What Comes in 2025?

A tumultuous year ahead

The fate of Europe: a museum to visit. Photo by Zach Dyson on Unsplash

First of all, let me wish you a Happy New Year, and thank all the support you gave throughout 2024. I truly appreciate it. We are living in incredibly interesting times — to say the least — and 2025 will be no different. The post WWII world order is definitely over, and the world economy faces massive challenges among growing polarization and geopolitical upheaval. We are witnessing a worldwide struggle for resources, energy, trade routes and growing financial instability. Western and Eurasian powers are at war with each other on multiple fronts. This, however, is not a war between good and evil where the good side wins and everyone lives happily after. As thing stand today we are in for an awful long race to the bottom. Industrial civilization — based on finite and polluting resources — is unsustainable, no matter how much we want it to succeed and no matter where we live. Life is going to be extremely hard without this much technology, and ultimately it will not matter which team you rooted for. The only way through this bottleneck (if there is any) will be via collaboration, self sufficiency, small local economies and building small scale democratic structures. Large geopolitical entities are on their way out, and even the strongest survivor will fall eventually.

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Welcome to part two of my longish analysis of world events at the turn of 2025. If you haven’t done so, please read part one: What a Year 2024 Was, where I laid out the geophysical realities underpinning world events. Again, coming from a world dominated by the Western narrative of things, the following might seem contra intuitive at best, or outright upsetting at worst. As usual, I strongly advise my readers to seek out alternative sources of information, and to take anything appearing on mainstream media with a huge pinch of salt. We are living through the collapse of modernity — which unlike the movies — will take decades to unfold in a slow motion trainwreck. No one will come on TV and admit that we are running out of stuff and the only way through this massive bottleneck is collaboration. Instead we will hear more rhetoric advocating for more war, more great power competition, “removing of red tape” and the like. So, treat what you hear, see and read lightly, and always keep this larger context in mind. Prepare for a tumultuous 2025.

Europe

It is perhaps not terribly risky to start by saying: we should expect more of the same in 2025. A deepening energy crisis, leading to further deindustrialization, layoffs and plant closures. Higher inflation, lower living standards — and not just in the EU. An accelerating collapse in discretionary spending (vehicles, leisure, consumer products etc.). Less democracy but more political theater to obscure the true extent of the West’s malaise. Peace talks commencing between the US and Russia, with fighting still going on unabated, and with European’s being pushed to the sidelines.

„Oh man… the bullshit piled up so fast, you needed wings to stay above it.” 
 Apocalypse Now, 1979

The war in Ukraine will reach its endpoint in 2025. Some sort of settlement of the conflict will be reached: if not through a political / negotiating process, then through a forced military collapse. Unfortunately there is still a lot of misunderstanding and misinformation in the West with regards to what is at stake here, although the picture gets clearer by the day (even for mainstream news consumers). Contrary to the now slowly dissolving (old) narrative, this war was never about a ‘land grab’ or the ‘rebuilding of empire’ but about conflicting economic, military and political spheres of influence. And that includes mineral resources, labor and markets for the West, and security concerns for Russia. All this in an area controlled by the latter for centuries, and coming on top of several invasions from the West (first during the Napoleonic wars, then in WWI and WWII). Ensuring a neutral, non-nuclear status for Ukraine thus remains paramount to Russians, but taking hold of the entire country is not. In fact everyone would be much better of with an independent, non-nuclear, de-militarized nation state between NATO and Russia.

The picture is really not complicated: the West wants resources, Russia wants peace. Normal states in normal times could easily solve this “conundrum” by two clever inventions: trade and arms control, both of which were working brilliantly in the past. The good times are over though. Having slowly run out of cheap-to-produce resources and having their industries shipped abroad, debts taken on by Western states could no longer be repaid on the basis of (real) economic growth. Elites there had two choices: continue with the pretense that nothing is wrong, or try to take control over resources abroad (serving as collateral). (Admitting that the current economic arrangement was never sustainable and that it had only led to soaring inequality was never an option.) Since pretense has only led to the money printing press running amok, the only remaining option was to provoke wars and to change as many regimes to favorable ones as possible. (‘Let’s just fight’ — as a former UK prime minister used to say).

Seeing the untenable military situation in Europe, however, the next US administration might start a tardy overhaul of the European security architecture (pulling back missile and military bases together with nuclear weapons) — reversing the policies of the past three decades. There is a catch however: while Russia is fully onboard with this de-escalation approach, it looks wholly uninterested in restoring economic relationship with Europe. This permanent looking cut-off from cheap energy and resources from Siberia, could make the EU’s economic collapse all but inevitable. The continent-wide block has long lost all its competitive advantages and is already busy turning itself into a mausoleum, a tomb of long dead empires. Without cheap energy and resources though, the EU will eventually find itself lying in one of those sarcophagi. And while a slowly deindustrializing and re-militarizing Europe will surely remain a lucrative market for US made weapons and fuel for some years to come, the EU might in the process become too poor to buy anything from America. And then, perhaps much sooner than anyone expects it, Europe could suddenly find itself defending against Russia all by itself, which it won’t be able to do. Again, no affordable energy, no economy. No economy, no military. As simple as that.

Much to the European elite’s luck, or shall I say: dismay, though, Russia is not interested in conquering the continent. First: it would not improve their security an iota; quite to the contrary. Second — taking on a European thinking hat — there are already no cheap resources left, and soon there will be no rich market to serve either, only 450 million disgruntled elderly people full of hatred. Who in their right mind would want to control such a territory…? So, lacking resources to make a fight, Europe will complete the raising of its new iron curtain. A physical and mental barrier even more hermetically sealed than the previous one. No passenger, car, plane or truck transit. Complete isolation. Militaries staring each other down from watchtowers behind lines of fortified defenses, pillboxes and trenches. Europe in the coming years might end up looking like the Korean peninsula rotated 90 degrees counterclockwise: with a politically immobile sclerotic West, and a still vibrant East. The demarcation line will thus run not just through Ukraine, but across the entire continent: from the northern tip of Norway to the Black Sea.

This situation, no matter how dire, will and cannot last forever. Europe will eventually disintegrate completely under the mounting pressures of its many internal contradictions: the lack of affordable energy, a viable industry and an economy worth saving (not to mention democracy itself, which will be long gone by then). As a European I can only hope that we will come to our senses before this future unfolds, and dismantle this failed project peacefully before it buries us alive. (As usual though, I have my doubts.) Again, it really doesn’t matter what we think is right or wrong. A coming decline in world energy production (starting with oil) will make it impossible to hold such increasingly isolated, ever more complex and energy intensive projects together, especially in a resource starved peninsula on the western edge of the Eurasian landmass. Civilization, and especially its industrial variant is a highly self-limiting enterprise predicated entirely on the availability of cheap and easy-to-get non-renewable resources and the only way to make its passing less painful is through having good relations with our neighbors. Collapse and its mitigation strategies are scale invariant: just as one needs good collaboration within their small community, so does nations need to work together to avoid the worst consequences of the decline of industrial civilization.

The sunset of oil production. Photo by Zbynek Burival on Unsplash

US

I’m not versed in U.S. internal politics, although I do enjoy watching the reality show going on there over the pond. Slapping tariffs on imports, on the other hand, is not particularly hard to understand. Added on top of the price of an imported item, tariffs are more like an additional tax burden on the consumer than a deterrent for adversaries. (If you thought that prices would remain the same after initiating them, I urge you to think again.) Here, too, western elites still cannot comprehend the fact that they are no longer the biggest trading block on the globe. BRICS+ countries command a much larger chunk of the world economy than anyone from the West thinks they do, surpassing the combined output of G7 nations even. (This is especially so if you consider that the US and European GDP is massively overinflated by financial, legal, insurance, banking, healthcare and other services…)

And while China would certainly feel the loss of the US market — either due to a trade war or a financial meltdown — it could still recover by trading more with its like-minded partners in Asia, Africa and Latin America. The same could not be told about the US economy, though: without Chinese imports and mineral inputs manufacturing a whole range of goods (including weaponry and medicine) would become impossible, making life extremely difficult. So while it looks good on paper, tariffs can only be implemented effectively against one geopolitical entity: the EU, to facilitate more fossil fuel sales and to draw European car companies to set up manufacturing inside the United States.

Then will the US become a powerful petrostate then? Will there be a return to drill baby drill? Hardly. Again, political elites fail to grasp reality here: The shale revolution is over. Just like the Saudi miracle it, too, has entered its cash cow phase, where investments are now limited to mergers and where all eyes are on maximizing shareholder returns — before the party inevitably ends. If oil prices go up in the meantime, then more will be left for stock buybacks or buying up additional smaller players. If not, then cost cutting will deliver profits. And if all else fails, bankruptcies will be declared and shops will be closed — marking an end to a once promising business. Again, there is nothing new in this, history books are full of examples.

American oil and gas output is peaking, and after a brief 2–3 year plateau it, too, will begin to decline. Permanently. There is nothing left to drill at these prices, and as we have seen, markets cannot bear much higher prices any longer than a paper bag could hold burning charcoal. We are at a critical juncture in world oil production, and the US is no exception. America will once again become highly dependent on oil imports, tempting it to seize control of trade choke-points and production outside its borders. Military realities on the ground, however, will throw a spanner into the gears of this plan (if one ever existed).

Iron dome in action. Photo by Mohammed Ibrahim on Unsplash

West Asia

Trouble is brewing around Iran. Unfortunately, the western defense establishment still believes for some reason that they can take control of the situation should a war between Iran and Israel broke out. Have they learned nothing from their affair with tiny, poor Yemen, which is successfully blocking the entire Red Sea for a year now? Ansar Allah (called the Yemeni Houthis by the West) have successfully made shipping oil (and other products) through the Red Sea extremely risky (if not impossible) in response to Western support for the war raging on in the Middle East. Even as most of Europe’s oil would have to pass through there (together with sanctioned Russian oil returning from India as refined fuel), these ships now have to make a lengthy detour around Africa — or take the risk of being hit by a drone or missile — making oil so much more expensive for Europe.

Now, that Syria has sunk into chaos after the fall of the Assad-regime, the planned Qatar-Syria-Turkey-Europe gas pipeline delivering cheap gas to Europe could also be postponed indefinitely. The country is still actively bombed and demilitarized by US allies in the region, effectively removing all of its air defenses and arms depos; lending Syria to be partitioned with large chunks of it becoming part of Turkey’s second Ottoman Empire, and with its southern area being occupied by Israel (1). Will these territories be used as a staging ground for a potential attack on Iran? We will see in 2025.

There is a caveat here. If a poor country like Yemen could stop all shipping in the Red Sea, can anyone guess what could Iran do to global oil trade should push come to shove…? It’s not unimaginable that instead of simply closing the Strait of Hormuz they would rather hit all other Gulf monarchies’ oil infrastructure in retaliation — a threat on the level of having nuclear bombs. Iran, unlike Western states, has hypersonic long range weapons and could easily knock out world oil trade, besides sinking any foreign ship (cargo or military) with rockets launched from deep inside their country. Has anyone planned for this contingency when talking about attacking Iranian infrastructure? I guess you know the answer.

The era of maritime dominance is over. Large, expensive warships in general and carrier battle groups in particular are like the cavalry in WWI: nice and shiny, but ultimately useless against the raft of new weaponry (machine guns then, hypersonic long range missiles now). The same goes to air power: expensive planes, costing a billion or two to make are no match to modern air defence missiles capable of downing them from 500 kms away. (These systems can also identify and track stealth aircraft, reducing their effectiveness in penetrating defended airspace.) No wonder there are no news of successful bombing campaigns against Iran, although some high ranking officials tend to believe they have already knocked out the country’s air defenses and now is the right time to attack. I’m afraid a dangerous miscalculation is in the offing.

The same goes to the Malacca Strait: China has plenty of long range, hypersonic anti-shipping missiles to sink any warship trying to blockade this vital trade choke-point. Ditto Taiwan: the “People’s Liberation Army” could literally flatten the entire island in a matter of days — well before re-supply ships from nearby US bases could reach their destination. I can but hope that both sides take these into their calculations. Losing a third of oil trade or the world’s high end chip fabs is no joke, but a catastrophe on a global scale. I can but hope, that none of this will come to pass neither in 2025 nor later.

Photo by Duangphorn Wiriya on Unsplash

Conclusion

We are living in dangerous times. We are now three years into an ever more desperate war over resources, financial and economic control over what once was a globalized world economy. Now, as oil production (both for supply and demand reasons) is approaching its decline phase, the game is on to control the last remaining oil rich territory of the planet, West Asia. With the Ukraine war slowly coming to an end in 2025 (either by the use of force or diplomacy) and with the fall of Syria, a potential war on Iran is clearly on the horizon.

The US led western world order faces more challenges than it could handle, though, even as it’s maritime military dominance fades into memory. The only deterrence it has is nuclear, a weapons class which simply cannot be used without facing a retaliation in kind. And while Iran doesn’t have such weapons (yet), it might very well tank the world economy by destroying the Gulf monarchs’ oil infrastructure. History — they say — does not repeat itself, but it sure does rhyme... A war in the Middle East. Peaking US oil production. A threat of disruption in world oil trade. I don’t know about you, Dear Reader, but it feels so 1973 again to me...

Zooming out a little, the coming worldwide decline of industrial civilization and the brutal ecological destruction it is leaving behind will haunt humanity for generations to come. On the long run neither the West, nor the East will be able to maintain their civilized status, and the sooner they realize it, the better they can prepare for a post-fossil-fuel-world. Will 2025 compel global powers to reconsider their options based on reality? And given such adversarial relations can eastern and western powers come to a mutual understanding with regards to humanity’s interests? As usual, I have my doubts, but let’s see.

Until next time,

B

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Notes:

(1) As a side note, resources — especially freshwater — also happens to be scarce around the region. After a peak in Syrian oil-production and the cumulative effects of climate change and US sanctions (and the blocking of remaining oil production) it quickly become clear that this many people could no longer be adequately fed. Rising ethnic and religious tensions were thus as much a symptom to ecological overshoot in the area as historical mistakes made by former colonial states.