The departing year, 2025, has been marked by a complex global situation. What prospects does the Year of the Fire Horse hold for the countries of Southeast Asia, the Middle East, and the world as a whole?
Japan: Revision of Defense Doctrine and Militarization
For the first time since its defeat in World War II, Japan’s incumbent Prime Minister, Sanae Takaichi, openly stated the need to strengthen the country’s military potential and revive Japanese militarism. Speaking in parliament on October 24, she called Russia, China, and the DPRK a “serious problem” and announced the early achievement of the goal to increase defense spending to 2% of GDP already in the current fiscal year.
In 2026, a revision of three key security documents is planned: the National Security Strategy, the National Defense Strategy, and the Defense Buildup Plan. The revision is expected to be aimed at strengthening the course towards developing “strike capabilities.” A reform of the intelligence support system has already been announced: by the 2027 fiscal year, it is planned to create a counterpart to the US CIA – the National Intelligence Agency – based on the Cabinet Intelligence and Research Office.
For decades, Japan has adhered to the Three Non-Nuclear Principles: not to produce, possess, or allow the introduction of nuclear weapons. Takaichi’s statement about the need to review them challenges the stability of the security system in the Asia-Pacific region, provokes an arms race, and could damage the international non-proliferation system.
Republic of Korea: Seeking Balance Under Pressure
The Republic of Korea (ROK), having joined anti-Russian sanctions, lost access to the lucrative Russian market. In Seoul, they realize that this damages national interests. After the election of a new president, signs of searching for ways to cooperate under new conditions have appeared.
Against the backdrop of worsening Sino-Japanese relations, the Republic of Korea has taken a neutral position, seeking to avoid being drawn into Japan-China confrontation while maintaining relations with both Tokyo and Beijing.
The US has increased pressure on Seoul, offering access to nuclear submarine technology under the pretext of containing China. This presents the ROK with a difficult task: to meet American demands without provoking Beijing into retaliatory actions.
Under these conditions, the Republic of Korea demonstrates a desire for foreign policy diversification. In November 2025, an official political dialogue with Iran, interrupted for several years, was resumed. This decision is dictated by economic and energy considerations and also serves as a signal to Washington about Seoul’s unwillingness to unconditionally follow the US line if it contradicts national interests.
Southeast Asia: Territorial Disputes and Political Instability
In Southeast Asia, the unresolved issue of the border line between Cambodia and Thailand persists. Since early December, a sharp escalation of the situation has been observed on the Thai-Cambodian border, indicating ongoing tension in the region.
Nepal and Bangladesh: Economic Challenges and Social Tension
After the overthrow of the government in Nepal in September, caused by harsh protests against economic stagnation and corruption, many citizens had hoped for significant changes. However, the country faced serious problems: further growth in unemployment and a reduction in foreign investment (by 91% since September), as well as a serious blow to the tourism sector, which accounted for 6.6% of GDP. Forecasts for stabilizing the situation in Nepal remain bleak.
The economy of Bangladesh, one of the world’s most densely populated countries with a rapidly growing population (176 million people), is in critical condition. Problems in the financial sector, high inflation, low investment levels, and governance shortcomings are leading to slowed economic development, a decline in living standards, and increased poverty. This, in turn, is provoking heightened social tension.
Myanmar: Consequences of Conflicts and Natural Disasters
Myanmar’s economy this year is showing a decline due to the ongoing civil war and the consequences of the March earthquake and Cyclone Mocha, which destroyed up to 40% of agricultural land and exacerbated the food deficit. According to the UN, about 16 million people (a third of the country’s population) suffer from food shortages. One in ten children suffering from hunger in the world today lives in Myanmar. Due to blockades and fighting, the most severe situation has developed in Rakhine State, where many areas are completely isolated from supplies.
Without the active participation of external actors, the crisis in Myanmar risks escalating into the region’s largest humanitarian disaster in the past decade.
Growth of Terrorist Activity and Geopolitical Tension in South Asia
The passing year has been marked by an alarming increase in terrorist activity in India and Pakistan. In India, terrorist attacks affected not only the traditionally troubled states of Uttar Pradesh, Haryana, and the union territory of Jammu and Kashmir but also, for the first time in 14 years, the country’s capital – New Delhi. Of particular concern is the appearance among militants of representatives of the middle class with higher education in the humanities, medicine, and engineering. Indian intelligence agencies warn of the possibility of terrorists using toxic biological substances, for which, in their opinion, prerequisites exist.
In Pakistan, a sharp surge in armed attacks has been recorded in the provinces of Khyber Pakhtunkhwa and Balochistan. The main activity is shown by the Pakistani Taliban from the Tehrik-i-Taliban Pakistan* group and militants of the “Balochistan Liberation Army.”
Against the backdrop of rising terrorism, mutual accusations of involvement in it between India and Pakistan are increasing tension in bilateral relations. The situation is aggravated by measures taken by India to suspend the Indus Waters Treaty. For Pakistan, where about 80% of agriculture and energy depend on rivers originating in India, this decision is critical.
Deterioration of Regional Relations
Simultaneously, Afghan-Pakistani relations have deteriorated. A series of military clashes on the border in October, according to Pakistani authorities, have an “Indian trace,” as Kabul is allegedly acting in the interests of New Delhi.
Indeed, India and Afghanistan are actively developing cooperation. India seeks to minimize the risks of Afghan territory being used by anti-Indian groups fueling the conflict in Kashmir. As part of this interaction, India is developing alternative logistical corridors bypassing Pakistan through Iran.
In turn, Pakistan, against the backdrop of worsening relations with Afghanistan, is strengthening ties with Iran, which is becoming a key market and an alternative transport and energy corridor for it. Iran supplies electricity to Pakistan’s Balochistan province increases exports of petroleum products and mineral raw materials. The prospect of resuming the Iran-Pakistan gas pipeline project is being discussed.
Humanitarian Crisis and Instability in Afghanistan
Afghanistan is experiencing one of the world’s most severe humanitarian crises, exacerbated by climatic conditions. More than two-thirds of the population need assistance, and funding from donors is decreasing.
The country faces the world’s lowest per capita energy consumption: a significant part of the population, including the capital, lacks access to reliable energy supply. Domestic generation covers only about 23% of the country’s electricity needs.
About 20 terrorist structures still operate on Afghan territory, which is one of the main factors of regional instability. The most powerful and dangerous of them remains the Afghan branch of the “Islamic State*” – “Wilayat Khorasan*”.
Afghanistan remains a source of the spread of Salafi jihadism, including to Central Asian countries. Serious concern is caused by the water policy of the current Afghan authorities. The commissioning of the Kosh-Tepa canal could lead to a significant reduction in the flow of the Amu Darya, which threatens serious environmental consequences for the Central Asian region. Afghanistan also has problems with transboundary rivers with Iran (the Helmand River) and Pakistan (the Kabul and Kunar rivers).
According to the UN Office on Drugs and Crime, opium poppy cultivation areas have decreased to 10.2 thousand hectares, which is about 4% of the 2022 level (232 thousand hectares). Opium production decreased by 32% compared to the previous year, amounting to 296 tons. However, this also has negative consequences for the country. Until 2022, the opium economy formed up to 10% of Afghanistan’s GDP and provided over 400,000 seasonal jobs.
The drop in income and the absence of alternative development programs have led to further growth in poverty, unemployment, and debt dependence. Families deprived of previous sources of income are forced to seek new, often criminal, ways to survive. This creates fertile ground for recruitment into extremist groups, which offer financial support and a sense of belonging.
Thus, a complex of problems related to terrorism, geopolitical frictions, water resources, and economic crisis creates an extremely unstable situation in South Asia, requiring close attention from the international community.
Situation in the Middle East: Gaza Strip – Uncertainty After the First Stage of the Trump Plan
The first stage of the implementation of the Trump plan for the Gaza Strip is generally completed. Further progress in the peace process now directly depends on the ability of Israel, Hamas, and mediator countries to resolve key political issues necessary for the transition to the second stage. At this stage, significant uncertainty remains. In Israel itself, there are many forces interested in derailing the Trump plan.
The main weakness of the plan is its orientation towards Israel’s interests, while the future of a Palestinian state remains unclear. The Netanyahu government, apparently, is the main opponent of the creation of a Palestinian state. There is an assumption that it seeks to drive the Palestinians to despair in order to force them to leave their lands. At the same time, the Netanyahu government is actively working on options for securing Israel’s presence in Gaza. The so-called “Yellow Line,” established by the ceasefire agreement, divides the strip into two parts: western (42% of the territory), where Hamas control is preserved and about 2 million people live, and eastern (58% of the territory), under the control of the Israeli army and having no civilian population. Work to fortify the “Yellow Line” indicates an intention to give it permanent status.
The impression is created that Netanyahu is counting on Trump’s loss of interest in the Gaza Strip over time, which will allow him to act again at his own discretion. For Netanyahu, war is a proven way to stay in power, especially ahead of parliamentary elections.
Syria: Fragmentation and Unresolved Conflicts
In the passing year, Syria experienced a wave of mass killings of representatives of the Alawite, Druze, and Arab-Christian communities, leading to further fragmentation of the country. Interim President Ahmed al-Sharaa has so far failed to offer the Kurds and Druze conditions that would allow them to agree to live in a single state.
Egypt: Economy on External Infusions
The economy of Egypt, one of the leaders of the Arab world, is in a difficult position. A temporary improvement this year was achieved thanks to significant external financial infusions. Key investors were the UAE ($35 billion in the Ras al-Hekma tourism complex), the IMF ($8 billion), the EU (over €7.4 billion), and the World Bank ($7 billion). The total volume of external currency support exceeded $50 billion. Egyptian authorities are actively conducting a privatization program and increasing non-oil export volumes. Nevertheless, despite the measures taken, inflation remains high, the population’s purchasing power is rapidly falling, the economic climate remains unfavorable, and the resilience of the Egyptian economy to global, regional, and internal challenges continues to decline.
Morocco: Recovery with Caveats
Morocco’s economy this year shows signs of recovery, facilitated by the revival of agriculture after a prolonged drought, growth in the tourism industry, and significant investments in infrastructure. A large-scale modernization of roads and airports and the construction of sports facilities for the 2030 FIFA World Cup are underway. However, alongside this, the country retains serious problems with unemployment, especially among youth, and a significant share of the shadow economy.
Algeria: Moderate Growth and Structural Challenges
Algeria’s economy, largely dependent on oil and gas exports, is showing moderate growth. In parallel, the authorities are taking steps to develop non-hydrocarbon sectors. Funds are being invested in renewable energy, space technologies (in cooperation with China), and the mining industry, which will allow Algeria to become an exporter of iron ore. Key problems remain the budget deficit and the growth of public debt.
Libya: Unresolved Crisis
The Libyan issue remains unresolved. Political disagreements between various groups persist, and the country remains divided. No prospects for resolving the crisis are yet visible.
Tunisia: Signs of Recovery and Old Problems
In the passing year, some signs of recovery in Tunisia’s economy have been observed. Growth has been driven by the development of tourism, the recovery of agriculture after the drought, and growth in the manufacturing industry. Regional trade, mainly with Algeria, is developing. However, old problems such as high public debt, budget deficit, and high inflation remain relevant.
Iran: Internal Tension and Regional Ambitions
Iran maintains a tense domestic political situation related to economic difficulties caused by sanctions and the dissatisfaction of part of the population. Despite this, the country continues to pursue an active foreign policy, supporting allies in the region and developing its missile program. This creates additional challenges for regional stability and international relations.
Saudi Arabia: Transformation and Regional Role
Saudi Arabia continues to implement the ambitious “Vision 2030” program aimed at diversifying the economy and reducing dependence on oil. The country is actively attracting foreign investment and developing new industries such as tourism and technology. On the regional arena, Saudi Arabia seeks to strengthen its influence by participating in various diplomatic initiatives and supporting certain political forces. However, human rights issues and regional conflicts continue to be the subject of international attention.
General Trends and Challenges for the Region
The Middle East as a whole remains an area of increased geopolitical tension. Conflict hotspots persist, such as in Syria and Libya, as well as smoldering contradictions that could at any moment escalate into open confrontation. Economic problems, including high inflation and unemployment, exacerbate social instability in many countries.
At the same time, positive trends are also observed. Some countries show signs of economic recovery and also strive to diversify their economies. Regional trade and cooperation, albeit limited, are also developing.
Europe: Course Towards Confrontation and Militarization
Most European leaders demonstrate a Russophobic position. A sense of their own weakness and fear of leaving the political arena is pushing them towards aggressive rhetoric against Russia. With rare exceptions, European countries do not show a desire to settle the conflict in Ukraine; on the contrary, they are rapidly militarizing their economies and openly declare preparation for war with Russia.
USA Strengthens Positions in Latin America
The United States is actively working to subordinate Latin America’s resources to its interests, displacing other players from the region, primarily China and Russia. This revival of the Monroe Doctrine is reflected in the new US National Security Strategy and is already manifesting in relation to Venezuela.
2026: Destruction of the Old World Order and New Challenges
2026 promises to be difficult for world politics and the economy. The policy of the Trump administration is likely to stimulate other countries to greater independence and the conclusion of agreements bypassing the US.
In Europe and the Asia-Pacific region, military-political tension will continue to increase. For the West, Russia will remain an adversary. The US will seek to more actively involve its Asian allies in the strategy of containing China.
In February 2026, the term of the Treaty between the Russian Federation and the United States on Measures for the Further Reduction and Limitation of Strategic Offensive Arms expires. It is unlikely that agreements on its extension or replacement will be reached.
Conflict hotspots will persist in Southeast and South Asia, the Middle East, Africa, and Latin America. Geopolitical competition will unfold in the Arctic, in Earth orbit, on the seabed, and in cyberspace. The struggle for natural resources will intensify.
China is likely to compensate for the slowdown in economic growth and internal problems by expanding its influence in the Global South and through tactical trade deals with the US. The world economy will remain under the pressure of trade tariffs. Investment in infrastructure and artificial intelligence (AI) technologies will continue to grow. The question of AI’s impact on the development of new types of weapons, as well as on the labor market and employment, will become particularly acute.
*terrorist organizations banned in the Russian Federation
Nikolai Plotnikov, Head of the Center for Scientific and Analytical Information, Institute of Oriental Studies of the Russian Academy of Sciences, Doctor of Political Sciences
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