025, “a once stable and cooperative order is being replaced by a more turbulent and fragmented global landscape” (5 things to know about geopolitics in a fractured world | World Economic Forum). In short, Trump’s trade war “legacy will linger for generations” by eroding the ethos of open trade (Did Trump’s tariffs kill economic populism? | Globalisation | The Guardian) and feeding a climate of economic nationalism. This fracturing of globalization set the stage for many of today’s geopolitical clashes and economic vulnerabilities.
Current Global Conflicts and Flashpoints
The world in 2025 is grappling with multiple major conflicts and flashpoints. These range from a hot war in Europe to simmering tensions in the Middle East and Asia. Each conflict has profound local consequences and radiating effects on other countries and markets. Below is an analysis of the key conflict zones – Ukraine, the Middle East (Israel–Gaza), Syria, the Taiwan Strait, and Iran – and their impacts.
War in Ukraine
Russia’s full-scale invasion of Ukraine in February 2022 has become Europe’s deadliest conflict since World War II. Now into its third year, the war has devastated Ukraine: thousands of civilians have been killed and over 6.7 million Ukrainians have fled the country as refugees (Ukrainian Refugee Support: October 2024 Aid and Relief Updates), the largest displacement in Europe this century. Ukraine’s economy shrank dramatically (over 30% in 2022) as cities, industry, and infrastructure were destroyed by bombardment. Whole towns in the east and south lie in ruins, and the fighting continues along a front line stretching hundreds of kilometers. Ukraine’s people are showing resilience, but the toll is enormous – the UN verified at least 11,700 civilian deaths and 24,000+ injured by late 2024 (Ukrainian Refugee Support: October 2024 Aid and Relief Updates) (actual figures are likely higher). On the other side, Russia has also suffered heavy losses (militarily and economically) and faces a quagmire. Western sanctions have largely severed Russia’s ties to Western markets: its banks were cut off from global finance, many foreign companies exited, and its oil exports sell at discounted prices under price caps. While Russia’s economy proved surprisingly adaptive (with IMF projecting some growth), it remains under strain from isolation and war expenditures. President Putin’s regime has tightened domestic controls amid the protracted war.
Impact on other countries (Europe and beyond): The Ukraine war sent shockwaves through Europe’s security and economy. Overnight, Europe was plunged into an energy crisis when Russia – previously Europe’s top natural gas supplier – weaponized energy supply in retaliation for EU support of Ukraine. Gas flows were slashed, leading to an “unprecedented energy crisis” in the EU with a sharp rise in prices and hardship for Europeans (EU action to address the energy crisis – European Commission). Governments scrambled to find alternative gas (via LNG imports and new pipelines) and to accelerate clean energy plans (the EU’s REPowerEU initiative) to end reliance on Russian fuel. By winter 2023/24, Europe had largely replaced Russian gas, but at the cost of higher energy bills for households and industry. Inflation spiked across Europe in 2022–2023, driven by surging fuel and electricity costs as well as higher food prices (since Ukraine, a major grain exporter, was partially blockaded). European Union countries also opened their doors to millions of Ukrainian refugees – over 6 million Ukrainians are now hosted across Europe (Ukrainian Refugee Support: October 2024 Aid and Relief Updates) – providing safety but also straining social services in some host nations like Poland and Germany. Politically, the war jolted Europe into greater unity on foreign policy and defense: EU and NATO countries coordinated unprecedented sanctions on Russia and delivered tens of billions in military aid to Ukraine. Long-neutral states like Sweden and Finland sought NATO membership, marking a historic shift in Europe’s security posture. At the same time, the war revealed rifts – for example, France and Germany faced domestic debates over energy and the economic costs, and some populist voices opposed endless support to Ukraine.
Globally, the Ukraine war affected regions far from the battlefield. Food and fuel prices soared worldwide in 2022, hitting import-dependent regions in Africa and South America especially hard. Russia and Ukraine together normally supply huge shares of the world’s wheat, corn, sunflower oil, and fertilizer. The conflict disrupted these supplies and drove up costs. In Africa, this translated to pricier bread and fertilizer shortages for farmers, aggravating hunger in vulnerable countries. African leaders raised alarm that the war was “disrupting grain and other food supplies and aggravating price inflation” in their countries (Ukraine tells African leaders no peace talks with Russia | Reuters). Latin America also felt the pinch: headline inflation across Latin America jumped from 8.4% to 10.2% in the months after the war began (How Latin America Has Been Shaped by the War in Ukraine – CSIS), as fuel and food became more expensive. Central banks from Brazil to South Africa had to hike interest rates to tame inflation, which in turn slowed economic growth. Meanwhile, Russia’s diplomatic isolation by the West prompted it to deepen ties elsewhere – forging closer economic links with China, courting India for oil sales, and engaging with countries in Latin America and Africa that were willing to remain neutral. In fact, much of the Global South adopted a non-aligned stance on the Ukraine war. Major Latin American nations (like Brazil under President Lula) condemned the invasion at the UN in principle but refused to join sanctions or send weapons (A Hesitant Hemisphere: How Latin America Has Been Shaped by the War in Ukraine) (A Hesitant Hemisphere: How Latin America Has Been Shaped by the War in Ukraine). Similarly, many African countries, including South Africa, officially call for dialogue and have “settled into a stance between neutral and pro-Russian” in practice (South Africa’s Belated Reckoning Over the War in Ukraine – POLITICO). This neutrality is partly historical (ties from the Cold War era) and partly pragmatic (avoiding economic fallout and keeping options open). For instance, South Africa and others attempted a peace mission to Moscow and Kyiv in 2023 – an effort to mediate which, while unsuccessful in changing either side’s position, signaled Global South interest in ending a war that was harming their economies (Ukraine tells African leaders no peace talks with Russia | Reuters).
Impact on global markets and stability: The Ukraine war rattled global markets initially – stock indices fell and investors rushed to safe havens like the dollar and gold when the invasion began. More enduring has been the war’s contribution to a “global economy limping along, not sprinting,” as the IMF’s chief economist put it (IMF downgrades global economic growth outlook, cites Mideast war as new risk | PBS News). The conflict amplified pre-existing supply chain issues (lingering from the COVID-19 pandemic) and fueled inflation to multi-decade highs in 2022/23. Central banks responded with aggressive interest rate hikes (the U.S. Federal Reserve, European Central Bank, etc.), which cooled inflation but also raised recession risks. Higher interest rates worldwide, combined with war uncertainty, made 2022–2024 a volatile period for financial stability. For example, in 2023 some mid-sized banks in the U.S. and Europe collapsed under rising rate pressures, illustrating how “shocks, including Russia’s war in Ukraine, slashed worldwide economic output by about $3.7 trillion” over three years compared to pre-pandemic trends (IMF downgrades global economic growth outlook, cites Mideast war as new risk | PBS News). Energy and commodity companies, however, saw windfall profits from high prices – oil and gas firms, as well as arms manufacturers (given booming defense demand), did particularly well. Geopolitically, the war has clearly drawn a sharper line between blocs: U.S./Europe/Japan on one side, Russia (and to an extent China) on the other, with many developing nations trying to maintain neutrality. This polarization affects global coordination on everything from trade to climate policy, adding to instability. In summary, the Ukraine war directly devastated Ukraine and caused pain in Russia, while indirectly sparking an energy crisis, higher living costs, and geopolitical realignments far beyond.
Middle East Turmoil: Israel–Gaza War and Regional Tensions
In the Middle East, a major flashpoint has been the renewed Israel–Gaza conflict. In October 2023, the long-simmering Israeli–Palestinian conflict exploded into war when the Hamas militant group ruling Gaza launched a shocking large-scale attack on Israel, killing around 1,200 Israelis. Israel responded with a massive military offensive in the Gaza Strip. The ensuing war was intense and devastating, especially for Gaza’s 2 million residents. For several weeks, Israeli airstrikes and artillery pounded the densely populated enclave, followed by a ground invasion aimed at dismantling Hamas. Urban neighborhoods were reduced to rubble. By the end of 2023, over 21,500 Palestinians in Gaza had been killed in the bombardment (South Africa files case at ICJ accusing Israel of ‘genocidal acts’ in Gaza | Israel-Palestine conflict News | Al Jazeera) (according to local authorities), and entire districts lay in ruins. The humanitarian situation became dire – hundreds of thousands displaced within Gaza, hospitals running out of supplies, and basic infrastructure (water, electricity) largely destroyed. Israel, for its part, suffered over 300 soldiers killed in the ground fighting, and its southern towns were badly traumatized by the initial Hamas onslaught and subsequent rocket fire.
Regional impact: The Israel–Hamas war risked igniting a wider regional conflagration. Other actors like Hezbollah in Lebanon and Iran (which backs Hamas and Hezbollah) were on high alert. Skirmishes erupted on Israel’s northern border with Lebanon as Hezbollah exchanged fire with Israeli forces in solidarity with Gaza, though it stopped short of full intervention. Arab and Muslim-majority countries reacted with outrage at Israel’s heavy bombardment of Gaza. There were mass protests in Middle Eastern capitals and beyond, pressuring governments to respond. While countries like Egypt and Jordan (which border Israel/Palestine) coordinated to send humanitarian aid and avoid a spillover (Egypt, for example, worked to prevent a flood of refugees from Gaza into Sinai, keeping the Rafah crossing tightly controlled), others took diplomatic action. Several nations in Latin America and the Middle East recalled their ambassadors from Israel in protest during the war. The conflict also derailed diplomatic progress: a U.S.-brokered initiative to normalize relations between Israel and Saudi Arabia was put on ice, as Saudi Arabia shifted focus to supporting the Palestinian cause and condemning Israeli actions. In the broader Muslim world, the war inflamed public opinion – Turkey, Iran, and Gulf states all vehemently criticized Israel, though their levels of response varied. Notably, Iran’s Supreme Leader hailed the Hamas attack and urged continued “resistance,” while Iran’s regional rivals like Saudi Arabia and the UAE (which had earlier signed peace accords with Israel) had to balance their ties with Israel against popular sentiment. By early 2024, the Israel–Gaza fighting had subsided after international pressure led to a ceasefire of sorts, but the underlying issues remained unresolved. Gaza was left in ruins and Hamas’s military capability dented but not eliminated. The political fallout also weakened Israel’s government (led by Prime Minister Netanyahu) amid domestic criticism, and it heightened Israel’s international isolation in many forums.
Impact beyond the region: Globally, the Israel–Gaza war had a more emotional and political impact than an economic one. There were huge protests in cities around the world, polarized along pro-Palestinian and pro-Israeli lines. Western governments generally defended Israel’s right to respond to terrorism but also urged restraint as civilian casualties mounted. The United Nations became a stage for diplomatic battles: the vast majority of countries in the UN General Assembly voted to demand a ceasefire in Gaza, but the U.S. used its Security Council veto to protect Israel from binding action. This created a perception of double standards – Western nations rallied to Ukraine’s defense against invasion, but were seen by many in the Global South as less vocal about civilians under fire in Gaza. Such perceptions widened the geopolitical rifts between the West and other blocs. Countries in Europe experienced some spillover in the form of inter-communal tensions: for example, incidents of antisemitism and Islamophobia rose as extremist voices tried to leverage the conflict. However, in terms of hard economics, the Gaza war’s impact was limited compared to something like Ukraine. There was some nervousness in energy markets – the IMF warned that the Israel–Hamas war introduced “new uncertainty” and risked oil supply disruptions if it escalated (IMF downgrades global economic growth outlook, cites Mideast war as new risk | PBS News) (IMF downgrades global economic growth outlook, cites Mideast war as new risk | PBS News). Oil prices did jump a bit during the conflict (by roughly 4% in the immediate aftermath) (IMF downgrades global economic growth outlook, cites Mideast war as new risk | PBS News), reflecting fears that Iran might intervene or that conflict could spread to oil-producing Gulf states. But because the fighting remained contained to Israel-Palestine and did not affect major oil facilities or shipping lanes, the oil price spike was short-lived. The global financial markets mostly absorbed the news without major turmoil, aside from brief volatility.
Politically, the war did prompt international institutions and human rights groups to engage: calls grew for accountability over possible war crimes. In late 2023, South Africa (backed by a number of other countries) filed a case at the International Court of Justice accusing Israel of genocide in Gaza (South Africa files case at ICJ accusing Israel of ‘genocidal acts’ in Gaza | Israel-Palestine conflict News | Al Jazeera), reflecting how even nations far from the conflict felt compelled to take sides. This legal and diplomatic push showed the conflict’s ability to stir global norms debates (genocide, proportional force, etc.). Europe, while not directly militarily involved, faced security vigilance – for instance, nations tightened surveillance against potential extremist attacks inspired by the events in Gaza, and the EU had to manage divisions among member states on how strongly to censure Israel. In summary, the Israel–Gaza war of 2023 caused immense suffering locally and raised regional tensions to a boiling point, but its direct economic impact on non-involved countries was relatively contained (short of raising humanitarian aid needs). Its greater effect was moral and geopolitical: it tested alliances and further galvanized a Global South critique of Western-led international order, adding to the sense of instability in world affairs.
(South Africa files case at ICJ accusing Israel of ‘genocidal acts’ in Gaza | Israel-Palestine conflict News | Al Jazeera) Destruction in Gaza: Entire residential blocks in the Gaza Strip lay in ruins after intense Israeli bombardment in late 2023. The Israel–Hamas war killed thousands of Palestinians and caused massive infrastructure devastation, exacerbating the humanitarian crisis (South Africa files case at ICJ accusing Israel of ‘genocidal acts’ in Gaza | Israel-Palestine conflict News | Al Jazeera). This devastation has fueled international outrage and calls for accountability, deepening geopolitical divides.
Ongoing Strife in Syria
While newer conflicts grab headlines, Syria’s war – now in its 15th year – remains a smoldering crisis. The Syrian civil war, which began in 2011, has never fully ended, even if active combat has reduced from its peak. President Bashar al-Assad’s government, with decisive military help from Russia and Iran, reclaimed most of Syria’s territory from rebel forces by 2018. Yet large areas are still outside Assad’s control: a northwest enclave (Idlib province) is held by rebel and jihadist factions under Turkish protection, and parts of the northeast and east are governed by Kurdish-led forces (the SDF) backed by a limited U.S. military presence. Thus, Syria remains effectively partitioned, and sporadic violence continues on multiple fronts – Syrian government troops skirmish with remaining rebels, Israeli jets occasionally strike Iranian arms depots on Syrian soil, and Turkish forces clash with Kurdish fighters along the border.
The humanitarian situation in Syria is dire. The drawn-out conflict has killed over half a million people (by various estimates) and displaced over 12 million (with around 6.8 million refugees abroad, mostly in Turkey, Lebanon, Jordan, and Europe, and a similar number internally displaced). Whole cities like Aleppo, Homs, and Raqqa were heavily damaged. By 2025, much of the world’s attention had shifted away, but Syrians continue to suffer from economic collapse and lack of reconstruction. Over 90% of Syrians live in poverty, and basics like electricity, clean water, and healthcare are scarce. International aid helps alleviate hunger, but funding has plateaued as donors focus on newer crises like Ukraine. A devastating earthquake in February 2023 struck northwest Syria (and Turkey), compounding the misery by destroying buildings and killing thousands, yet even that tragedy only temporarily drew global focus back to Syria’s plight.
Regional and global implications: Syria’s conflict, while relatively stagnant, still affects surrounding countries. Refugee pressures are a major legacy – Turkey hosts ~3.6 million Syrian refugees, and their presence has become a hot-button political issue domestically (contributing to economic strain and social tensions). In Lebanon, a country of 5 million, over 1 million Syrian refugees reside, exacerbating Lebanon’s own severe economic crisis. These neighboring states, after years of bearing the burden, have pushed for refugee returns, even as Syria is not truly safe for mass repatriation. Furthermore, Syria remains a theatre for great-power and regional rivalries. Russia maintains military bases in Syria and uses its presence there as leverage in its broader confrontation with the West – interestingly, with Russia bogged down in Ukraine, Moscow drew down some assets from Syria, but it still holds sway (for example, Russian air patrols in Syrian skies continue). Iran’s influence in Syria is strong via the militias and advisers it has on the ground; Syria is a land corridor for Iran to supply Hezbollah in Lebanon. This Iranian entrenchment is a security concern for Israel, which has carried out hundreds of airstrikes in Syria over the past few years targeting Iranian shipments and militia bases to prevent advanced weaponry from reaching Hezbollah. Thus, Syria is part of the broader Iran-Israel shadow war. The United States, for its part, keeps a small contingent (under 1,000 troops) in Syria’s northeast, primarily to combat remnants of ISIS and to support the Kurdish-led SDF (which helped defeat the ISIS caliphate). Those U.S. troops have occasionally come under attack by Iran-backed militias, especially when U.S.-Iran tensions spike (e.g. during the 2023 Gaza war, Iranian proxies launched rockets at U.S. bases in Syria). Each such flare-up carries a risk of escalation between the U.S. and Iran on Syrian soil.
For Europe, the Syrian war’s peak impact was the 2015 refugee influx that significantly altered European politics (fueling anti-immigrant populism). By 2025, that impact has been absorbed, but Europe remains involved mainly via humanitarian aid and by participating in diplomatic talks on Syria’s future (though those talks – the Geneva peace process, etc. – have stalled). Some Arab countries have moved toward rehabilitating Assad’s regime diplomatically: in 2023, Syria was readmitted to the Arab League, reflecting a regional desire to bring Syria back into the fold and address issues like refugee returns and drug smuggling (Syria became a hub for Captagon trafficking). However, Western sanctions on Assad’s government remain, and without a political settlement or reconstruction funding, Syria’s “no war, no peace” stalemate persists. In essence, Syria’s conflict has evolved into a frozen or low-intensity war that still periodically erupts (for instance, in Idlib where jihadist groups hold sway, ceasefires between Turkey and the Assad regime are fragile). The human suffering continues quietly, and the country’s fragmentation offers space for extremist cells (though ISIS was territorially defeated in 2019, insurgent attacks still occur). Economically, Syria is so isolated that its war now has minimal direct effect on global markets (Syrian oil output is negligible, trade is cut off). The main global impact is through instability export: refugees, narcotics, and serving as a proxy battleground for others. It stands as a cautionary tale of unresolved conflict in an era when new crises have stolen the spotlight. The persistence of the Syrian war underscores how **certain conflicts can become protracted quagmires with *immense human cost* and destabilizing ripple effects (e.g. exacerbating regional refugee strains), even if they fade from daily news.
China–Taiwan Tensions in East Asia
On the other side of the world, a potential flashpoint that keeps global policymakers up at night is the tension between China and Taiwan. Taiwan is a self-governing island that China claims as its own territory, and Beijing has vowed to achieve “reunification”, by force if necessary. In recent years, China–Taiwan frictions have escalated to their highest level in decades, sparking fears of a possible military conflict that could draw in the United States and shatter global stability.
The situation: China’s People’s Liberation Army has been conducting frequent military drills and shows of force around Taiwan. For example, in 2023 and early 2024, Chinese warplanes and naval ships repeatedly simulated blockades and invasion scenarios. On several occasions, China staged large-scale exercises encircling Taiwan as a “stern warning” against what it calls Taiwanese separatism (China launches military drills around Taiwan, calls Taiwan president …). These drills sometimes included firing missiles over Taiwan or into surrounding waters, dramatically raising tensions. Each perceived provocation – such as high-profile visits of U.S. lawmakers to Taipei, or Taiwan’s president meeting foreign officials – has been met by Beijing with saber-rattling responses. The United States, which by law provides Taiwan with defensive arms, has been navigating a delicate line: supporting Taiwan’s self-defense but without provoking a direct clash with China. The U.S. Navy regularly conducts “freedom of navigation” patrols through the Taiwan Strait, which Beijing protests. In 2024, the PLA simulated a blockade of Taiwan in exercises, and analysts noted China is normalizing such military pressure tactics (China-Taiwan Weekly Update, April 4, 2025). Taiwan’s government, for its part, has been bolstering its own defenses (buying new U.S. weapons, extending compulsory military service for young citizens, and even training civilians in resiliency and guerrilla tactics to resist any invasion (With future at risk, Taiwan prepares citizens to resist potential … – PBS)). While an actual war has not erupted, the atmosphere is one of continual brinkmanship.
Wider regional impact: The China-Taiwan standoff is not occurring in isolation – it’s embedded in U.S.–China strategic competition and the broader Indo-Pacific power dynamics. U.S. allies like Japan, South Korea, and Australia are increasingly concerned. Japan in particular, which would likely be pulled into any Taiwan conflict due to its proximity, has sharply expanded its defense spending and coordination with the U.S. (Tokyo’s new security strategy explicitly cites stability in the Taiwan Strait as vital to Japan’s security). Australia, the U.K., and the U.S. formed the AUKUS pact to share advanced military tech (like nuclear submarine know-how) largely with an eye on countering China’s naval rise. Meanwhile, China views these developments as encirclement. Other regional players like Southeast Asian nations feel caught in the middle – they do not want a clash between their biggest trading partner (China) and the U.S., and they worry that any conflict over Taiwan could devastate Asia’s economy and security.
Global economic stakes: Taiwan’s role in the world economy is a huge reason why this flashpoint is of global concern. Taiwan produces a large share of the world’s advanced semiconductors (microchips), including the most advanced chips, through companies like TSMC. These chips are essential for everything from smartphones and cars to data centers and military equipment. A war or blockade affecting Taiwan could cripple the global electronics supply chain overnight, causing an economic shockwave. Even the current tensions have prompted shifts – countries and companies are pursuing a “China +1” strategy (diversifying supply chains to other countries like Vietnam, India, Mexico) to reduce potential disruption from a Taiwan crisis. The U.S. has imposed export controls on advanced chips to China, seeing tech as part of this strategic rivalry. In response, China is investing heavily in self-sufficiency for key technologies. This decoupling in tech and trade, which began with Trump’s tariff war and sanctions on Chinese tech firms, has only deepened. The **world’s two largest economies (China and the U.S.) are now *engaged in a form of economic cold war*, with Taiwan as a central flashpoint. Europe too has grown warier – the EU speaks of “de-risking” (not decoupling) from China, seeking to protect critical sectors while still trading. For instance, some European officials visited Taiwan in symbolic gestures, despite Chinese backlash (China responded by downgrading ties with Lithuania after it hosted a Taiwanese office).
If, in the worst case, China were to attack or invade Taiwan, it could lead to a U.S.-China war, something that would make the global economic damage from Ukraine or any other conflict pale in comparison. Analysts warn it would likely trigger a global depression, given China’s central role in manufacturing and U.S./allied likely sanctions on China in such a scenario. Financial markets keep a wary eye on any uptick in Taiwan Strait tensions. So far, the tensions manifest as a “cold” confrontation – aggressive posturing and rhetoric but no direct fighting. Middle powers are leveraging this rivalry too – for example, India has inched closer to the U.S. as a counterweight to China, while some countries in Africa and Latin America see China as an alternative partner to the West. All told, the China-Taiwan flashpoint contributes significantly to today’s geopolitical instability, even without open conflict. It drives the militarization of Asia-Pacific, prompts costly shifts in trade/tech flows, and forces countries worldwide to consider how they’d respond if the unthinkable happened. At the same time, it’s worth noting that there is still robust economic interdependence: China and the West trade hundreds of billions annually, and all sides so far have been careful to avoid an accidental spiral into war. Diplomacy continues sporadically (e.g. occasional U.S.-China summits) to manage this tension. But the situation remains one of high alert, with Taiwan’s fate a potential global turning point.
Iran and Regional Security Challenges
Iran is another hotspot in global geopolitics, due to its nuclear program and its involvement in various Middle Eastern conflicts. Tensions between Iran and Western powers (especially the U.S., and U.S. allies Israel and some Gulf Arab states) have been high for years and in 2025 remain unresolved. The concerns revolve around Iran’s nuclear ambitions, its role in conflicts like Syria and Yemen, and its support for militant groups.
Nuclear standoff: Iran’s nuclear program has progressed significantly since the United States unilaterally withdrew from the Joint Comprehensive Plan of Action (JCPOA) nuclear deal in 2018 under President Trump. In the absence of that deal’s restrictions, Iran expanded its uranium enrichment. Today Iran is enriching uranium up to 60%, a level far beyond civilian needs and only a short technical step from weapons-grade (90%). This has alarmed the international community. Talks to revive the Iran nuclear deal have stalled repeatedly. As a result, there is a looming risk: Iran could potentially “break out” to a nuclear weapon capability, or at least approach the threshold, and Israel has vowed not to let that happen – raising the possibility of an Israeli preemptive strike on Iranian nuclear facilities. Israeli leaders view a nuclear-armed Iran as an existential threat, and Israel has a history of striking nuclear sites in the Middle East (Iraq 1981, Syria 2007). Throughout 2024, secretive conflicts continued: Iran accused Israel of sabotaging some nuclear facilities and assassinating Iranian scientists in prior years, and those shadow wars may be ongoing beneath the surface.
Regional conflicts and proxies: Iran extends its influence through a network of allied militias and political movements across the Middle East – often referred to as the “Axis of Resistance.” In Syria, Iran’s Revolutionary Guard and Hezbollah (the Lebanese Shiite militia) have been key to propping up Assad’s regime. In Iraq, Iran backs certain Shiite militias. In Yemen, Iran has supported the Houthi rebels, who fought a war against a Saudi-led coalition (though that conflict has de-escalated into a ceasefire by 2023). In Lebanon, Hezbollah (armed and funded by Iran) effectively anchors Iranian influence. And in the Palestinian territories, Iran provides support to groups like Hamas and Islamic Jihad. This reach means Iran is often in direct or indirect conflict with U.S. allies. For example, during the 2023 Israel-Gaza war, Iran cheered on Hamas’s fight and likely helped disseminate weapons or know-how. The U.S. and Israel suspect Iran’s hand in Hamas’s military capabilities (though Hamas is Sunni Islamist, it has received Iranian aid due to a shared hostility toward Israel). As mentioned, pro-Iran militias in Iraq and Syria even launched drone and rocket attacks on U.S. bases in the region amid that crisis, apparently to pressure the U.S. to stop aiding Israel. The risk of a wider Iran-Israel war is ever-present; any spark could set off direct clashes. In late 2023, there were moments when it seemed possible – if Hezbollah had fully entered the Gaza war or if Israel had struck Iranian territory in retaliation, a major war could have erupted. Fortunately, that was avoided, but the underlying feud continues.
Impact on other countries: For the Gulf Arab states (like Saudi Arabia, UAE), Iran is the main regional rival. However, an interesting development occurred in 2023: Saudi Arabia and Iran, in a deal brokered by China, restored diplomatic relations after years of severance. This thaw led to improved prospects for peace in Yemen and a general lowering of direct Saudi-Iran hostility. Still, deep suspicion remains. Those Gulf states have been diversifying their alliances – engaging with China and Russia more (who take a softer line on Iran), not just relying on the U.S. Meanwhile, Europe has tried to play a mediator role on the nuclear issue but is increasingly aligning with the U.S. stance as Iran moves closer to nuclear-weapons potential. The EU faces a tricky balance because it would like to revive trade with Iran (which was booming briefly after the 2015 JCPOA eased sanctions), but cannot as long as Iran is out of compliance and under U.S. sanctions. Also, Europe worries about Iran’s ballistic missiles and its human rights issues (like Tehran’s crackdowns on domestic protests, such as the large demonstrations in 2022 following the Mahsa Amini incident).
Global economic angle: Iran is a significant oil producer, but sanctions have largely kept its oil off the official global market. It does sell some oil clandestinely (mostly to China). If Iran were fully open, it could export much more, potentially lowering global oil prices. As it stands, any confrontation with Iran carries the risk of a major oil shock. The Strait of Hormuz, off Iran’s coast, is a choke point through which about 20% of the world’s oil passes. In past incidents, Iran or its proxies have attacked oil tankers or Saudi oil facilities (e.g. the drone/missile strike on Abqaiq in 2019 temporarily knocked out a big chunk of Saudi oil output). So investors and governments remain very sensitive to Iran-related tensions. The mere threat of an Iran-U.S./Israel clash can send oil prices upward. Analysts estimate that a serious conflict causing a sustained 10% cut in oil supply could push prices so high that global growth would drop significantly (a 10% oil price rise is estimated to cut 0.15% off global GDP) (IMF downgrades global economic growth outlook, cites Mideast war as new risk | PBS News). This is why, whenever there’s an incident – like Iranian fast boats harassing commercial ships in the Gulf or proxy attacks – the world watches closely. So far, outright war has been avoided through deterrence and back-channel communications. The U.S. has beefed up its military posture in the Gulf at times to deter Iran (for example, in late 2023 the U.S. sent additional fighter jets and air defenses to protect its bases after Iran-backed attacks).
In summary, Iran represents a chronic flashpoint: its actions and the reactions they provoke contribute to the instability of the Middle East. The country itself is suffering economically under sanctions – high inflation, currency depreciation, and public discontent have rattled the regime (the late 2022 protests were nationwide and shook the leadership, though they ultimately clamped down). A cornered but defiant Iran continues to inch toward nuclear capability, even as Israel and the U.S. issue warnings. The situation is a powder keg that could either be defused by diplomacy (a new deal or interim agreements) or ignite if missteps occur. For now, it’s a tense status quo, but one that hangs over global markets (oil) and regional peace like a dark cloud. Iran’s alignment with Russia (supplying armed drones for use in Ukraine) has only further complicated its relations with the West (Ukraine tells African leaders no peace talks with Russia | Reuters), effectively tying the Iran issue into the larger East-West geopolitical contest.
Global Ripple Effects: From Europe to South America
The confluence of conflicts and tensions described above has created a highly volatile global environment. The impacts are both direct – on the nations involved in fighting – and indirect, affecting countries far removed from the battlefields. Here we examine how these crises collectively influence various regions and global markets:
- Devastation for directly involved countries: The most immediate effect of wars is on the countries fighting them. Ukraine’s cities and infrastructure are shattered; Syria remains fragmented and in ruins; Gaza has endured staggering destruction from bombardment (South Africa files case at ICJ accusing Israel of ‘genocidal acts’ in Gaza | Israel-Palestine conflict News | Al Jazeera). These nations face lost lives, humanitarian crises, and years (if not decades) of rebuilding ahead. Economically, conflict zones suffer collapses in output, hyperinflation or shortages, and dependency on aid. Ukraine, for instance, is propped up by international financial support to pay salaries and keep services running, while Syria and Gaza survive on humanitarian aid convoys. The social fabric in war-torn areas is torn apart – millions of refugees and internally displaced from Ukraine, Syria, and elsewhere will carry trauma and will need resettlement or repatriation. The human capital loss (skilled workers leaving, children out of school) is a long-term blow. So the countries directly embroiled in conflict pay the highest price, descending into humanitarian and economic emergencies that then require global assistance.
- Shockwaves through other countries (especially Europe and South America): Nations not at war are nonetheless feeling aftershocks. Europe has been hardest hit by the Ukraine war’s spillover – dealing with the fastest inflation in decades, an energy crunch, and the influx of refugees on a scale not seen since WWII. European governments rolled out subsidies and support to cushion citizens from high gas/power bills, at great fiscal cost. They also ramped up defense budgets, diverting funds to security that might have gone to other needs. In Eastern Europe, countries like Poland and the Baltics have taken on a frontline role, boosting military readiness and hosting U.S. troops, given the threat perception from Russia. Western European economies like Germany had to rapidly reorient industrial supply chains (e.g. finding new sources for natural gas, since Russian pipeline gas was largely cut off). This painful adjustment contributed to slower growth – Germany narrowly avoided recession in 2023 thanks to government intervention. South America felt the turmoil primarily economically: higher global commodity prices were a double-edged sword. Commodity-exporting countries (like Brazil with soy and iron ore, or oil exporters like Venezuela/Ecuador) enjoyed a windfall when prices spiked, improving their trade balances. But inflation surged across South America, hurting consumers (Is Latin America’s economic tide turning? Here are some insights from Davos 2025 | World Economic Forum). Many South American countries also import fertilizers and fuel; Russia is a key fertilizer exporter, and the war disrupted that, hitting farmers in countries like Brazil and Argentina. Cost of living increased – for example, in 2022-23 staples like wheat (for bread) became pricier across Latin America due to the war-induced global shortage. This came on top of pandemic-related economic woes, so it strained governments’ ability to respond. By 2024, inflation in Latin America had begun to recede, but growth remained sluggish (Is Latin America’s economic tide turning? Here are some insights from Davos 2025 | World Economic Forum). Policy-wise, South American nations largely stayed neutral on geopolitical conflicts (as noted, Brazil and others took a non-aligned stance on Ukraine (A Hesitant Hemisphere: How Latin America Has Been Shaped by the War in Ukraine)). They sought to maintain trade with all sides – for instance, continuing to do business with Russia and China while also engaging with the U.S./EU. This pragmatic neutrality is partly why Latin America hasn’t been directly drawn into these conflicts, but it means they also don’t benefit from the kind of allied support (financial or military) that, say, Eastern European countries received.
Other regions: Africa (aside from North Africa which is tied to Middle East dynamics) also endures indirect hits. Higher fuel and food costs triggered by conflicts have been painful for African economies, many of which are net importers of energy and grains. As mentioned, African leaders vocally highlighted how the Ukraine war’s disruption of grain exports threatened food security in Africa (Ukraine tells African leaders no peace talks with Russia | Reuters). In some places, this translated to social unrest or added stress on governments (for example, protests in some African countries over high food prices). Asia outside the conflict zones has had a mixed experience – for instance, oil-importing countries like India were hurt by expensive oil, but India also opportunistically bought discounted Russian oil. East Asian exporters faced some market turbulence and were concerned about Europe’s slowdown reducing demand for their goods. At the same time, high commodity prices benefited countries like Indonesia (coal, palm oil exports) and Middle Eastern oil producers enjoyed a revenue boom in 2022. So, impacts vary, but the common theme is volatility – many countries have had to adjust to rapid swings in prices and supply availability, testing their economic resilience.
- Strains on global markets and financial stability: The multitude of crises has left the global economy in a precarious state. After the strong post-COVID rebound of 2021, growth has cooled. The IMF projects only modest global growth around 3% or less, citing the combination of higher interest rates, the war in Ukraine, and “widening geopolitical rifts” as drags on momentum (IMF downgrades global economic growth outlook, cites Mideast war as new risk | PBS News). Financial stability concerns have risen: war-driven inflation led to fast monetary tightening, which in 2023 exposed weaknesses in banks (as seen in the U.S./European bank failures). Investors are navigating an environment with unusual overlapping risks – not just typical business cycles, but war and geopolitical fragmentation. Stock markets have been seesawing with news of peace talks or escalations; for example, whenever there’s optimism about Ukraine (or a ceasefire in Gaza), European stocks and the euro tend to lift, and when rocket attacks or nuclear rhetoric flare up, there’s a flight to safety (U.S. Treasury bonds, gold, etc.). Energy markets remain prone to geopolitical premium pricing – traders keep an eye on every development in Russia or the Middle East for possible supply shocks. In 2022, Brent oil spiked above $120/barrel with the initial Ukraine invasion shock; it has since settled lower, but could swing again with any new conflict involving a major producer. Food commodities similarly spiked when Ukraine’s exports were choked; prices have moderated with efforts like the Black Sea Grain Initiative (which allowed some Ukrainian grain out until Russia ended the deal in mid-2023), but food security remains a concern.
Another aspect is the realignment of global trade and finance due to these tensions. We see the beginnings of geopolitical fragmentation of the world economy: blocs are trading more within themselves (e.g. sanctions pushing Russia to trade more with China/India; Western countries considering “friendshoring” supply chains to trusted partners). Protectionism and sanctions are more prevalent, which adds friction to global commerce. As the World Economic Forum observed, “geopolitical fragmentation is impacting global trade routes… and economic instability” (5 things to know about geopolitics in a fractured world | World Economic Forum). This fragmented landscape can dampen investment, as businesses are uncertain about tariffs, sanctions, or even physical security of their assets. It also creates currency dilemmas – for instance, discussions in the BRICS about developing alternative payment systems to reduce reliance on the U.S. dollar have gained momentum as countries like Russia have been frozen out of the dollar system. While the dollar remains dominant, such shifts indicate a hedging behavior that could alter global financial flows over time.
In summary, countries not directly at war are grappling with second-order effects: energy crunches, inflation spikes, refugee inflows, and market volatility. Europe and developing regions like Africa and Latin America have felt these effects acutely. Global markets are jittery – every conflict or flashpoint adds another layer of uncertainty for investors and businesses. The cumulative effect is slower growth and persistent inflation (a phenomenon economists call “stagflation-lite”), as well as heightened financial risk. Cooperation on global economic governance has suffered because major powers are at odds; for example, G20 meetings have been fraught due to divisions over Ukraine. All these factors mean the world economy in 2025, while not in outright crisis, is navigating stormy seas with multiple storm fronts at once. As one analyst put it, the era of stability is over; we are in a period where conflict, trade tensions and turbulence have made the global framework far more uncertain (5 things to know about geopolitics in a fractured world | World Economic Forum).
Southern Africa: Navigating Global Turmoil
Turning to Southern Africa, and South Africa in particular, we see a region striving to manage its own challenges amid the global instability outlined above. South Africa is the continent’s most developed economy and a regional leader, so its foreign policy and economic health are a focal point in how Africa engages with these global issues. We will examine South Africa’s international relations in the context of the conflicts and then its local economic hardships linked to global instability.
Foreign Policy Balancing Act in a Fractured World
South Africa has historically championed principles of non-alignment and “dialogue over confrontation” in global affairs – a legacy of its anti-apartheid struggle and the influence of the Non-Aligned Movement. In the current conflicts, Pretoria has tried to maintain this non-aligned stance, sometimes awkwardly. For example, when Russia invaded Ukraine, South Africa initially called for peaceful resolution but avoided condemning Russia, positioning itself as neutral (Understanding the Knot of South Africa’s Stance on Russia/Ukraine …). Over time, its stance appeared to tilt toward Moscow: South Africa held joint military drills with Russia (and China) off its coast, and its leaders often echoed Russian talking points blaming NATO expansion for the war (South Africa’s Belated Reckoning Over the War in Ukraine – POLITICO). The ruling African National Congress (ANC) has long-standing ties with Russia dating back to the Soviet support for the anti-apartheid movement, which colors its view of the conflict. South Africa even appealed to the International Criminal Court not to enforce an arrest warrant for Putin (so that Putin could potentially visit South Africa without fear of arrest) (South Africa’s Belated Reckoning Over the War in Ukraine – POLITICO). Such moves drew criticism from Western nations, straining South Africa’s relations with the US and EU. In fact, U.S. officials accused South Africa in 2023 of covertly supplying weapons to Russia – a charge Pretoria denied, but which underscored the trust deficit that emerged. Overall, as one analysis noted in mid-2024, South Africa’s position on the Ukraine war can be described as “somewhere between neutral and pro-Russian,” reflecting the views of many African countries (South Africa’s Belated Reckoning Over the War in Ukraine – POLITICO).
At the same time, South Africa has engaged in diplomatic initiatives related to the war. President Cyril Ramaphosa joined a delegation of African heads of state in June 2023 on a peace mission to Kyiv and Moscow. This African Peace Initiative aimed to present African concerns (like food security) and propose confidence-building steps (Ukraine tells African leaders no peace talks with Russia | Reuters). While President Zelenskyy firmly rejected any plan that froze the conflict in place (insisting on Russia’s withdrawal) (Ukraine tells African leaders no peace talks with Russia | Reuters), the mission was symbolically important. Ramaphosa and others conveyed that Africa “has no right to do nothing” and that the status quo was hurting their continent (Ukraine tells African leaders no peace talks with Russia | Reuters). They also secured agreement on the need for the free flow of grain (Ukraine tells African leaders no peace talks with Russia | Reuters), highlighting how interlinked these issues are for Africa’s well-being. This showcased South Africa’s attempt to act as a bridge between East and West – leveraging its good relations with Russia to push for considerations that matter to the Global South (like unblocking food and fertilizer exports).
Beyond Ukraine, South Africa has been vocal on other conflicts. In the Israel–Gaza war, South Africa unequivocally condemned Israel’s actions in Gaza. The government compared Israel’s bombardment and blockade to apartheid-era oppression, and as noted, filed a case at the International Court of Justice accusing Israel of genocide against Palestinians (South Africa files case at ICJ accusing Israel of ‘genocidal acts’ in Gaza | Israel-Palestine conflict News | Al Jazeera). This was one of the strongest moves by any country globally on that issue. It aligned with South African public sentiment, as solidarity with the Palestinian cause runs deep (South Africa’s own experience with apartheid shapes its foreign policy outlook on oppression elsewhere). South Africa had already downgraded its diplomatic relations with Israel in recent years, and during the Gaza war it called for an immediate ceasefire and humanitarian access, strongly criticizing Western countries for not doing enough to restrain Israel. This put South Africa firmly on the side of much of the Global South in the Israel-Palestine debate, again emphasizing human rights and international law.
Regarding China–Taiwan, South Africa has a clear official policy: it recognizes the People’s Republic of China as the sole legal government of China and acknowledges Taiwan as an integral part of China. Pretoria made this switch in 1998 (cutting formal ties with Taiwan in favor of Beijing), and it has only grown closer to China since. In 2023, South Africa hosted the BRICS summit (a group comprising Brazil, Russia, India, China, South Africa) and showed alignment with China’s global south cooperation vision. A 2024 joint statement between South Africa and China reaffirmed South Africa’s commitment to the One-China Policy and support for China’s efforts at “national reunification” (Joint Statement between the People’s Republic of China and the Republic of South Africa on the occasion of the 2nd State Visit to China by H.E. President Cyril Ramaphosa and the Establishment of an All-Round Strategic Cooperative Partnership in a New Era | The Presidency). This means that in the event of increased China-Taiwan tension, South Africa would diplomatically back China’s position and not recognize any move toward Taiwanese independence. It also means South Africa refrains from any official contacts with Taiwan that would anger Beijing. In general, South Africa values its relationship with China – China is South Africa’s largest trading partner, and there are significant Chinese investments in mining, manufacturing, and infrastructure. South Africa, along with other BRICS members, often echoes China’s calls for a multipolar world and respects “sovereignty” (implicitly criticizing Western sanctions or interventions).
When it comes to Iran, South Africa has maintained cordial relations. Iran supported anti-apartheid movements, and post-apartheid South Africa has kept diplomatic ties and engaged in trade (especially oil imports historically, and exporting agricultural goods). South Africa has voiced support for the Iran nuclear deal and opposed unilateral sanctions that hurt Iran’s economy. In international forums, Pretoria tends to support dialogue on the Iran issue and has not joined Western efforts to isolate Iran. There isn’t a very direct engagement, but South Africa’s stance would be to encourage negotiations to prevent conflict (consistent with its general approach).
Regionally, Southern Africa (SADC countries) generally mirror South Africa’s non-aligned posture. Countries like Namibia, Mozambique, and Zimbabwe also abstained or stayed neutral on UN votes about Ukraine. Many have significant economic ties with China and remember Soviet support in liberation struggles, so they are sympathetic to Russia/China’s narrative of opposing Western “hegemony.” However, they also value Western trade and aid, so it’s a careful balance. African Union as a whole has tried to position itself as a peacemaker (the AU also had representatives in that Ukraine peace mission).
In essence, South Africa’s foreign policy in this turbulent period is a balancing act: it champions a “rules-based international order” but interprets that in a way that often challenges Western positions, emphasizing sovereignty and dialogue. It seeks to be a voice for the Global South, advocating issues like equitable access to food, energy, and respect for all nations’ security concerns. This has led it to some controversial stances (like the perception of cosying up to Russia). Domestically, these positions have been debated – South Africa’s opposition parties and civil society sometimes criticize the government for jeopardizing trade relations with the West or for siding with autocratic regimes. In mid-2024, South Africa’s general election results shook up the political landscape (the ANC lost some ground). This could, in the future, influence foreign policy if a coalition with more Western-friendly parties emerges. For now, though, Pretoria continues to walk a diplomatic tightrope, engaging with all sides: joining China and Russia in BRICS forums on one hand, and on the other hand sending delegations to Washington and European capitals to maintain those ties.
(Ukraine tells African leaders no peace talks with Russia | Reuters) African mediation efforts: A delegation of African leaders, including South African President Cyril Ramaphosa (center left), visits the site of atrocities in Bucha, Ukraine, in June 2023 during a peace mission. This initiative highlighted Africa’s desire to broker peace and address the war’s impact on the Global South (Ukraine tells African leaders no peace talks with Russia | Reuters). South Africa’s balanced foreign policy sees it leveraging historical ties with Russia while voicing the needs of non-Western nations affected by global conflicts.
Economic Hardships and Vulnerabilities
Global instability has exacerbated economic hardships in South Africa, compounding the country’s own structural problems. South Africa entered this period with sluggish growth, high unemployment, and serious domestic challenges (like energy shortages). The external shocks from global conflicts have added new burdens:
- Energy price shocks: South Africa is a net importer of oil, so the surge in oil prices after Russia’s invasion of Ukraine hit South Africans at the pump and in the wallet. Fuel price hikes drove up transport costs across the economy. Since South Africa generates much of its electricity from coal (domestic resource) it wasn’t directly exposed on gas prices like Europe, but it did face higher prices for refined fuels and oil-based products. The government had to temporarily reduce fuel taxes to shield consumers. Additionally, diesel costs skyrocketed, which mattered because South Africa’s Eskom (the power utility) often runs diesel generators to supplement power during its electricity crisis. Higher diesel prices made it even more expensive for Eskom to alleviate blackouts. This feeds into the severe power crisis (load-shedding) the country has – record power cuts in 2023 slashed GDP growth to near zero (South Africa’s Economy Loses Momentum Amid Record Power Cuts). Businesses and households spending on generators and fuel adds financial strain, and global oil inflation worsened that pain. In short, conflict-driven energy inflation widened South Africa’s trade deficit (more spending on oil imports) and worsened domestic inflation.
- Food and fertilizer costs: South Africa is generally food-secure at an aggregate level (it’s a big agricultural producer, especially of maize, fruit, wine, etc.), but it does import significant quantities of wheat and rice that many consumers rely on. The war in Ukraine sent global wheat prices up sharply in 2022. As a result, bread and cereal prices rose in South Africa, hurting the poor the most (since low-income families spend a larger share of income on food). Similarly, South African farmers faced higher fertilizer prices because Russia (a major fertilizer exporter) cut off some exports. Even though South African agriculture fared decently by exporting maize at high global prices, the input cost rise squeezed profit margins and potentially limited planting in some cases. High food prices pushed up overall inflation, which averaged above the South African Reserve Bank’s target range. By mid-2023, food and energy prices were persistently high, keeping inflation elevated and inflation expectations unanchored (South Africa’s Economy Loses Momentum Amid Record Power Cuts). The central bank responded with interest rate hikes, which, while necessary to tame inflation, increased borrowing costs for consumers and businesses, damping economic activity further.
- Commodity market volatility: On the flip side, South Africa as a commodities exporter saw some benefits from global price spikes. It exports minerals like gold, platinum, coal, and iron ore. In 2022, as Europe sought alternatives to Russian coal, South African coal exports jumped and fetched high prices, bringing a windfall to those mining companies and temporarily improving South Africa’s trade balance. Precious metals like gold often rise in uncertain times (gold hit multi-year highs amid the geopolitical turmoil), which helped South African gold producers. However, these gains were not enough to offset the broader headwinds. And by 2023, some commodity prices had cooled or China’s slower growth reduced demand, so South Africa couldn’t rely on a commodity supercycle to pull it out of trouble. Moreover, mining exports are capital-intensive and don’t create enough jobs domestically to significantly dent unemployment.
- Financial flows and currency: South Africa’s currency, the rand, is quite sensitive to global risk sentiment. During episodes of geopolitical risk-off (when investors become more cautious), the rand tends to weaken as money flows out of emerging markets to safe havens. Indeed, since 2022 the rand has seen periods of significant depreciation against the US dollar. A weaker rand makes imports more expensive, adding to inflation, and also increases the local currency cost of repaying any foreign debt. South Africa’s government debt is mostly Rand-denominated (which is good), but some is in dollars, and major state-owned enterprises have foreign loans. The global rise in interest rates (a response to inflation partly caused by conflicts) has also raised South Africa’s borrowing costs. Its bonds saw yields climb, putting pressure on an already tight budget (interest payments consume a big chunk of the budget). The “challenging external environment” combined with internal issues contributed to South Africa’s weak growth performance (South Africa’s Economy Loses Momentum Amid Record Power Cuts). Foreign investors have been somewhat deterred by not just internal issues like energy constraints but also by concerns over South Africa’s geopolitical stance (e.g. fears of secondary sanctions or loss of preferential trade access if SA is seen as too close to Russia). For instance, there were discussions in the US about whether South Africa should continue to benefit from the African Growth and Opportunity Act (AGOA) which gives duty-free access to the US market – such trade privileges could be at risk if political relations sour. All this uncertainty doesn’t help investor confidence.
- Local socio-economic strains: South Africa already had one of the world’s highest unemployment rates (around 33%) and deep inequality. The global instability aggravates this by suppressing the economic growth needed for job creation. Key industries like tourism, manufacturing, and finance are influenced by global conditions. Tourism, for example, had started recovering post-pandemic, but remains vulnerable to any international shocks that affect travel sentiment or incomes abroad. Manufacturing exporters faced softer demand from Europe in 2023 due to Europe’s slowdown. Also, higher input costs (energy, raw materials) because of global factors made some South African products less competitive. The result is that economic recovery is sluggish, and poverty may be worsening as inflation erodes purchasing power and job opportunities stay scarce. South African households are squeezed between rising prices and rising interest rates on their debts (mortgages, etc.). Social discontent has been brewing, occasionally spilling into protests (for better wages, or against load-shedding). The government’s ability to respond with more social spending is limited by a heavy debt load and higher debt service costs (South Africa’s Economy Loses Momentum Amid Record Power Cuts).
In short, South Africa’s economy is under severe pressure from both internal dysfunction and external shocks. The global conflicts have hit it via volatile commodity prices, higher fuel and food costs, and less favorable financial conditions (South Africa’s Economy Loses Momentum Amid Record Power Cuts) (South Africa’s Economy Loses Momentum Amid Record Power Cuts). One IMF assessment noted that “crippling power cuts, volatile commodity prices and a challenging external environment” have all combined to undermine growth in South Africa (South Africa’s Economy Loses Momentum Amid Record Power Cuts). Growth in 2023 was around only 0.6%, and though a slight pickup is expected, it is far below what’s needed to reduce unemployment. This makes South Africa and its neighbors more vulnerable to any further global instability. Countries in Southern Africa that depend on South Africa (like Lesotho, Eswatini, Zimbabwe) also feel the pinch when South Africa’s economy struggles, since it’s a major trade partner and source of remittances for them.
Looking at Southern Africa broadly: Smaller economies like Zambia and Mozambique have faced high fuel/import bills and currency depreciation due to global trends. Many countries in the region had debt levels rise during the pandemic, and the subsequent rise in global interest rates (partly a result of war-induced inflation) has made it harder to service that debt – we’ve seen debt distress in some African countries (e.g. Zambia had to restructure its debt). So global instability indirectly squeezes budgets and could limit development spending region-wide. On the positive side, some Southern African countries benefited from high prices of specific exports (for instance, Angola, though in Central Africa, got more revenue from oil; Botswana from diamonds). But being commodity-reliant is a double-edged sword of volatility.
To cope, South Africa and its neighbors are exploring closer ties with BRICS and other emerging partners to attract investment (for example, there’s talk of more Chinese investment in energy infrastructure to help SA’s power woes) and to perhaps trade in local currencies to reduce dependency on the strong U.S. dollar. Regional blocs like SADC have supported calls for diplomatic solutions to conflicts (they don’t want great-power games playing out in Africa). South Africa also uses forums like the G20 and BRICS to argue for reforms in global finance that give developing nations more breathing room during crises.
In conclusion on this section, South Africa finds itself buffeted by global winds it cannot control while trying to fix the holes in its own ship. Internationally, it walks a non-aligned line, and domestically it endures the economic fallout of a world in turmoil. This dual challenge defines Southern Africa’s predicament: needing a stable global environment to thrive, but facing the exact opposite and thus having to become more resilient and adaptive at home.
Conclusion: A Fragmented World and Its Consequences
In 2025, the world is experiencing a level of geopolitical and economic turbulence not seen since the Cold War. In simple terms, what is happening is that multiple crises are unfolding at once, and they are feeding off each other. Years of rising great-power rivalry and shocks (like Trump’s trade wars, the pandemic, etc.) have eroded cooperation between nations. Now, major conflicts – a war in Europe, a war in the Middle East, persistent unrest in places like Syria, a potential flashpoint in East Asia, and a tense standoff with Iran – are all interacting in complex ways.
Geopolitically, power is more diffuse and contested. The United States and its allies face potent challenges from Russia (in Ukraine) and China (in Asia), and even have disagreements with friends (for instance, over trade). The old order of U.S.-led globalization is fraying, giving way to a more fragmented world where blocs of countries pursue their own interests. Middle powers (like South Africa, India, Brazil, Turkey) are asserting more autonomy, not blindly following either Washington or Moscow/Beijing (5 things to know about geopolitics in a fractured world | World Economic Forum). This creates a very fluid international scene: one in which long-standing norms can break down (e.g. a major power invading a neighbor, or sanction regimes splitting the world economy). For the average person globally, this means we’re in a more unpredictable era.
Economically, people feel this in their daily lives: prices for basic goods like food and fuel have been volatile, sometimes painfully high, because wars and tensions disrupt supply. When Russia invaded Ukraine, suddenly gas became scarce in Europe and bread more expensive in Egypt. When conflict loomed in the Middle East, everyone worried if petrol might get pricier. And because these shocks have made inflation a global problem, central banks have hiked interest rates, which might cool down prices but also makes mortgages and loans costlier and can even cause banks to wobble. So financial anxiety is part of this picture – one day it’s a war, the next day it’s a bank run, and they’re sometimes connected (as the IMF noted, the war in Ukraine, pandemic, and interest rate hikes together knocked trillions off world output (IMF downgrades global economic growth outlook, cites Mideast war as new risk | PBS News)). Investors and businesses don’t like uncertainty, and right now uncertainty is abundant.
For countries directly in conflict, the situation is obviously dire – Ukrainians worry about surviving bombings and getting through winter without heat; Gazans mourn entire families lost and wonder when they will rebuild their homes; Syrians persist through an seemingly endless nightmare of hardship. These human stories underscore why international organizations and some nations are desperately calling for peaceful resolutions. But big-power politics often impedes quick solutions – e.g. UN action gets vetoed, peace talks falter over maximalist demands.
Countries not at war are still in a fragile position. Europe learned it must never take peace for granted and is rearming and rethinking its energy strategy. Many developing countries feel like collateral damage of fights among giants – they ask, “Why should we suffer inflation and hunger for a war we have no stake in?” This sentiment has led to some resentment towards the West’s priorities, and it’s partly why places like Africa or Latin America often preach mediation and a focus on economic development rather than taking sides in geopolitical feuds.
From a Southern African perspective, as we detailed with South Africa, the challenge is to stay principled and protect one’s interests amid big global rifts. South Africa tries to uphold ideals (like opposing what it sees as injustices in Gaza or championing the underdog) while also keeping trade ties with all partners. It’s not easy – any choice has a consequence, whether economic or diplomatic.
In layman’s terms, the world right now can be thought of as a neighborhood that’s become a lot less friendly and a lot more chaotic. The “neighborhood cop” (the US-led system) isn’t as commanding as before, and some big guys on the block (like Russia and China) are challenging the old arrangements. There are fistfights on some streets (wars), and even where there aren’t fights, everyone’s mistrusting each other, locking their doors, maybe forming cliques for safety. When two neighbors fight, the whole block sometimes loses electricity or water (akin to how a war in one place affects supplies and prices everywhere).
For the global economy, this means the smooth flow of goods and money is disrupted. Think of it like traffic jams and detours on what used to be a fast highway of trade – goods take longer routes, cost more; sometimes roads (trade links) are closed entirely due to sanctions or blockades. Investors act like drivers in bad weather – more cautious, sometimes pulling over (holding off on investments) until visibility improves.
What does this mean looking forward? It means uncertainty remains high. Will the Ukraine war end in a peace deal or escalate further? Will the Taiwan situation remain just tense or boil over? A lot hangs in the balance. There are also efforts to stabilize things: international diplomacy continues (e.g. talks brokered by Turkey and the UN did yield some grain export deals earlier, and maybe back-channel U.S.-Russia communications reduce nuclear risks). Major powers still have incentives to avoid direct confrontation – for instance, the U.S. and China, despite rivalries, still hold summits to manage tensions, because a war would be catastrophic for both. So it’s not all doom; there are still threads of cooperation – on climate change, on preventing pandemics – that sane actors realize need to be preserved.
For South Africa and similarly placed countries, the strategy is to build resilience at home (so global shocks hurt less) and to use diplomacy to voice their interests. South Africa, as we’ve seen, pushes for multilateral solutions – whether it’s reforming the UN or advocating for economic justice (it often highlights how sanctions and wars affect African economies unfairly). Locally, fixing issues like energy reliability, diversifying its economy, and maintaining prudent fiscal/monetary policy are key so that, for example, if oil prices jump or foreign investors withdraw, the country can withstand it.
In conclusion, the world of 2025 is marked by instability and a transition to a new order. We have tariff wars morphing into tech wars, cold wars edging into hot wars, and alliances realigning. This has led to economic ripples everywhere – some beneficial (for commodity sellers) but many harmful (for consumers and vulnerable nations). South Africa’s story shows how a country can be far from the epicenter of conflict yet still feel the tremors and have to make hard choices in response. Understanding this interconnectedness is important: no crisis exists in a vacuum now.
Ultimately, the hope is that cooler heads prevail – that diplomacy can gradually defuse these conflicts (a tall order, but not impossible) and that lessons will be learned to reinforce global systems against such shocks. For everyday people, the situation translates to being prepared for a bumpy ride: higher costs, possibly new job opportunities in some sectors (like defense or energy alternatives) but losses in others, and a need to stay informed about global events because they do affect one’s grocery bill and one’s community. As the world navigates this turbulent period, it becomes clear that peace and stability, once taken for granted, are now precious commodities that require effort from all nations to restore. The current instability was years in the making – from trade disputes to unaddressed regional conflicts – and it won’t resolve overnight. But recognizing what is happening is the first step: we are in a fractured global landscape, and concerted actions will be needed to mend it, to rebuild trust, and to refocus on common interests (like prosperity and development) over zero-sum confrontations. Each conflict discussed is a puzzle piece in this bigger picture of a world trying to find a new equilibrium. And until that equilibrium is found, uncertainty will reign.
In sum, today’s geopolitical and economic instability is the result of disrupted global relationships – whether through tariffs or tanks – and its impact is truly global: no country is completely insulated. South Africa and its region exemplify the challenges of the developing world in this scenario: needing to adapt to shocks and assert their voice so that their interests are not trampled in the tussles of great powers. The hope is that international cooperation can be reforged in new forms to tackle the fallout (be it energy alliances, humanitarian initiatives, or new trade pacts among emerging economies) (5 things to know about geopolitics in a fractured world | World Economic Forum). For now, we live in a world on edge, navigating instability with cautious optimism that diplomacy and prudence can eventually prevail over conflict and chaos.
Sources:
- Guardian analysis of Trump-era tariff impacts on global trade (Did Trump’s tariffs kill economic populism? | Globalisation | The Guardian) (Did Trump’s tariffs kill economic populism? | Globalisation | The Guardian)
- Politico report on South Africa’s stance in the Russia-Ukraine war (South Africa’s Belated Reckoning Over the War in Ukraine – POLITICO)
- Reuters coverage of the African peace mission to Ukraine and its motivations (Ukraine tells African leaders no peace talks with Russia | Reuters)
- Al Jazeera report on South Africa’s ICJ case against Israel (Gaza war) (South Africa files case at ICJ accusing Israel of ‘genocidal acts’ in Gaza | Israel-Palestine conflict News | Al Jazeera)
- European Commission briefing on the EU energy crisis from the Ukraine war (EU action to address the energy crisis – European Commission)
- World Economic Forum insights on geopolitical fragmentation and instability (5 things to know about geopolitics in a fractured world | World Economic Forum)
- IMF/Associated Press discussion of global economic outlook amid wars (Ukraine, Israel-Gaza) (IMF downgrades global economic growth outlook, cites Mideast war as new risk | PBS News) (IMF downgrades global economic growth outlook, cites Mideast war as new risk | PBS News)
- IMF country report on South Africa’s economic challenges in a tough external environment (South Africa’s Economy Loses Momentum Amid Record Power Cuts) (South Africa’s Economy Loses Momentum Amid Record Power Cuts)
- World Economic Forum report on Latin America’s post-Ukraine war inflation and recovery (Is Latin America’s economic tide turning? Here are some insights from Davos 2025 | World Economic Forum)
- Joint China-South Africa statement reaffirming South Africa’s One-China policy (Joint Statement between the People’s Republic of China and the Republic of South Africa on the occasion of the 2nd State Visit to China by H.E. President Cyril Ramaphosa and the Establishment of an All-Round Strategic Cooperative Partnership in a New Era | The Presidency)
- Reuters and Guardian photojournalism (embedded images) illustrating the human impact in Gaza and Ukraine (South Africa files case at ICJ accusing Israel of ‘genocidal acts’ in Gaza | Israel-Palestine conflict News | Al Jazeera)