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Energy & Economics
nuclear fusion reactor tokamak concept background, 3d rendering

Accelerating the realization of nuclear fusion: A clear milestone is needed

by Choongki Sung

A few days ago, the author visited Commonwealth Fusion Systems (CFS) near Boston, USA. CFS is one of the most highly watched fusion energy startups in the world, currently constructing SPARC, a next-generation experimental device utilizing high-temperature superconductor technology. The researchers I met there were filled with confidence that nuclear fusion commercialization would be possible soon, and their passion resonated deeply. At the same time, it raised concerns about what we are doing and whether we are falling behind. The reason the world is accelerating efforts to advance the commercialization of fusion power is clear. As the heat wave continues to exceed 30°C even in September, it shows that the climate crisis has become a part of our daily lives. At the same time, rapidly evolving generative artificial intelligence (AI) is signaling an unprecedented demand for electricity. Faced with the dual challenge of responding to the climate crisis and the surge in energy demand, there is an urgent need for a new energy source that can ensure stable supply while minimizing environmental impact. Recently, fusion energy has been gaining attention as a next-generation energy source that meets these conditions. Fusion energy is a clean energy source that emits no carbon, and it uses hydrogen isotopes as fuel, which are virtually inexhaustible. It is often called the 'ideal energy source' because it is not constrained by weather or geographical conditions. Although the technical difficulty has historically been so high that it was considered an 'endless challenge,' the situation has now changed. In 2022, the U.S. Lawrence Livermore National Laboratory (NIF) succeeded in achieving 'net energy gain'—producing more energy than was input—in a laser-driven fusion experiment, raising expectations for the realization of fusion power. Furthermore, the fact that over 50 private companies worldwide are now diving into technology development with the goal of early commercialization shows that nuclear fusion is no longer a distant dream. Major nations are already focusing their national capabilities by presenting phased goals and execution plans. The U.S. has established a public-private partnership-based national strategy to actively support the endeavors of startups like CFS. China is promoting the construction of a demonstration reactor called CFEDR and, as a precursor, plans to complete the BEST device, capable of burning plasma operation, by 2027. The U.K. is ramping up national preparations by constructing the STEP device with a target of 2040, while also putting in place the engineering technology research facilities and institutional framework to support it. South Korea also possesses research capabilities that are by no means lagging. The core technology accumulated through the construction and operation of KSTAR is world-class, and its experimental results are internationally recognized. The country's experience in operating nuclear power plants is also an asset for future fusion engineering technology development. However, since the establishment of the ‘Nuclear Fusion Energy Realization Acceleration Strategy' last year, no specific roadmaps and execution plans have been revealed publicly. It is necessary to recall that the clear path from KSTAR to ITER to DEMO in the past allowed us to dedicate ourselves to the construction and operation of KSTAR, enabling South Korea to join the ranks of advanced nuclear fusion nations. Major countries around the world are currently moving ahead rapidly, aiming for commercialization in the 2030s and 2040s. To avoid being left behind in this competition, South Korea must urgently formulate an innovative plan for constructing a fusion demonstration reactor, targeting a demonstration in the 2030s. Furthermore, key technologies and large-scale research infrastructure must be strategically secured. A clear goal is essential to ensure that research and investment do not lose direction. Once the execution plan is clearly defined, universities can lead the necessary research and train appropriate talent, and young researchers can envision a future for themselves. Nuclear fusion is a new energy source that can simultaneously solve the climate crisis and energy security issues. What we need is a specific plan to realize it and unwavering determination to execute it. If we make the right choices and preparations now, South Korea can leap forward as an energy powerhouse that future generations can trust and rely on.

Energy & Economics
Silhouette of a person holding a smartphone in front of the flag of The European Union (EU)

The European smartphone market: premium loyalty, Chinese competition, and tariff pressure

by World & New World Journal

SummaryApple and Samsung remain the dominant forces in the European smartphone market, but Chinese brands are moving up the ranks and capturing market share - especially in the mid-range and premium segments. Trade measures and new EU regulations (eco-design) as well as regional economic weaknesses will influence demand and pricing in 2025.  Source:  https://gs.statcounter.com/vendor-market-share/mobile/europe? A look at Apple in Europe Apple holds a unique position in Europe, as it focuses less on pure delivery volume and more on anchoring itself in the premium segment. About one in three active smartphones in Europe is an iPhone [1], a number that matters more than quarterly shipment fluctuations. Even as shipments in Europe fell by nine percent in mid-2025, Apple's large installed base and trade-in programs helped maintain momentum [2]. Germany is a telling case in point. Apple's market share here is just over thirty percent, due to a mix of price-sensitive Android buyers and a strong premium niche who opt for iPhones due to the stability of the ecosystem, resale value, and perceived better privacy [3]. Penetration is higher in the more affluent northern and western markets, from the Nordics to the UK, underlining why Apple's marketing and retail strategy is heavily focused on these regions. Loyalty binds these markets together: almost nine out of ten iPhone users stay with the brand when they upgrade [4]. Combined with the high resale value, this reinforces the benefits of ownership. The iPhone 17 offers subtle but strategic updates - more base storage, improved cameras, and a slimmer 'Air' edition - aimed at retaining existing users rather than shaking up the market [5]. Behind the scenes, Apple is also quietly shifting supply chains and expanding iPhone assembly in India to be less vulnerable to tariff shocks and geopolitical risks [6]. For Europe, this means more stable pricing in the medium term, even as the EU tightens its regulations on eco-design and repairability. In short, Apple's strength in Europe comes not from chasing every segment, but from cultivating a premium base that rarely deviates. This base is both its shield and its springboard as competitors aggressively push into the mid-range and even the premium segment.  Source: Shutterstock/Elvard project -  BSD City, Indonesia, August 21, 2025 Back of an orange iPhone 17 Pro and an orange Samsung S22 Ultra A look at Samsung in Europe Samsung continues to be a consistent powerhouse in the European smartphone market. Unlike Apple, which is firmly anchored in the premium segment, Samsung's influence extends across all segments. From the high-end Galaxy S/Ultra series to the growing range of foldable devices and the hugely popular mid-range Galaxy A devices, Samsung ensures that there is a flagship-quality option in every price segment. This range is one of the reasons why the company consistently is the largest smartphone supplier in Europe by volume, claiming around 36% of the European market in the second quarter of 2025 [2]. The Galaxy A series, which includes models such as the A16 5G and the A56, has played a special role in this. These mid-range devices offer a good balance of performance, camera quality, and affordability, making them particularly appealing to price-sensitive consumers. The A56 alone recorded a 12% increase in sales compared to its predecessor, despite a slight decline in Western European smartphone sales overall [7]. Samsung's appeal goes beyond hardware. Through close partnerships with carriers and retail chains, the company has a reach that few rivals can match, enabling promotions, bundles and financing offers that appeal to buyers from all demographics. Android's flexibility is another draw - customers who value customization, connectivity with non-Apple devices or advanced camera and display features often choose Samsung. Samsung's multi-tiered approach gives the company versatility and resilience. While Apple focuses on customer loyalty and premium margins, Samsung covers both the high-end and mid-range segments. Foldables and advanced mid-range devices are particularly popular in the tech-savvy cities of Europe, where buyers like to experiment with features and form factors. In short, Samsung's European approach is broad rather than exclusive - covering premium aspirations, mainstream demand, and everything in between. This ensures that the brand has a strong presence across all consumer segments, from students seeking reliable mid-range phones to professionals looking for innovative flagships. Other brands in Europe While Apple and Samsung dominate the European smartphone landscape, other brands are quietly reshaping the market. Chinese manufacturers, including Xiaomi, HONOR, realme, OPPO and OnePlus, have been steadily gaining ground, especially in the mid-range segment where value for money is most important. Some of these brands are even making inroads into the premium segment, experimenting with foldable devices and advanced camera features, trying to establish themselves as credible alternatives to the established giants. Their approach is a balanced mix of aggressive pricing to attract first-time buyers and selective launches at the high end to build prestige and brand awareness [8][1]. In the meantime, smaller vendors continue to carve out their niches. Google's Pixel phones, for example, appeal to consumers who value a clean Android experience, consistent software updates, and high-quality cameras. Motorola and Sony have a smaller but loyal following, often among buyers who value reliable hardware at a fair price. In Eastern Europe and emerging markets, brands such as Transsion have started to offer very affordable devices tailored to specific regional needs, further increasing consumer choice. These players are making the European smartphone market increasingly dynamic, offering consumers more choice - from advanced cameras to flexible Android software and competitive pricing. While Apple and Samsung continue to dominate the premium and mass market segments, other brands are steadily changing the perception of what a European smartphone can offer.  Source: Shutterstock/ICXd Thailand,Bangkok - August 27, Collection of popular mobile phone logo apple, huawei, samsung, nokia, realme, oneplus, lenovo, lava, sony, LG, Xiaomi, Motorola,oppo, vivo, ZTE Global problems with tariffs on smartphones The smartphone world is not just about innovation, but also about politics. In 2024-25, tariffs on Chinese goods made headlines. The US threatened to impose high tariffs on electronics, which could have driven up the prices of smartphones and laptops. Industry lobbying softened the blow: key categories such as smartphones were exempted from the strictest reciprocal tariffs, which could have mitigated a massive price shock, although uncertainty in global supply chains remains a major problem [9][10]. Europe, on the other hand, has avoided blunt tariffs on smartphones. Instead, manufacturers are navigating regulatory changes - eco-design requirements, repair standards, and trade barriers - that subtly increase costs. The result is less dramatic headlines, but no less tension for OEMs who are closely watching trade measures between the U.S. and China as they affect sourcing and assembly globally. Companies like Apple and Samsung are hedging against this uncertainty by diversifying their production. Apple has ramped up iPhone assembly in India, while other brands are spreading their production to Vietnam, Malaysia, and other countries. Impending tariffs and changing regulations may affect lead times and profit margins, even if European consumers are not yet feeling the direct impact [10]. Slower economic growth makes mid-price alternatives and competitive Chinese brands more attractive. Flagship smartphones, which often cost more than €1,500, raise the question of whether ultra-premium devices still fit into everyday life in times of rising living costs. Consumer preferences in Europe European smartphone buyers are not a monolith. Broadly speaking, the market is split into two camps. Premium buyers value ecosystem integration, software updates and build quality and opt for Apple and Samsung. Value-conscious buyers focus on value for money and are increasingly opting for brands such as Xiaomi, realme and HONOR. Financing options, carrier subsidies and trade-in programs often influence when and how customers upgrade [11]. Trust and perception also play a role - especially in Germany. Privacy concerns and political sentiment towards China weigh heavily. German consumers, both individuals and businesses, are wary of Chinese-made devices in sensitive areas, giving Apple and Samsung an advantage when it comes to security and brand awareness [12].  Source: Shutterstock/Anatoliy Cherkas Customer comparing various mobile phones in a tech store, selecting the ideal device tailored to her unique needs and preferences The upgrade rhythms differ depending on the ecosystem. iPhone owners show strong loyalty, while Android buyers - especially in mid-range segments - switch brands more frequently due to better features or price. This behavior explains the rapid growth of Chinese OEMs and mid-range models and illustrates how ecosystem and satisfaction lead to repeat purchases [13]. In short, European consumers weigh price, performance, ecosystem, and trust - factors that vary depending on whether the buyer is a premium enthusiast or a value seeker. This nuanced behavior influences how brands position devices, launch models and plan for long-term growth on the continent. iPhone 17 vs Galaxy S25 — Tech Comparison   Source: Shutterstock/Sashkin Modern lens of smartphone double camera structure. New features for a smartphone camera concept. 3d illustration Observations: Where Each Excels & Trade-Offs • Cameras: Samsung (especially Ultra) wins on sheer versatility (more lenses, higher MP, better telephoto) and possibly low-light/detail thanks to sensor size and AI noise reduction. iPhone 17 shines in video consistency, processing, and front-facing “Center Stage” improvements. • Display & Brightness: Both are strong; iPhone probably edges ahead in outdoor brightness/visibility with peak luminance claims; Samsung wins in display size options (Ultra, plus), scaling, and maybe smoother animations thanks to their hardware + adaptive refresh tech. • Battery & Charging: Samsung has larger batteries in its high-end models; iPhone balances good battery with durability and efficient hardware. Charging speeds might favor Samsung in some markets, but Apple now supports faster wired/wireless + MagSafe maintained. • Hardware / Performance: Samsung’s chipset leap shows up in raw power + AI task support. Apple’s A19 is very efficient, tightly integrated, often delivering real performance with lower power draw. Apple also tends to offer longer software support. • AI & OS: Samsung pushes more aggressively into “AI companion” territory, making more tasks on-device that used to require cloud. iPhone focuses on privacy, on-device intelligence, camera/AI tools, and a more closed ecosystem. Preference depends on how much a user values customization versus privacy and integration.What about European brands? In Europe, there are no longer many smartphone manufacturers that cover the entire spectrum. Most local activities focus on software, components, or niche manufacturers such as Fairphone, which emphasize sustainability, modular design and repairability. These brands appeal to consumers for whom ethics and environmental responsibility are more important than innovative technical specifications. Even large corporations such as VW and BMW are only tentatively dabbling in this area and have yet to launch devices for the mass market. The reality is that global giants such as Apple, Samsung and increasingly aggressive Chinese OEMs dominate the European smartphone market, while domestic brands occupy specialized niches [14]. Market outlook In the short term - i.e., over the next 12 months - smartphone shipments in Europe could stagnate or decline due to economic restraint, the rising cost of living and stricter EU eco-design regulations. The premium segment remains resilient: Apple, high-end Samsung models and top Chinese devices continue to appeal to buyers seeking quality, design, and ecosystem benefits. Chinese brands are steadily gaining traction in the mid-price segment, especially in markets that are less sensitive to country-of-origin concerns [2]. Looking ahead to the next 24 months, several forces will change the landscape. Supply chains will diversify, with more assembly in India and Southeast Asia reducing dependence on China. Competition will intensify with AI features, voice assistants, and foldable devices as brands differentiate beyond hardware. Regulatory pressure on repairability, durability and sustainability could increase prices or shift the perception of value towards software and services. Apple's service ecosystem could gain traction, while Samsung's breadth and Chinese OEMs' aggressive pricing ensure a dynamic market for European consumers [15].  Source: Shutterstock/Sayan Puangkham Timeline to 2026 – Business Growth and Future Strategy, A futuristic business timeline concept moving from 2020 to 2026. A hand points toward the glowing year 2026. Sources:[1] StatCounter, Mobile Vendor Market Share Europe, Aug 2025 https://gs.statcounter.com/vendor-market-share/mobile/europe [2] Canalys, Europe smartphone shipments Q2 2025 https://canalys.com/newsroom/europe-smartphone-market-q2-2025 [3] StatCounter, iOS share Germany 2025https://gs.statcounter.com/os-market-share/mobile/germany [4] CIRP, iPhone loyalty and resale value 2024–25https://appleworld.today/2025/08/cirp-apple-loyalty-depends-on-carrier-loyalty/ [5] TechRadar/Macworld, iPhone 17 launch coverage, Sept 2025https://www.techradar.com/news/new-apple-event [6] Reuters, Apple expands India assembly, 2025 https://www.reuters.com/world/china/apple-aims-source-all-us-iphones-india-pivot-away-china-ft-reports-2025-04-25[7] SamMobile, Samsung mid-range phones success in Europe, https://www.sammobile.com/news/guess-which-samsung-mid-range-phone-is-a-massive-hit-in-europe/8] Financial Times, Chinese smartphone brands target Europe with mid-range and premium launches, 2025, https://www.ft.com/content/a982abf2-9564-4a8c-b8df-9e614ecd2151[9] Reuters, U.S. exempts key electronics from severe tariffs after industry lobbying, 2025, https://www.reuters.com/technology/us-exempts-electronics-tariffs-2025-06-15 [10] Avalara, Global tariff landscape and smartphone supply chain impact, 2025, https://www.avalara.com/blog/en/2025/05/global-tariff-impact-smartphones.html[11] Financial Times, European consumers split between premium and value smartphones, 2025, https://www.ft.com/content/consumer-smartphone-trends-europe-2025 [12] Emerald Insight, Country of origin and consumer electronics perception in Europe, 2024, https://www.emerald.com/insight/content/doi/10.1108/XXXXX/full/html [13] Backlinko, iOS vs Android loyalty in European smartphone users, 2025, https://backlinko.com/ios-android-loyalty[14] Patently Apple, European smartphone brands and market presence, 2025, https://www.patentlyapple.com/patently-apple/2025/02/european-smartphone-brands.html [15] Reuters, Smartphone industry outlook: supply chains, AI, and regulatory pressure, 2025, https://www.reuters.com/technology/smartphone-outlook-2025

Energy & Economics
Soon Saudi Women Driving Car, May 2018 From Inside Jeddah Motor Show.

Saudi women right to drive: statistics and economic impact

by World & New World Journal

Saudi Arabia had long banned women from driving, but now women can obtain driver’s licenses and drive. With this new change, Saudi women’s mobility and economic activities may expand. How are Saudi women reacting, and what are neighboring countries’ responses? Women’s fight By the mid-20th century, Saudi Arabia underwent a deep transformation, fueled by oil revenues. In consequence, new ministries and agencies emerged to manage economic development, while a new technocratic elite began to form, who later clashed with the conservative Wahhabi establishment. Strikes and nationalist movements exposed social inequalities, leading the monarchy to tighten control throughout the country. This period of modernization was thus marked by both progress and restrictions, such as the 1957 ban on women driving. [1] As the driving ban kept active, between 1990 and 2017 many different protests (groups of women driving), campaigns (“Teach me how to drive so I can protect myself” or #Women2Drive [2]) and movements against the driving ban surged. Important figures like Wajeha al-Huwaider [3], Loujain al-Hathloul [4] or Manal al-Shariff [5] (among others) defied the female driving ban in Saudi Arabia and by 2018, after many obstacles, their struggle culminated in victory. Announced by the end of 2017 and taking effect on June 24th, 2018, [6] the ban was lifted, and women were able to apply and issue driving licenses and drive in public. The move was part of the measures taken by the young Crown Prince Mohammed bin Salman in line with his vision and policy towards an economic and social change in the Kingdom. Statistics and impact of the measure The lift of the driving ban for women exceeded by far expectations, Saudi authorities were expecting about 2,000 women to have received licenses by the time the ban was lifted [7], but in just the first seven months, as many as 40,000 women issued driving licenses, according to Saudi Arabia traffic department. [8]. Then, according to a report from the General Authority for Statistics (GASTAT), after 19 months the numbers increased to 174,624. The report showed that 90% of the total driving licenses issued for Saudi women concentrated in Riyadh, Makkah and the Eastern Province [9]. PwC projected 3 million women would become new drivers in the Kingdom by 2020. (PwC, 2018) I Figure 1: Women’s driving licenses: expectation vs actuals One year after women were first allowed to drive, the She Drives KSA national research project surveyed nearly 30,000 people across Saudi Arabia in 2019. [10] Its aim was to understand the effects on households, travel behavior, sustainable development, and traffic safety. The main findings of this research are the next ones: Households and cars: The number of households with at least one licensed female driver jumped from 22% before the reform to nearly 64% after. Around one in four households bought a new car, and demand for parking — especially on-street — increased noticeably.  Figure 2: Households with license female driver Private drivers: Reliance on private chauffeurs fell sharply, from almost half of households (46%) to just over a quarter (27%). Most families linked this change directly to women driving themselves. Among those who still employ drivers, the majority are non-Saudis, mainly from India.  Figure 3: Reliance on private chauffeurs before and after the ban lift. Women and licenses: Nearly two-thirds of women surveyed now hold a license, though training often involves long waiting times. For many, the change has had real economic impact: about 16% reported a shift in their employment status, and more than 64% said their income had increased since they began driving. Training typically costs between 2,000 and 3,000 SAR.  Figure 4: Economic outcomes reported by women She Drives KSA. Travel behavior: Patterns of daily mobility have shifted. Far fewer women now ride as passengers in family cars, while many have taken the wheel themselves. Use of ride-hailing services has fallen by almost 17%. Women mainly drive to work, education, entertainment, and errands. Nearly three-quarters of licensed women drive frequently, and many also escort siblings, children, or parents. Most describe driving as making them feel more independent, confident, and proud. Car preferences: Most women with a license plan to buy their own car, with a clear preference for new vehicles. Safety, price, stability, and fuel efficiency are the most important criteria, while affordability remains the biggest obstacle. Attitudes: Men and women alike view women driving positively, though women are more likely to link it to empowerment and higher income. The majority in both groups reject the idea that women drivers add to pollution. Traffic safety: Women express greater confidence about safety than men. More than 70% disagree that women driving leads to more accidents. About 15% of female drivers reported having been in an accident, but almost all were minor, with no fatalities. Supportive policies: There is strong backing for measures to ease the transition, including more women’s driving schools, lower training costs, and better roads and parking facilities. Almost 90% of women, and around three-quarters of men, want training costs reduced.  Figure 5: Policy support: reduce women’s driving training costs. In simple words, after one year, women driving in Saudi Arabia has reduced reliance on private drivers, boosted car purchases, and contributed to women’s economic empowerment. While men are slightly more cautious on safety, the overall societal impact is viewed positively, and this positive impact seems to continue in the future. Economic transformation, opportunities and challenges for the Kingdom In economic terms the move was a step towards Crown Prince Mohammed bin Salman’s Saudi Vision 2030. In addition to a social openness of the Saudi society and the diversification of the Saudi economy away from oil. According to the Euro Group Consulting [11] the decision to lift the ban will have profound immediate and long-term effects on women’s mobility, independence and economic participation in the Kingdom. (Following the mentioned She Drives KSA report, the first results are already visible). In addition to a small and meaningful achievement in women’s rights and gender equality, letting women drive can be translated into an increase in the economic participation and the increase of the female workforce, which the Kingdom was expecting to increase from 22% to 30%. The target was achieved and exceeded earlier than expected, being 36% by 2021. [12] Economic inclusion has created new job opportunities in sales, marketing, field services, transportation, logistics, while also driving new businesses. This shift has been a cornerstone of the cultural and social transformation the Kingdom seeks to implement. (Euro Group Consulting, n.d) Recalling the PwC report [13], adding 3 million new female drivers creates immediate opportunities in several specific sectors. The demand for driving licenses and schools rose sharply, specifically those targeting women. Car sales were expected to increase, with a projected annual growth of 9% for 2025, compared to the previous 3%. The used car market and the car leasing are forecast to grow too. And motor insurance was also expected to expand to SAR 30 billion by 2020. Car manufacturers like Toyota and General Motors (Chevrolet and GMC brands), for example, found the move beneficial, as they implemented strategies to increase their sales as a “new niche” was born, but not only that, the sector became also an opportunity for the creation of new jobs. In addition, a Bloomberg Economics report indicated that the lift of the ban could add up $90 billion to Saudi Arabia by 2030. [14] The opportunities, however, are not for big companies only, women have seen an opportunity in terms of entrepreneurship, for example in women-only ride-hailing services or the case of Reema Juffali, who became the first Saudi woman racing driver, the first Saudi woman to hold a racing license and also the first Saudi woman to win an international motor race. Reema nowadays competes in the International GT Open with her own Saudi team, Theeba Motorsport [15] Women on the roads would impact social behavior, habits and patterns, especially in the consumer and leisure side. On the other hand, there are challenges for the longer-term, the obvious one is a better infrastructure, including roads, intersections and parking spaces. But also, in the economic spectrum challenges would appear. For example, insurance companies might increase their costs, due the uncertainty and lack of data related to women drivers and their behavior, while the car leasing market might be affected too. Countries reactions Internally the lift of the ban was welcomed and celebrated, the historical fight had achieved a great victory for the women. But the international community also reacted to the new measure. Donald Trump said it was a “positive step” towards promoting women’s rights. [16] On the same line Antonio Guterres posted a similar message in X. [17] OHCHR and UN experts “warmly welcome this historic development” [18] and went farer by stressing the need for a full gender equality in the Kingdom Amnesty International also welcomed the move and called for an end to all forms of discrimination against women [19]. International media highlighted the development and saw it as a potentially transformative reform, while others also questioned whether it was symbolic or really part of a deeper change. [20] Other institutions, like the International Bar Association or the Baker Institute pointed out the importance of the move toward greater freedom [21] as well as the consequences and impacts on transportation, labor market, health effects, etc., respectively. [22] Regional media reactions highlighted the reform and its importance in a conservative Muslim society. They showed relief and encouragement, as women in most of the countries in the region, like the UAE, Bahrain, Kuwait or Jordan, could drive freely. [23] On the other hand, some religious scholars and clerics within Saudi and the region showed a more cautious line. (Middle East Policy Council). Final notes Overall, the decision to allow women to drive in Saudi Arabia is a big win for the women. At the same time, it has already created and impacted positively in terms of society and economy, especially in the automotive and labor sector. If the government can capture and get the best from this shift, including investment in infrastructure, regulatory adaptation and development of new services to meet the needs of women drivers and drivers in general, the Kingdom would enter a better era with a promising future. While data and the future look promising for the Kingdom, reactions internationally – while welcoming the move – also pointed to important topics to be improved and to put effort on them as soon as possible. The road ahead might not be that easy, even Saudi is trying to transform its image internationally, internally and due its ideology and foundation basis, challenges would be tough to achieve. References [1] Commins, D. (2006). The Wahhabi Mission and Saudi Arabia. New York: I. B. Tauris[2] RTBF, R. (2011, May 23). Histoire du monde: le droit de conduire. Retrieved from RTBF Actus. https://www.rtbf.be/info/emissions/article_histoire-du-monde-le-droit-de-conduire?id=6150133[3] BBC News. (2008, March 11). Saudi women make video protest. Retrieved from BBC News: http://news.bbc.co.uk/2/hi/middle_east/7159077.stm[4] Noman, M. (2014, December 03). #BBCtrending: Saudi woman driving blog ‘arrest’. Retrieved from BBC News: https://www.bbc.com/news/blogs-trending-30316837[5] Independent. (2012, February 05). Saudi women in drive ban legal bid. Retrieved from Independent: https://www.independent.co.uk/news/world/asia/saudi-women-in-drive-ban-legal-bid-6483456.html[6] ECDHR. (n.d.). What progress has been achieved for Saudi woman drivers? Retrieved from ECDHR: https://www.ecdhr.org/what-progress-has-been-achieved-for-saudi-women-drivers/[7] BBC. (2018, June 24). Saudi Arabia’s ban on women driving officially ends. Retrieved from BBC: https://www.bbc.com/news/world-middle-east-44576795[8] Matt, M. (2019, June 25). The journey to nowhere: Little hope for Saudi women since driving ban was lifted. Retrieved from abc News: https://abcnews.go.com/International/journey-hope-saudi-women-driving-ban-lifted/story?id=63667888[9] Saudi Gazette. (2020, March 08). Over 174,000 women driving licenses issued in 19 months. Retrieved from Saudi Gazette: https://saudigazette.com.sa/article/590574#:~:text=RIYADH%20%E2%80%94%20Ever%20since%20they%20were,the%20national%20and%20international%20levels[10] Kamargianni, N. B.–G. (2020). Impact of women driving cars on the sustainable development and traffic safety in the Kingdom of Saudi Arabia - Phase 2 Survey Results.[11] Euro Group Consulting. (n.d.). The road to change: Women driving and economic participation in Saudi Arabia. Retrieved from Euro Group Consulting: https://eurogroupconsultingmea.com/the-road-to-change-women-driving-and-economic-participation-in-saudi-arabia/[12] Arab News. (2022, March 09). Saudi Arabia hits female labor force target almost 10 years early: Uber report. Retrieved from Arab News: https://arab.news/y5qum[13] PwC. (2018). Women driving the transformation of the KSA automotive market. PwC.[14] Pittaway, A. (2022, March 30). Four years of women drivers in Saudi, what has changed? Retrieved from Global Fleet: https://www.globalfleet.com/en/taxation-and-legislation/global/features/four-years-women-drivers-saudi-what-has-changed?a=API07&t%5B0%5D=Global%20Fleet%20Conference&curl=1[15] Theeba Motorsport. (2025). Reema Juffali (driver profile). Retrieved from Theeba Motorsport: https://www.theebamotorsport.com/drivers/reema-juffali[16] BBC. (2017, September 27). Saudi Arabia driving ban on women to be liftedRetrieved from BBC: https://www.bbc.com/news/world-middle-east-41408195[17] Guterres, A. (2017, September 27). X. Retrieved from @antonioguterres: https://x.com/antonioguterres/status/912831976083771392[18] Office of the High Commissioner. (2017, September 28). End of Saudi driving ban for women should be just the first step - UN Experts. Press release. Retrieved from https://www.ohchr.org/en/press-releases/2017/09/end-saudi-driving-ban-women-should-be-just-first-step-un-experts[19] Amnesty International. (2018, May 25). The driving ban and women’s rights in Saudi Arabia. Retrieved from Amnesty International: https://www.amnesty.org/en/latest/news/2018/05/the-driving-ban-and-rights-in-saudi-arabia/[20] Baker, A. (2018, June 28). Is the end of Saudi Arabia’s driving ban a rebrand or a revolution? Retrieved from Time: https://time.com/5324404/saudi-arabia-driving-ban-rebrand-or-revolution/[21] Kaur, C. (2018, June). Saudi Arabia lifts ban on driving for women after lengthy campaign. Retrieved from International Bar Association: https://www.ibanet.org/article/c8d82237-545d-4fca-ad14-3e56add4734b[22] Krane, J., & Farhan, M. (2018, June 13). Women driving in Saudi Arabia: Ban Lifted, what are the economic and health effects? Retrieved from Baker Institute for Public Policy: https://www.bakerinstitute.org/research/impact-lifting-saudi-arabias-ban-women-drivers[23] Middle East Policy. (n.d.). Saudi Arabia Debates Right of Women to Drive. Retrieved from Middle East Policy Council: https://mepc.org/commentaries/saudi-arabia-debates-right-women-drive/

Energy & Economics
Stuttgart, Germany - 10-01-2022: Person holding cellphone with logo of Saudi Arabian property developer NEOM Company on screen in front of webpage. Focus on phone display. Unmodified photo.

Neom: economic perspectives and its mobility pillar

by World & New World Journal

Saudi Vision 2030 First announced on April 25th, 2016, by Deputy Crown Prince Mohammed bin Salman, the Saudi Vision 2030 became the roadmap and goals the Saudi government was expecting to achieve within the next 15 years. The Saudi Vision 2030 is a wide government program which aims to achieve and increase an economic diversification, including also a social and cultural transformation, all in line with Crown Prince Mohammed bin Salman’s vision of Saudi Arabia for the future. Presented as an “ambitious yet achievable blueprint” the Saudi Vision 2030 is based on three pillars: 1) The first one is to make Saudi Arabia the “heart of the Arab and Islamic worlds”; 2) Become a global investment powerhouse and 3) transform the Kingdom into a global hub connecting Asia, Europe and Africa. Moreover, Saudi Vision 2030 is centered in three specific themes, which includes specific objectives and goals to be achieved by 2030: 1) A vibrant society: focus on society - citizens and residents – by prioritizing physical, psychological and social wellbeing in order to create a society that can enjoy a high quality of life, a healthy lifestyle and an attractive living environment. 2) A thriving economy: create an environment that supports economic growth and job creation for Saudis, focusing on young, skilled and talented people, but also attracting the best global talents. The Kingdom is aiming to become a leading and competitive global economy, open to business and investments, and looking for innovations, diversifications and ensuring sustainability. 3) An ambitious nation: No matter the role – citizens, businesses, non-profit organizations - everyone contributes to the development of Saudi Arabia. This should be complemented with an effectively governed country. After 10 years from its inauguration, Saudi Vision 2030 has already been working on different projects and initiatives. Including tourism, heritage, medical, sports, cultural, environmental, energy and business, among other key projects, the Saudi Vision 2030 therefore has become a unique and ambitious long-term project for the Kingdom. NEOM A highlight from the Saudi Vision 2030 is NEOM, a futuristic and planned region located in the northwest part of the country, next to the Red Sea, which aims to be powered fully by renewable energy and led by the Public Investment Fund. The area considered for NEOM is 26,500 km2 and it includes industrial complexes, floating ports and a global trade hub (Oxagon), sustainable tourist and luxury resorts (Magna, Trojena and Sindalah) and a futuristic linear city (The Line), among others… Overall it is “gigaproject”, itself.  Figure 1: Map of NEOM region and its subprojects. Source: Encyclopædia Britannica, Inc./Refugio Mariscal. https://www.britannica.com/place/Neom#/media/1/2270136/340484 NEOM pillars In line with the Saudi Vision 2030, NEOM also has defined 15 sectors as their pillars: biotech, design & construction, education and R&D, energy, entertainment & culture, financial services, food, health & well-being, manufacturing, media, mobility, sports, technology & digital, tourism and water. Mobility Focusing only on the mobility pillar, NEOM seeks to lead in innovation and integration of autonomous solutions in the mobility area, while creating smart and sustainable solutions (powered by renewable energy) to connect and provide a multi-modal regional mobility system. The proposed mobility system is important as it would be the link between people and the services provided in the region. Moreover, as a futuristic and smart project, it seeks to change the traditional car-centered approach into a shared, on-demand, intelligent and active approach, in which short walks, the use of bicycles, as well as shared and on-demand multi-modal public transportations would be prioritized, increasing health and people’s wellbeing. In addition, the Kingdom has used this opportunity to help it fight against climate change and global warming and achieve its 2030 and 2050 goals of reducing emission by 45% and reaching net zero emissions, respectively. Somehow mentioned already, the proposals and challenges include the promotion of low-carbon transport systems, green spaces and resilient infrastructure integrated into a seamless environment. Going a bit more in detail, the mobility plan in NEOM focuses on 6 main areas: rail mobility, urban mobility, roads and infrastructure, advanced air mobility, water mobility and digital mobility. Smart transportation systems and investments To manage the urban and intercity transportation efficiently and sustainably, NEOM is investing heavily in smart logistics, automation, and zero-emission mobility. Modern transport vehicles, integrated rail systems, and innovative water and air mobility solutions are central to this vision. Land Transportation and Logistics Autonomous Transfer Vehicles (ATVs) These are designed for high-capacity horizontal transport in large construction sites, warehouses, and port terminals. They reduce operator requirements with autonomous navigation supported by laser and ultrasonic sensors; they are managed centrally through remote control and fleet management software. With customizable dimensions, ATVs, save time, reduce costs, and integrate logistics data. Straddle Carrier Systems Used mainly in port terminals and storage areas (NEOM’s port area), these carries handle containers and heavy loads of 5 to 100 tons. They reach speeds of up to 80 m/min, have 360° turning capability, and operate with lithium batteries, optimizing high-frequency logistics operations. Electric Town Tractors and Platform Trucks Electric town tractors provide a silent, emission-free and cost-effective solution for NEOM’s urban logistics, with fast-charging technology, long range and a modular design. In addition, electric platform trucks support high-capacity internal logistics solutions in NEOM’s factories, construction sites and warehouses. Electric Cars and EV Industry Ceer, the first Saudi electric vehicle brand, will design, manufacture and sell sedans and SUVs, with a target market focus on the Kingdom and in the MENA region. In addition, companies like Lucid Group Inc. (focused on long-range and fast-charging electric cars) is building a factory with an expected peak production of 155,000 vehicles per year, encouraging, along with Ceer, to shift towards the EV, while promoting the development of EV infrastructures and zero-emissions environments. Companies like REDEX also support this shift by developing systems to monitor energy, EV integration, and green hydrogen production data. Shared and micro mobility Motorcycles, scooters and bicycles are gaining popularity in the Kingdom and companies like UAE-based Udrive has seen a potential market and has launched projects for shared mobility and vehicles rentals, aiming to grow this sector further in the Kingdom. Public Transport and Buses Following a 2024 MoU with Hyundai Motors, NEOM tested the Hyundai Universe Fuel Cell Bus in Trojena as a VIP service. This hydrogen-powered bus marks a milestone for zero-emission mobility. Supporting infrastructure is growing, with Enowa (NEOM’s energy and water subsidiary) installing the first hydrogen refueling station in the area.  Figure 2: Hyundai’s Fuel Cell Bus Diagram. Source: Hyundai UNIVERSE Fuel Cell. https://ecv.hyundai.com/global/en/products/universe-fuel-cell-fcev Rail Transportation SYSTRA has led NEOM’s integrated electric rail project since 2021, conducting feasibility studies, technology benchmark and pre-design. The system includes: - The Spine: a $1.5 billion, 75 km backbone with high-speed, metro and freight lines. It features 14 viaducts, 7 roads, 9 overpasses, and 152 culverts, connecting The Line, Nea, City Station, Neom Bay Mansions, Neom Bay Airport, and Oxagon. It is designed to minimize environmental impact and connect the region. - Industrial City Connector: metro and freight lines serving NEOM’s industrial zone. - Tourism: a funicular line in the touristic mountainous area. Future solutions like the Hyperloop are also under consideration.  Figure 3: Oxagon’s development area. Source: NEOM. https://www.neom.com/en-us/regions/oxagon Water Transportation System IDOM is designing a sustainable waterborne transportation system along NEOM’s 650 km of coastline and islands. This system will ensure safe, high-quality, and accessible services for all users. Additionally, REGENT plans to establish a regional R&D and training hub in NEOM to develop its flagship electric Seaglider vessel for passenger transport, tourism, and other uses.  Figure 4: REGENT Seaglider. Source: Regent. https://www.regentcraft.com/seagliders/viceroy Air Mobility NEOM is partnering with Volocopter (investment of 175 million EUR) to develop eVTOL air taxis and emergency response vehicles. An initial fleet of 15 aircraft has been launched, with testing of an unmanned traffic management (UTM) system underway. Future plans include connecting NEOM cities with eVTOLs.  Figure 5: Volocopeter VoloCity (prototype). Source: Electric VTOL News / Volocopter. https://evtol.news/volocopter-volocity/ Principles and Green Infrastructure Across all modes, NEOM emphasizes on-demand and connected services, active and micro mobility, electric and zero-emission vehicles powered by renewable energy, and autonomous public transport. Green infrastructure initiatives include over 160 EV charging points, mobile solar charging, systems, and shared EV and micromobility program, as well as the mentioned hydrogen station. NEOM is collaborating with Pony.ai to develop autonomous vehicles and introduce the first robotaxis in Saudi Arabia, supported by a $100 million investment. Oxagon, Trojena and The Line Subprojects Oxagon, Trojena and The Line are part of NEOM, and they will rely on, promote and develop certain mobility strategies according to their proper characteristics, these are as follow: - Oxagon: it is a purpose-built coastal city, located on the Red Sea. It aims to become a hub that works under a circular economy with efficient, sustainable and profitable gains, the port city will rely on embedded robotics, automatization, AI and IoT. Due to its characteristics, therefore, the city transportation links must ensure connectivity (within and outside the city) and it will be integrating transport corridors, as well as a well designed sustainable mass transit system for the industrial area itself. - Trojena: calling to become a world-class center for winter sports and adventures Trojena is moving into the inclusion of Advanced Air Mobility, autonomous electric pods, a funicular and an urban ropeway, balancing the adventurous experience with a car-free and natural environment. - The Line: A futuristic city fueled only by renewable energy, which will prioritize people and nature, enhancing the urban living conditions and the urban sustainability. The idea behind The Line is to prioritize health and wellbeing over transportation and infrastructure. It would be home to up to 9 million people, who would live in an urban-nature environment, with ideal climate all-year-round and with 5 min-walk access to all facilities and 20 min maximum commuting times. A city without cars but connected with other systems such as a high-speed transit system, an ART (autonomous rapid transit), a PRT (premium rapid transit), shuttles, pods, bicycles, scooters and elevators.  Figure 6: The Line living and architectural concept. Countries reactions and current situation When the Saudi Vision 2030 was launched many countries reacted positively, including the UAE, Bahrain and the US, while others like China or India showed some pragmatic interest. Still, reactions could be said to be positive overall. Diversification, trade, economic alliances and opportunities, investments, cooperation, jobs creation and openness to the world seemed to be positive points. Nonetheless, there were certain concerns regardless the society and the economy of the country (specifically the financial viability for the “gigaprojects” involved) Now, after 9 years from being launched, Saudi Vision 2030 still seems a far and ambitious vision difficult to achieve, considering that 2030 is 5 years from now, yet it is possible to see that there is advance and a plan that has been paved already. At different levels, there has been an improvement, and more is coming. In recent years, the Kingdom has been in the eyes of the world due to its ambitious plans and on-site constructions have already started, it will be a matter of time to see the results. On the other hand, in terms of innovation and R&D, there has been a boost in different strategic areas, and money seems to be flowing into the Kingdom. Clear examples are shown in the mobility area where companies like REGENT, Volocopter and Pony.ai have invested huge amounts of money, have established and have worked together within the future transportation for the NEOM region and the country itself. In the same line, Ceer, the first Saudi automotive brand, is aiming to impact not only in the region but in the whole region. Conclusión NEOM’s mobility pillar is more than a transport strategy – it is a testbed for new technologies, from hydrogen buses to seagliders and eVTOLs. If successful, it will not only modernize Saudi Arabia’s infrastructure but also position the Kingdom as a global leader in sustainable and innovative mobility. Still, challenges remain: large-scale financing, infrastructure delivery, and societal adaptation. For now, we will have to wait some years until we can see radical or real changes, after all, Saudi Arabia seems to be working hard and in line with its Saudi Vision 2030. Referenceshttps://english.alarabiya.net/perspective/features/2016/04/26/Full-text-of-Saudi-Arabia-s-Vision-2030 (Consulted 11/09/2025)https://www.vision2030.gov.sa/en/explore/projects/neom (Consulted 11/09/2025)https://www.vision2030.gov.sa/en/explore/projects/the-line (Consulted 12/09/2025)https://www.volocopter.com/en (Consulted 12/09/2025)https://www.regentcraft.com/seagliders/viceroy (Consulted 12/09/2025)https://ceermotors.com/about-us/ (Consulted 12/09/2025)https://english.alarabiya.net/News/middle-east/2016/04/26/Global-reactions-to-Saudi-Vision-2030-announcement (Consulted 12/09/2025)https://boltflight.com/saudi-arabias-jaw-dropping-reputation-surge-how-vision-2030-is-transforming-the-kingdom-into-a-global-powerhouse/ (Consulted 12/09/2025)https://www.pif.gov.sa/en/our-investments/giga-projects/neom/ (Consulted 12/09/2025)https://www.fada.com.tr/en/blogs/en-the-role-of-smart-transportation-systems-in-saudi-arabia-s-neom-project/ (Consulted 19/09/2025 and 20/09/2025)https://www.idom.com/en/project/water-mobility-strategy-design-water-mobility-project-management-office-pmo-for-neom/ (Consulted 19/09/2025 and 20/09/2025)https://www.idom.com/en/new/defining-the-water-public-transport-system-of-the-future/ (Consulted 19/09/2025 and 20/09/2025)https://www.htwo.hyundai.com/en/worldwide/press-releases/article/Hyundai_Motor_Group_Pioneers_Hydrogen_Mobility_in_NEOM_to_Drive_Sustainable_Transport (Consulted 19/09/2025 and 20/09/2025)https://futuretransport-news.com/saudi-arabia-hyundai-trials-hydrogen-bus-in-neoms-mountainous-terrain/ (Consulted 19/09/2025 and 20/09/2025)https://www.constructionweeksaudi.com/news/neom-hyundai-hydrogen-bus (Consulted 19/09/2025 and 20/09/2025)https://redex.eco/news/redex-signs-mou-with-neoms-mobility-sector-to-support-its-sustainable-transport-ambitions/ (Consulted 19/09/2025 and 20/09/2025)https://www.systra.com/uk/project/neom-oxagon-creating-an-integrated-transport-system-for-a-city-of-the-future/ (Consulted 19/09/2025 and 20/09/2025)https://www.leapforward.onegiantleap.com/the-future-of-mobility-is-here/ (Consulted 19/09/2025 and 20/09/2025)https://lucidmotors.com/?ref=leapforward.onegiantleap.com (Consulted 19/09/2025 and 20/09/2025)https://www.spa.gov.sa/en/w2369040 (Consulted 19/09/2025 and 20/09/2025)https://www.urbantransportnews.com/news/unveiling-the-spine-project-a-deep-dive-into-railway-construction-tunnelling-at-neom (Consulted 19/09/2025 and 20/09/2025)

Energy & Economics
map of Latin America with purple, blue and black colors, artificial intelligence background artificial intelligence robots surrounding with hands the map of Latin America. Futuristic and three-dimensional style This content was generated by an Artificial

The crossroads of AI in the LAC region

by Carlos Arturo Covarrubias Gutiérrez

The shadow of artificial intelligence looms over the world; depending on the region, it takes the shape of a Chinese dragon or of Miss Manifest Destiny. But AI is among us, little by little taking up space, absorbing ideas without asking, constantly feeding itself in an endless cycle that, whether we accept it or not, undoubtedly consumes the Earth’s energy. While it is an ambiguous promise to affirm that the wave of AI will eventually end, the reality is that it is here, not only consuming but also spreading information that, as we know, is mostly the equivalent of junk content and misinformation — though at a scale greater than anyone would have foreseen. At the same time, it is managing to change the globalizing culture of the internet, transforming the feelings, tastes, and aversions of future generations. It is therefore imperative in these current times to think about what steps the LAC region (Latin America and the Caribbean) should or should not take in the face of the unbridled advance of AI. It is on the basis of this vital point for the future and destiny of LAC that the present reflection is made. It is crucial to delve into some of the opportunities that currently exist in the region for the development, implementation, and transformation of artificial intelligence in Latin America and the Caribbean. As we know, the region is home to enormous wealth, opportunities, and human capital — both labor and intellectual — that, if necessary, it can provide both momentum and renewal to the idea of artificial intelligence from the so-called peripheral countries, in this case, Latin America and the Caribbean. As an example, we can point to Argentina, Bolivia, and Chile (the lithium triangle) (Obaya, 2021), countries in which key raw materials such as lithium and copper give them a crucial role in the future goals of the countries where the main AI companies and corporations originate. This can bring both opportunities and future technological, economic, and social dependencies. That is why the region must learn to manage its resources to its advantage through active regional networks, with ethical and participatory governance, as well as a strong and structured digital diplomacy with a collective voice. But above all, with technological ethics combined with a rationality-based regulatory framework prepared to address humanitarian, social, environmental, and business needs in a harmonious way — also encouraging sociocultural communities to participate actively, considering the natural life cycle of the norms which could, as a likely outcome, eventually form part of a new international regulatory framework. This would be especially necessary given the shortcomings of the international community in addressing issues of constant innovation and impact. In the framework of AI’s evolution and development, this may not be too complicated due to the inherent characteristics of this technology — a technology that will end up being so embedded in daily human life that it will be difficult not to be part of it without being left behind, especially considering the undeniable commercial, social, planetary, and geopolitical relevance represented by dominance over the AI market. And this is without even mentioning the possible arrival of generative AI, which would raise even more issues and concerns. It is also significantly important to understand some of the advances and initiatives being planned or deployed in the LAC region, such as Mexico’s collaboration with Nvidia to develop a Mexican AI language (Mota, 2025). Another example is AI4D, an initiative of Canada’s IDRC, along with other foreign strategic partners (Artificial Intelligence for Development, n.d.). This initiative promotes inclusive, ethical, and human-centered AI, aiming to include itself in different regions of the Global South. Among some of the cases that demonstrate the enormous potential of this initiative are the CENIA in Chile (Centro Nacional de Investigación en Inteligencia Artificial, CENIA, n.d.) and BID Lab in LAC (BID Lab, n.d.), both of which foster comprehensive technological development in the region. While all of the above sounds like a real opportunity to foster the development of a region historically lagging in many social, economic, and technological matters, we must also document our pessimism. That is, we must keep in mind some of the key challenges that, depending on where we put the pin on the map, reveal a diversity of problems that could alter the course of many of these opportunities and initiatives. Among some of the relevant issues are corruption, political instability, technical and economic gaps in LAC—as in other regions of the Global South—criminal networks that in some cases are categorized as terrorist, and others. It is also very important to consider the potential future use of artificial intelligence as automated and systematic instruments of repression by authoritarian governments; its implementation within the criminal organizations of the region; the use of LAWS (Lethal Autonomous Weapons Systems) (Perrin, 2025); or the creation of new easily producible drugs that could cause regional destabilization. In this last regard, the events in Nepal cast a shadowy expectation of the collusion of digital platforms and the use of AI for strategic and recolonizing purposes in service of capital and platforms — without the need for the pretext of drugs or terrorism. In addition, it is important to consider the historical scars of exploitation, abuse, and oppression in the LAC region by foreign forces. Therefore, it is not only important but imperative for the interests of the region to work within a framework of equality and not subordination to the current and future interests of the companies and nations that will focus on the region, which undoubtedly possesses geostrategic strength. Thus, the international rhetoric of the nations forming part of LAC must change or transform in order to put the interests of the region first, to make the most of the wave of artificial intelligence with strategy and geopolitical thought. This is not to mention some of the challenges that as a region we will have to face, such as the fragmentation of regional institutions in LAC, the lack of coordination, and the absence of a unified regional agenda outlining the steps to be taken as a region toward AI implementation, innovation, education, and ethical use — as well as the influence of global powerbrokers, namely digital platforms, in their capacity to remove and install governments in the Global South. The challenge, as can be seen, is enormous. However, the context of the new tripolar world order fuels positive expectations for LAC’s integration in a position of strength to act with national and regional aims that benefit the majority. References Artificial Intelligence for Development. (s.f.). Ai4D.ai. Recuperado el 17 de septiembre de 2025, de https://www.ai4d.aiBID Lab. (s.f.). BID Lab. Banco Interamericano de Desarrollo. Recuperado el 17 de febrero de 2025, de https://bidlab.org/esCentro Nacional de Investigación en Inteligencia Artificial – CENIA. (s.f.). Investigación UC. Recuperado el 17 de febrero de 2025, de https://investigacion.uc.cl/centros-de-excelencia/centro-nacional-de-investigacion-en-inteligencia-artificial-ceniaMota, C. (2025, julio 31). La estrategia de Nvidia en México. El Heraldo de México. https://heraldodemexico.com.mx/opinion/2025/7/31/la-estrategia-de-nvidia-en-mexico-719056.htmlObaya, M. (2021). Una mirada estratégica sobre el triángulo del litio. Buenos Aires: Fundar.Perrin, B. (2025, enero 24). Lethal autonomous weapons systems & international law: Growing momentum towards a new international treaty. ASIL Insights, 29(1). https://www.asil.org/insights/volume/29/issue/1

Energy & Economics
At Singapore 2023 075

A Post-Humanist Perspective of Singapore's Ecomodernist Leadership

by Sasha Maher , Rhiannon Lloyd , Lydia Martin

Abstract Green growth has become doxa in the political economic governance of climate change. This is despite the lack of empirical evidence of its success and concerns that it reifies a business-as-usual dynamic. The question arises: why have practices of ‘green leadership’ maintained a hegemonic hold on how nation states respond to climate change? This provocation examines this question through an analysis of Singapore's policy ambition to become Asia's climate services leader. It draws on post-humanism to suggest that the form of ecomodernist leadership exhibited by Singapore not only perpetuates the status quo but (re)affirms the problematic anthropocentrism underpinning their approach. We demonstrate this through analysis of recent policy, media and private sector documents. Finally, we argue that a focus on Singapore matters because of its influence in the region and networked position globally. Introduction Singapore has emerged as a leader of green growth since gaining independence from Malaysia in 1965. Governed by the People's Action Party (PAP) since 1959, the city-state has pursued a developmental strategy focused on economic growth and wealth accumulation, despite its lack of natural resources. This strategy encompassed value-added manufacturing, high-tech research and financial services, propelling Singapore from a modest per capita GDP in 1965 of USD $516 to a substantial figure of USD $82,807 in 2022 (World Bank, 2022). However, this rapid development brought with it cumulative environmental challenges, including high Green House Gas (GHG) emissions, air pollution, ecosystem degradation and biodiversity loss (Goh, 2001). In response, Singapore reframed these issues as economic opportunities, effectively folding an ecomodernist or green growth approach into its development agenda (Dent, 2018; Hamilton-Hart 2006, 2022). This shift was significantly influenced by Lee Kuan Yew, Singapore's first Prime Minister, whose vision of a ‘Garden City’ involved a massive, ongoing tree-planting initiative. This initiative was not just an ecological project but a strategic move to attract foreign investment by showcasing Singapore as a modern, liveable city, thereby aligning nature conservation with economic development (Schneider-Mayerson, 2017). Building on Prime Minister Lee Kuan Yew's leadership, Singapore has continued to adopt ecomodernist policies, promoting concepts such as sustainability as essential for maintaining its competitive edge in the global arena. The state's stance on climate change illustrates this approach: initially seen as a threat and often couched as an enemy in official discourse, climate change has been transformed into an opportunity for growth. This perspective is epitomised in the annual three-day Ecosperity conference, an elite gathering emphasising the synergy between ecological sustainability and economic prosperity. However, this green growth approach has faced criticism for prioritising human needs over ecological integrity (Dent, 2018; Schneider-Mayerson, 2017; Wong, 2012), suggesting that Singapore's model of ‘green’ leadership may not be sufficient for addressing the root causes of climate change and other environmental challenges. We are similarly concerned at Singapore's leadership stance towards climate change. The latest rendition of this is its ambition to become Asia's climate finance ‘leader’ and a hub of carbon trading. Not only does Singapore's green growth approach narrowly cast complex environmental issues as technical problems requiring technical solutions but it renders nature as an object to be used for human development. This anthropocentrism negates non-human agency, instrumentalises nature and limits the radical change necessary as others have noted (Böhm and Sullivan, 2021; Ergene, Banerjee and Hoffman, 2021; Nyberg and Wright, 2023). In the following provocation, we draw on post-humanist critique of anthropocentrism to give a brief overview of green growth (Braidotti, 2013, 2019; Calás and Smircich, 2023). Second, we outline Singapore's emissions profile and latest policy response. We then surface three themes which are indicative of how Singapore's green leadership frames nature as non-agentic and subservient to humans. These themes are: ‘nature as risk producer’, ‘nature as instrument’ and ‘nature's demise as opportunity’. Anthropocentrism and Green Growth The discourse on greening capitalism emerged in the mid-2000s as initiatives by the United Nations Environmental Program, OECD and World Bank. At the Rio + 20 Conference these three organisations released publications promoting green growth with titles that evoked mutual compatibility such as Inclusive Green Growth: The Pathway to Sustainable Development and Toward a Green Economy: Pathways to Sustainable Development and Poverty Eradication. Subsequently, the United Nations Framework Convention on Climate Change enshrined green growth in the 2015 Paris Agreement in Article 10, paragraph 5, ‘Accelerating, encouraging and enabling innovation is critical for an effective, long-term global response to climate change and promoting economic growth’ (United Nations UNFCCC, 2015: 27). Since then, the prevalence of green growth ideas has accelerated and diffused globally, taken up by states supranational organisations and non-states actors. It has remained a key policy theme at influential climate governance fora. For example, at the recent Green Swan 2023 conference, keynote Sir Nicolas Stern confidently declared that ‘there's no conflict between action on climate change and economic growth. Actually, it's the opposite. Action on climate change will drive economic growth’. Omitted from Sterns's assertion is recognition of the ‘coupling’ effect whereby economic growth has also led to the exploitation of non-humans and a concomitant climate crisis. Green growth approaches view nature as the means to create economic development as measured by GDP. The key assumption is that ‘the environment’ and humans as consumers or workers (see Mildenberger 2020) will both equally benefit through this process of instrumentalisation. The method to achieve the ‘decoupling’ of emissions (or ecological destruction) from GDP is via the application of technologies, investment, markets and innovation. Implementation of these methods will ostensibly redirect capital and production towards the efficient use of resources without disrupting consumption patterns and minimising ‘harm’ to nature. Nature in this framing is characterised as both threatening to humans (‘risk producer’) and simultaneously vulnerable (‘object at risk’). In either case, human beings are presupposed as the agents who will restore the orderliness of life; an orderliness where humans are the dominating species (Ruuska, Heikkurinen and Wilen, 2020) and the state of vulnerability is erased (Schwartz, 2019). At its core green growth is founded on the notion of efficiency gains, but as others (Hickel, 2021; Hickel and Kallis, 2019; Jackson, 2021) have noted, empirically there is no evidence that relative or absolute decoupling will arrest and restore the planet nor reduce carbon emissions permanently to levels that could keep global warming below 1.5 degrees. Efficiency has limitations and at some point, input is required to continue to grow which makes ongoing decoupling in the long-term unsustainable. This calls for an urgent rethinking of policy and the opening up of alternative possibilities such as degrowth or post-growth (Jackson, 2021). However, shifting the paradigm away from wealth accumulation and material prosperity would alter production and consumption patterns. As Hickel and Kallis (2019) remark, this type of transformation would not be politically expedient: ‘The assumption is that it is not politically acceptable to question economic growth and that no nation would voluntary limit growth in the name of the climate or environment; therefore, green growth must be true, since the alternative is disaster’ (2019: 484). Green growth may not only be implausible but it also dangerously reifies dualistic thought-structures that universalises and positions humankind as the privileged, superior species, a tendency which has underpinned the exploitative and extractive relationship between humans and nature that has driven climate change. It also ferments a ‘politics of resignation’ in which citizens tacitly accept harmful externalities (Benson and Kirsch, 2010). In line with post-humanist thought, we perceive nature through a relational lens. From this perspective, ‘nature’ is not a separate entity that exists apart from and below ‘culture’ (e.g., humans, organisations and nation states). Rather nature is understood to be a dynamic, open-ended and interactive ‘living system’ that encompasses all forms of life and matter (Braidotti, 2016). This relational framing of nature is positive in that it attributes agency and vitality to all life and not exclusively to humans and their doings (Braidotti, 2013). In short, more-than-human natures such as the ‘natural environment or ‘atmosphere’ are not tractable or deadened backgrounds for human action but are creative forces that shape life, including our own. In taking this ontological position, post-humanism surfaces and critiques anthropocentric assumptions evident in culture and society (Braidotti, 2013), providing a unique standpoint from which to deconstruct and challenge green growth. Singapore the Green City-StateEmissions Profile Singapore's GHG emissions for 2021 totalled 53 MtCO2e (National Climate Change Secretariat, 2021). In 2000, emissions were 38 MtCO2e and continues to increase over time. These emissions cover direct or primary emissions (Scope 1, 2): energy (39.2%), industry (44.4%), transport (14.2%), building (0.9%), households (0.4%), waste and water (0.6%) and others (0.2%). Secondary or indirect emissions (Scope 3) created within the energy sector from Liquid Natural Gas (LNG) at 94% are mostly in industry (16.6%), buildings (12.6%), household (6.6%) and transport (2.2%). Industry emissions amount to over 60% of Singapore's total emissions of which 75% are from the combustion of fossil fuels by the refining and petrochemicals sector (Tan, 2019). Singapore ranks 27th out of 142 countries in terms of emissions per capita but excluded from official statistics are the emissions from bunkering/marine fuels sales which was 148 MtCO2e in 2020 (The International Council of Clean Transportation, 2022). The rationale for the exclusion is that the UNFCC does not require GHG inventories to include emissions from shipping nor aviation. In 2021 Singapore set a new National Determined Commitment target of limiting GHG emissions in 2030 to 60 MtCO2e from 65 MtCO2e. It also brought forward its emission peak year to sometime ‘before 2030’ and confirmed its target to reach net zero emissions ‘as soon as viable in the second half of the century’ (National Climate Change Secretariat, 2022). Singapore's main mitigation actions were outlined in its long-term low-emission development strategy. These comprise three areas: (a) to transform industry, economy and society; (b) to draw on carbon capture, utilisation and storage and low-carbon fuels; and (c) international collaboration to build carbon markets, carbon storage and regional electricity grids. A key policy lever is Singapore's progressive carbon tax rate which covers 43% of emissions according to Climate Action Tracker (2022). The rate was increased from $5 SGD/tCO2e in 2019 to $25/tCO2e in 2024 and will reach $50–80/tCO2e by 2030. Carbon tax-liable companies are permitted to use carbon credits to offset up to 5% of emissions. However, these credits can only be obtained via the Singapore government's International Carbon Credit Framework under Article 6.2 of the Paris Agreement and not the voluntary carbon market. The tax works on multiple fronts: it drives demand to create a carbon market, derisks companies to increase investor confidence and incentivises decarbonisation efforts in Singapore and in credit producing host countries. Singapore's other mitigation efforts consist of energy efficiency and resource optimisation across industry, households, buildings, waste management and public transport. Green Finance Leader Singapore is positioning itself as Asia's hub for carbon trading. The government outlines this in its most recent master plan for addressing climate change: Singapore Green Plan 2030 (SGP). Launched in 2020, SGP 2030 aims to centre the city-state as a regional ‘leader’ in climate action and sustainable development, aligning with global commitments such as the UN's 2030 Agenda and the Paris Agreement. The plan represents a collective effort across five key ministries, guided by the Inter-Ministerial Committee on Climate Change. It focuses on five pillars: City in Nature, Sustainable Living, Energy Reset, Green Economy and Resilient Future, striving for efficient resource use, low-carbon energy adoption and innovation-driven change. Key initiatives include enhancing green spaces, promoting water conservation, expanding clean public transport and mandating clean energy vehicles by 2030. The Green Economy pillar of the SGP is particularly significant, framing environmental challenges as opportunities for economic growth. This involves incentivising carbon capture technologies and establishing Singapore as a carbon services and trading hub through the Green Finance Action Plan 2022 (Monetary Authority of Singapore, 2022). The plan aims to create a robust green financial ecosystem, making Singapore a global centre for green finance. This includes developing markets for sustainable economic solutions, such as green bonds and insurance products. A study commissioned by the government in 2021 highlighted Singapore's potential to become a carbon trading hub, estimating its value between USD 1.8 billion to USD 5.6 billion by 2050 (Carvalho et al., 2021). As part of its green leadership plan Singapore is also entering into strategic partnerships under Article 6.2 with ‘carbon-rich’, developing countries. It has signed agreements with Vietnam, Bhutan, Paraguay, Papua New Guinea, Fiji, Rwanda, Costa Rica, Ghana, Senegal, Dominican Republic, Colombia, Chile, Cambodia, Indonesia, Kenya, Mongolia, Morocco, Peru and Sri Lanka. It also recently signed a Green Economy Agreement with Australia with the aim to generate demand and facilitate the trading of Australian carbon credits. The aim of these Article 6.2 agreements is to facilitate the trading of Internationally Transferrable Mitigation Outcomes or carbon credits which are generated from the reduction of emissions in one country (e.g., PNG) which is then bought by a second country (e.g., Singapore, New Zealand). However, Singapore's interest extends to the role these partnerships play in helping to establish a trading market in Singapore. In its agreements, Singapore asserts that ‘when completed carbon tax liable companies in Singapore will be able to purchase carbon credits from eligible projects to offset up to 5% of their taxable emission’ (National Climate Change Secretariat, 2023). Article 6.2 partnerships not only help reduce costs for Singapore companies but bring to market a portfolio of credit sellers for trading on Singapore's new trading platform, Climate Impact X. Ecomodernist Themes of Nature A post-humanist perspective on Singapore's ambition to transform into a climate leader surfaces three ecomodernist or green growth themes. These themes are: ‘nature as risk producer’, ‘nature as instrument’ and ‘nature's demise as opportunity’. Across these themes, it is implied that humans take priority and should utilise nature to achieve economic growth. A conventional approach would ignore this dualism and support the instrumentalisation of nature without awareness nor concern that this thought-structure plays a key part in producing climate change. In official organisational documents and speeches regarding Singapore's ambitions to create a global carbon trading hub, Singapore is presented as a model city and a vanguard in terms of environmental actions. Reference is also frequently made to the ‘founding father’, and visionary environmental leader, Prime Minister Lee Kuan Yew. Nature as Risk Producer Politicians, officials and industry often, if not always, portray climate change as the result of nature being ‘out of place’ and consequently hostile towards the vulnerable nation-state (Douglas, 1966; Ruuska et al., 2020). For example, below is an extract from the SGP which sets up the catastrophic framing, and two quotes from Prime Minister Lee Hsien Loong followed by Grace Fu Minister for Sustainability and the Environment at the COP28: Climate change is an existential threat of our times. It has brought rising sea levels and extreme weather patterns…Singapore, as a low-lying island state, is particularly vulnerable. Our weather is getting warmer, rainstorms heavier, and dry spells more pronounced (Singapore Government). Singapore [is] a low-lying, alternative-energy disadvantaged island-state. We therefore appreciate the inherent challenges in climate transitions. However, we believe that new technologies, new financing models and new markets offer us hope (Ministry of Foreign Affairs Singapore, 2023). Singapore is a small city-state, lacking in renewable energy. We are a low-lying island that is acutely vulnerable to the threat of rising sea levels. We are an urbanised city near the equator, susceptible to rising temperatures (Ministry of Sustainability and the Environment Singapore, 2023). The narrative that nature is a risk producer is a form of spatial anthropocentrism in which Earth and beyond are considered the rightful and exclusive spaces for humans (Ruuska et al., 2020). If nature was tame and in its proper docile place, then humans would not be at risk. The reasonable response to this logic is to put nature back in its place by constructing hard engineering solutions, such as sea walls and defending infrastructure that deliver services to humans (e.g., water, electricity, transport, telecommunication), alongside the use of soft solutions to absorb the costs of rebuilding, for example, via flood insurance. Nature as Green Growth Tool The case of Singapore demonstrates that the objectification of nature is a prerequisite to instrumentalisation. Our second theme – nature as a green growth tool – is evident in Singapore's continuation of its long-standing Garden City strategy: nature to be altered to ensure the material prosperity of the populace and thus maintain PAP's political legitimacy (Barnard and Heng, 2014; Hamilton-Hart, 2006, 2022; Schneider-Mayerson, 2017). For example, in the SGP, former Prime Minister Lee Kuan Yew is quoted as follows: Over 100 years ago, this was a mudflat, swamp. Today, this is a modern city. Ten years from now, this will be a metropolis. Never fear (Singapore Government). The SGP then follows this quote from Prime Minister Lee by stating that,…Having advanced from mudflats, to metropolis, we will turn our metropolis into a global city of sustainability (Singapore Government). Today, Singapore is a City in a Garden, and is one of the greenest cities in the world. We set aside large nature reserves, with about a third of our island covered by trees. We knew public cleanliness and hygiene were important to prevent diseases in our hot and humid urban environment and took tough measures to enforce them (Singapore Government). There is a direct link made between using nature as a tool and nation building. As a consequence of this argument, any opposition to Singapore's ‘global’ ambitions could be viewed as a threat to the state, unpatriotic and regressive. The use of nature as instrument for green growth is most stark under the Green Economy pillar. Nature's Demise as Opportunity The third theme evident in Singapore's attempts to position itself as a ‘green leader’ also concerns the instrumentalisation of nature but takes it a step further, with nature's destruction as a result of anthropogenic climate change being presented as a means to stimulate economic development. In the SGP, four of the pillars focus on efficiency and optimising production and consumption of natural resources. However, the Green Economy pillar not only seeks to capitalise on nature but intends to prosper from its demise. The discourse on the climate crisis is rewoven as a narrative about ‘seizing’ opportunities from the climate crisis and the ensuring there is pressure on states and corporates to act. Similar to disaster capitalism, the impacts of climate change are a new business venture for Singapore to advance its developmentalist approach. Below are instances of this discourse: As the world transits to a low-carbon future, there are many exciting new opportunities in the green economy. For instance, the increasing demand for green financing and carbon services will create good jobs and new opportunities for our enterprises (Ministry of Trade and Industry Singapore, 2022). Singapore's Green Plan aims to harness sustainability as ‘a new engine of growth’ …Under the plan, the Singaporean government will lead and drive all economic actors to make the transition toward more sustainable economic models, including establishing the country as a hub for green finance, carbon trading and sustainability consultancy (Wangkiat, 2021). We must seek out new areas of cooperation. This will allow us to deepen collaboration while also strengthening our relevance as a global business hub. Sustainability is one area where there are interesting opportunities for growth and strong potential for international collaboration. Green financing, carbon services, and trading are some examples of the new industries that we can look forward to in the green economy (Ministry of Trade and Industry Singapore, 2023). Singapore is unequivocal in highlighting the competitive advantage that the climate crisis holds for the state. This intensification of the instrumentalism of its Garden City strategy serves not only to commodify but also to financialise climate change. As Ergene, Banerjee and Hoffman (2021: 1320) remark, ‘The Anthropocene is not a story of unintended consequences but is a direct result of a political economy that privileges wealth accumulation at the expense of environmental destruction’. The growth imperative inherent in capitalism relies on the appropriation of nature's ‘resources’ at a low-cost despite ecological consequences. Capitalism seeks to exploit ‘cheap’ resources, including land, labour and energy. This pursuit of cheap inputs is founded on the ontological separation between humans and nature, and the devaluing of nature and some humans compared to others. Capitalism unleashes ‘a “metabolic rift” in the relationship between humans and the earth, resulting in an environmental crisis that now threatens the very basis of life on the planet’ (Wright et al., 2018: p. 459; see also Foster, 2012; Nyberg et al., 2022). Conclusion The three themes explored above underscore how Singapore continues to conceptualise nature as ‘other’. The current understanding of ‘green leader’ and what is legitimate and required in order to be considered ‘green’ maintains a primarily economically centred political agenda. This ‘ecomodernist leadership’ regime is preoccupied by quantitative measures of a known and knowable nature. In short, being ‘green’ requires the improvement of these numbers in directions agreed as beneficial to both the economic and environmental systems they reflect and relate to. Such instrumentalism provides one means towards green futures, but we would argue that this dangerously reifies the dualistic exploitative relations that underpin climate change (e.g., Moore, 2016). Green growth and other notions of ‘greening’ (e.g., Green Economy, Green Finance) do not alter the problematic of anthropocentrism but rather propagate and support a Promethean logic (Dryzek, 2022). So, although Singapore's portion of global emissions is small at 0.1%, we would suggest that Singapore's contribution to climate change extends beyond this number due to its green leadership stance and practices. 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Energy & Economics
Glass world bank building. Financial concept. Golden inscription bank. Banking. 3D render.

Closing the global financing gap in social protection: A World Bank perspective

by Iffath Sharif

Universal social protection coverage is off-track Time and time again we see the importance of universal social protection. It is a first line of defense to avoid deepening poverty in crises and helps overcome systemic poverty by empowering people to become economically self-reliant and invest in themselves and their children. Still over 3.4 billion people live without social protection coverage (International Labour Organization (ILO), 2021)1 and most of them live in low-income countries (LICs) and lower-middle-income countries (LMICs). Social protection spending relative to gross domestic product (GDP) is 4.5 times lower in LICs than in high-income countries, with little change from a decade ago. Moreover, globally, only about 25% of financing goes for the poorest 20% of the population (Tesliuc et al., 2025). Low coverage and stagnant financing stand in stark contrast to increasing risks that disproportionately affect people living in poverty, including from climate change and growing conflict and fragility. For uncovered households, the impact of any single shock can mean having to skip meals, sell off valuable assets, and pull children out of school, all with lifelong impacts. To accelerate progress against these challenges, the World Bank has set an ambitious new target to extend social protection coverage to an additional half a billion extremely poor and vulnerable people by 2030. Achieving this goal will require collective action to address the global fiscal deficit in social protection spending. Financing reform to double down on our social protection coverage Reaching half a billion people with social protection will entail continuing to work with over 70 governments, leveraging our knowledge and learning through building new evidence, facilitating cross-country peer-to-peer exchange, and close collaboration with development partners. There will also be a need to make meaningful use of the World Bank’s existing social protection financing of US$29 billion to continue investments in digital delivery systems to make spending in social protection more efficient. Such foundational investments can help to leverage labor market and fiscal reforms and complementary financing to reach our goal. Five specific actions could increase social protection financing to reach more people. Improve effectiveness of current social protection spending A top priority is to ensure that existing social protection budget resources are spent effectively. We must redouble efforts to ensure that resources reach those who need them most, and investing in delivery systems that improve the quality and cost-effectiveness of services. There is strong potential for existing social protection funding to make substantial gains against poverty. For emerging and developing economies (EDEs) with extreme poverty headcount below 10%, improved pro-poor targeting of existing social assistance budgets could virtually eliminate extreme poverty in these countries. And even in LICs and LMICs with extreme poverty rates from 20% to 80%, existing budgets could significantly decrease the total income shortfalls of the poorest 20% of the population. As of 2022, the income shortfall of the extreme poor in EDEs was estimated at US$163 billion (in USD 2017 purchasing power parity [PPP]). Improving the efficiency of existing social assistance spending to technically and politically feasible levels could reduce this shortfall to US$120 billion (Tesliuc et al., 2025). With increasing fiscal constraints, prioritizing high return investment is more important now than ever. Government-led Economic Inclusion (EI) programs are one such option, with long-run benefits that significantly outweigh initial costs. Niger’s EI program demonstrated a benefit-cost ratio of 127% 18 months after implementation, while in Zambia, the program costs break even with their returns in just 12 months. Assuming sustained impacts, both Niger and Zambia show positive returns on investment, at 73% and 36%, respectively (Bossuroy et al., 2022; Botea et al., 2023). How benefits reach people matters too. Digitalization of delivery systems, for example, can improve the efficiency of existing spending. In Liberia, the cash transfer program struggled with physical cash payments that took around 17 days on average and cost nearly US$8 per transfer. Now, the introduction of mobile payment has reduced delivery costs to US$2.5 per transfer and reduced the timeframe for delivery of missed payments substantially (Tesliuc et al., 2025). Prioritize progressive spending, and realize climate benefits in the process Globally, generalized subsidies on fossil fuels, agriculture, and fisheries exceed US$7 trillion (roughly 8% of global GDP); they are regressive, inefficient, expensive, and environmentally unsound (Arze del Granado et al., 2012; Damania et al., 2023). In the Middle East and North Africa, those subsidies are over five times higher than spending on cash transfers and twice as high as social assistance (Ridao-Cano et al., 2023). Redirecting inefficient fuel subsidies to social protection using dynamic and digital social registries could lead to more effective and better-targeted benefits. This also has the advantage of discouraging fossil fuel usage, thereby contributing to national and global climate goals. Egypt showcases the potential impacts of successful subsidy reform. One year after beginning to phase out fuel subsidies, the government used the resources saved to double the health budget, increase education spending by 30%, and launch a new national cash transfer program. The cash transfer program, Takaful and Karama, now reaches almost 20% of the population with targeted and effective assistance (El Enbaby et al., 2022). Continued investment in digital systems by Egypt helped to scale up this support, ensuring that those in need receive resources and services directly while minimizing wasteful expenditure on fuel subsidies. Increase the domestic tax base for social protection spending When efficiency gains and reallocation are insufficient, countries can enact appropriate tax reforms to increase domestic revenues toward adequate social protection coverage. Policy recommendations include broadening the tax base through appropriate tax reforms including a thorough fiscal incidence analysis, enhancing the progressiveness and effectiveness of the tax system, and supporting domestic revenue mobilization (World Bank, 2022). Bolivia, Botswana, Mongolia, and Zambia increased their revenue base with new taxes on natural resources that were earmarked for social protection and Brazil did likewise with a tax on financial transactions (Bierbaum and Schmitt, 2022). Efforts to increase domestic resources to broaden social protection coverage also require ringfencing progressive public spending. Social protection programs often face fierce competition across different government priorities for limited resources. Fiscal reforms therefore must come with the political will to prioritize social protection budget allocations. Citizen engagement can help: with support from United Nations International Children's Emergency Fund (UNICEF) and ILO, Mozambique adopted Social Action Budget Briefs to monitor social protection budget allocations against national strategic objectives (Bierbaum and Schmitt, 2022). Demonstrate impact to leverage climate financing Already the World Bank has investments of almost US$21 billion across 91 social protection programs with activities that help poor people respond better to the risks of climate change. We must continue to demonstrate how social protection supports poor and vulnerable people in adapting to climate change. In Ethiopia, the Productive Safety Net Program (PSNP) public works activities have reduced surface run-off, increased water infiltration, raised groundwater levels, enhanced spring yields, and increased stream base flows and vegetation coverage. Furthermore, by leveraging economic inclusion activities, the PSNP program has led to positive environmental impacts and promoted livelihood diversification and enhanced productivity, thereby decreasing people’s vulnerability to climate change. And we must continue to build the evidence that pre-emptive social protection investments and strengthening social protection systems are the best response to future shocks and crises – improving outcomes for people and the effectiveness of financing. In Pakistan, the Benazir Income Support Program (BISP), the country’s largest government-led cash transfer program, was scaled-up to provide 2.8 million families with roughly US$100 within a week of the 2022 floods. Rapid action was possible by leveraging information from the disaster risk management authorities linked to the geocoded data in the national social registry. Leverage partnerships for more effective collective action For LICs and fragility, conflict, and violence (FCV)-affected countries in particular, international support will continue to play an important role to complement efficiency gains and domestic spending. High fragmentation in donor financing calls for increased coordination in aid delivery (Watkins et al., 2024). By 2030, an estimated 59% of poor people worldwide will be concentrated in FCV-affected countries (World Bank, 2024) and humanitarian interventions play a critical role in saving lives in these settings. However, the lack of predictability and sustainability often misses opportunities to build resilience, human capital, and productivity effectively. Somalia, Ethiopia, and Yemen, among others, offer encouraging examples of collaboration in supporting and working through existing country systems (Al-Ahmadi and De Silva, 2018). In Somalia, humanitarian financing dwarfs development aid: US$1.1 billion and US$869 million, respectively, in 2018. The Somalia Baxnaano Program aims to align humanitarian and development efforts by supporting national social protection systems. Through partnership with the government, the British Foreign, Commonwealth & Development Office (FCDO), UNICEF, World Food Programme (WFP), and the World Bank, the program reached 181,000 households with cash transfers in 2021 and provided 100,000 households with emergency transfers in response to concurrent shocks in 2020 (Al-Ahmadi and Zampaglione, 2022). Countries at all income levels will benefit from promoting a larger role for the private and financial sectors to increase available financing. One option we are exploring in that context is the potential of innovative financing mechanisms, such as impact bonds, sovereign wealth funds, debt swaps, and Payment for Ecosystem Services (PES) (Watkins et al., 2024). Coordination on the knowledge agenda will be crucial to make the most effective use of available resources. We must leverage, share, and coordinate analysis, evidence, data, technical assistance, and implementation support across national stakeholders and international partners. It is critical that we work together to build the evidence base for effective social protection at the global, national, regional, and local levels, scaling up what works, and reforming what does not. Financing reform for shared prosperity There is no one-size-fits-all solution to the massive social protection financing challenge. We need to carefully analyze how to make the best use of scarce social protection resources, whether at the global, national, or local level. We also need to leverage more resources – both domestically and through partners and the private sector – to invest in social protection responses to the permacrises that we face, with climate and fragility high among these challenges. Partnerships, knowledge sharing, and collaboration are key to learning, scaling up and expanding what works and improving what does not. Overall, strengthening and expanding social protection systems are critical as we work together to end extreme poverty on a livable planet. FootnotesDisclaimer The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the World Bank, its executive directors, or the governments they represent.1. The estimated population of the 144 World Bank client countries is 6.8 billion.ReferencesAl-Ahmadi AA, De Silva S (2018) Delivering social protection in the midst of conflict and crisis: The case of Yemen. Social protection and jobs discussion paper, no. 1801. Washington, DC: World Bank. Available at: http://hdl.handle.net/10986/30608License:CCBY3.0IGOAl-Ahmadi AA, Zampaglione G (2022) From protracted humanitarian relief to state-led social safety net system: Somalia Baxnaano Program. Social protection and jobs discussion paper, no. 2201. Washington, DC: World Bank. Available at: http://hdl.handle.net/10986/36864License:CCBY3.0IGOArze del Granado FJ, Coady D, Gillingham R (2012) The unequal benefits of fuel subsidies: A review of evidence for developing countries. World Development 40(11): 2234–2248.Bierbaum M, Schmitt V (2022) Investing more in universal social protection. Filling the financing gap through domestic resource mobilization and international support and coordination. Working paper no. 44. International Labour Organization (ILO). Available at: https://www.ilo.org/publications/investing-more-universal-social-protection-filling-financing-gap-throughBossuroy T, Goldstein M, Karimou B, et al. (2022) Tackling psychosocial and capital constraints to alleviate poverty. Nature 605: 291–297. Available at: https://doi.org/10.1038/s41586-022-04647-8Botea I, Brudevold-Newman A, Goldstein M, et al. (2023) Supporting women’s livelihoods at scale: Evidence from a nationwide multi-faceted program. SSRN scholarly paper. Rochester NY. Available at: https://papers.ssrn.com/abstract=4560552Damania R, Balseca VE, De Fontaubert C, et al. (2023) Detox Development: Repurposing Environmentally Harmful Subsidies (English). Washington, DC: World Bank Group. http://documents.worldbank.org/curated/en/099061523102097591/P1753450ec9e820830aba2067262dab24bfEl Enbaby H, Elsabbagh D, Gilligan D, et al. (2022) Impact evaluation report: Egypt’s Takaful cash transfer program. IFPRI ENA regional working paper no. 40. Available at: https://ebrary.ifpri.org/utils/getfile/collection/p15738coll2/id/136395/filename/136607.pdfInternational Labour Organization (ILO) (2021) World Social Protection Report 2020-22. Available at: https://www.ilo.org/resource/news/more-4-billion-people-still-lack-any-social-protection-ilo-report-findsRidao-Cano C, Moosa D, Pallares-Miralles M, et al. (2023) Built to Include: Reimagining Social Protection in the Middle East and North Africa. Washington, DC: World Bank. Available at: http://hdl.handle.net/10986/40227Tesliuc ED, Rodriguez A, Claudia P, Rigolini J (2025) State of Social Protection Report 2025: The 2-Billion-Person Challenge. Washington D.C.: World Bank Group.Watkins K, Nwajiaku-Dahou K, Kovach H (2024) Financing the fight against poverty and hunger – Mobilising resources for a Sustainable Development Goal reset. ODI report, ODI, London, 24 July.World Bank (2022) Charting a Course Towards Universal Social Protection: Resilience, Equity, and Opportunity for All. Washington, DC: World Bank Group. Available at: http://hdl.handle.net/10986/38031World Bank (2024) The Great Reversal: Prospects, Risks, and Policies in International Development Association (IDA) Countries. Washington, DC: World Bank Group.

Energy & Economics
Ukraine refugees map to neighbors countries. vector

The Economic impacts of the Ukraine war on Eastern European countries with a focus on inflation and GDP growth

by World & New World Journal Policy Team

I. Introduction Russia invaded Ukraine in February 2022. As the Russian invasion of Ukraine enters its fourth year, its most immediate and visible consequences have been loss of life and large numbers of refugees from Ukraine. However, given the interconnected structure of the international political, economic, and policy systems, the ramifications of the Ukraine conflict can be felt well beyond Ukraine and Russia. Much of the recent literature and commentaries have focused on the military and strategic lessons learned from the on-going Ukraine conflict (Biddle 2022; 2023; Dijkstra et al. 2023). However, there are not many quality analyses of economic effects of the Ukraine war on Eastern European countries, including Russia and Ukraine. This paper focuses on the economic effects of the Ukraine war on nine Eastern European countries, including Russia and Ukraine. This is because although Eastern European countries are neighbors of Russia and Ukraine and have had significant negative economic outcomes from the Ukraine war, these countries were mainly ignored by researchers. II. The Economic Effects of the Ukraine war The impacts of war are far-reaching and devastating. War causes immense destruction of property and loss of life. It also creates psychological trauma for those who have experienced it firsthand. War can also have long-term economic impacts, such as higher unemployment and increased poverty. War can also lead to the displacement of people, as we have seen the millions of refugees who had been forced to flee their homes due to conflicts. War can also have political effects, such as creating new states or weakening existing nations. It can also lead to the rise of authoritarian regimes in many post-war nations. War can also lead to increased militarization as nations seek to protect themselves from future conflicts. The Ukraine war might have broader economic consequences. The supply chains may be affected because of the destruction of infrastructures and resources. War mobilization may affect the workforce and economic production. Actors in the economy may also act strategically to deploy resources elsewhere or to support the war effort because the war has affected incentive structures of workers and business. These effects can be local to geographical areas engulfed in conflict but also cause ripple effects to a wider regional area and to the global economy. Trade, production, consumption, inflation, growth and employment patterns may all be influenced. Peterson .K. Ozili.(2022) claimed that the scale of the Ukraine war had its negative impact on the economies of almost all countries around the world. According to Ozili, the main effects of the Ukraine war on the global economy are several, but this paper focuses on two below: Rising Oil Gas Prices  and inflation – European countries import a quarter of their oil and 40% of their natural gas from the Russian Federation. The Russian Federation is the second largest oil producer in the world and the largest supplier of natural gas to Europe, and after the invasion, European oil companies will have problems getting these resources from the Russian Federation. Even before the Russian invasion, oil prices were rising because of growing tensions between countries, the COVID-19 pandemic, and other factors, but remained in the $80–95 per barrel range. After the invasion, this price reached the value of $100. Natural gas prices rose 20% since the war began. Rising gas & oil prices can drive high inflation and increase public utility bills. Decline in production and economic growth. Rising oil and gas prices lead to high inflation and, therefore, a decline in consumption, supply and demand, thereby causing decline in growth and production. This paper focuses on inflation and GDP growth of nine Eastern European countries regarding the economic effects of the Ukraine war. Ozili (2022) claimed that very high inflation was a perceived negative consequence of the Russian invasion of Ukraine. As Figure 1 shows, inflation in the EU jumped in the first month of the invasion, and the increasing trend continues. EU inflation in 2022 peaked in October and amounted to 11.5% that was a historical record. However, inflation has slowly declined as energy prices have gone down. This higher inflation in Europe basically resulted from energy price increase. As Figures 2, 3, and 4 show, energy prices in Europe skyrocketed in 2022. As Figure 2 shows, energy prices have been the most important component of high inflation in the EU.  Figure 1: Average inflation rate in the EU (%). Source: EurostatCreated with Datawrapper     Figure 2: Main components of inflation rate in the Euro areas.  Figure 3: Natural gas prices in Europe, January 2021- end 2024  Figure 4: Crude oil price, January 2020-January 2025 Source: Eurostat Created with Datawrapper Inflation skyrocketed not only in the EU member countries, including Eastern European countries, but also in Russia and Ukraine.  Figure 5: Inflation rate in Russia, 2021-2025 As Figure 5 shows, inflation rate in Russia averaged 8.16 % from 2003 until 2025, but it reached an all time high of 20.37 % in April of 2022 just after the Russian invasion of Ukraine. In 2022, Russia experienced high inflation, with the average annual rate reaching approximately 13.75%. This surge in inflation was largely attributed to the economic impact of Western sanctions and increased government spending related to the war in Ukraine. From end of 2022 and throughout 2023, however, inflation was brought under control, but in 2024 inflation started to climb again. The inflation rate in Russia has been moderately high in 2024 and 2025, reaching to 9.5% in 2024 and 9.9% in May 2025 and 9.4% in June 2025.   Figure 6: Inflation rate in Ukraine, 2021-2025 The Ukrainian economy has undergone harsh conditions with the onset of Russia’s full-scale invasion of Ukraine in 2022. Following the start of the invasion, inflation skyrocketed to 26.6% in October 2022 from 10.0% in 2021. Inflation in Ukraine started to slow down from the end of 2022 throughout 2023, reaching 5.1% in November 2023. However, inflation began to rise from early 2024 and then grew to 12% in December 2024. As Figure 5 & 6 shows, inflation rates in Russia and Ukraine do not follow the pattern of EU countries in which inflation skyrocketed in 2022 and then has slowly declined over time. Rather inflation in Russia and Ukraine skyrocketed in 2022 and then slowed down in 2023 and started to climb again in 2024 and 2025. As Figure 7 shows, inflation in Eastern European countries has been also very high just after Russia invaded Ukraine. Hungary’s annual inflation rate surged in 2022, reaching a peak of 26.2 % in January 2023. By mid-2023, it began to decline, and by 2024, it showed a gradual decline trend, reaching 3.7 % in 2024. And inflation in Hungary slightly increased in 2025, reaching 4.6% in June 2025 and 4.4% in May 2025.  The Czech Republic(Czechia) experienced a significant surge in inflation in 2022, with the average inflation rate reaching 15.1%. This marked the second-highest inflation rate since the Czech Republic’s independence in 1993.  Two factors mainly contributed to this surge: High energy prices:The global energy crisis, exacerbated by the war in Ukraine, significantly impacted energy prices in the Czech Republic.  Increased food prices: The rising energy costs also led to higher food prices, with some sectors experiencing inflation rates as high as 26%.  The inflation rate in the Czech Republic in 2023 was relatively high, reaching 10.7%. However, inflation significantly declined in 2024 and 2025. The average annual inflation rate in the Czech Republic for 2024 was 2.4%. The inflation rate in 2025 was also low, recording 2.7% in July 2025. Poland also experienced a significant increase in inflation in 2022, with the average inflation rate reaching 14.2%. The inflation was down to 11.47% in 2023, but it was still high. The rate continued to fall, reaching 3.72% in 2024. In July 2025, inflation dropped to 3.1%. Similarly, Bulgaria experienced a significant surge in inflation in 2022, reaching a peak of 18.7 % in September 2022. However, Bulgaria’s annual inflation rate continued to decline from 13.02% in 2022 to 8.6% in 2023 and 2.6% in 2024. The inflation in June 2025 was 3.1%.  Romania experienced a significant surge in inflation in 2022, reaching a peak of 14.6 in November 2022. However, the annual inflation rate in Romania declined from 13.8% in 2022, recording 10.4% in 2023 and 5.58% in 2024. The inflation rate reached a more moderate rate of 5.8% in June 2025.  Slovakia experienced a significant surge in inflation in 2022, reaching a peak of 15.4 % in November 2022. However, the annual inflation rate in Slovakia declined to 10.96% in 2023, and 3.15% in 2024. The inflation rate in Slovakia reached a more moderate rate of 4.3% in June 2025.  Slovenia had much lower inflation rate than other Eastern European countries. The annual inflation rate in Slovenia was 8.83% in 2022, 7.45% in 2023, and 1.97% in 2024. The inflation rate in Slovenia reached a relatively low rate of 2.2% in June 2025.  Unlike Russia and Ukraine, these Eastern European countries followed the pattern of EU countries in which inflation skyrocketed in 2022 and then has slowly declined over time.   Figure 7: Inflation rate in Eastern Europe during the Ukraine war Very high inflation in Europe during the early stage of Ukraine war basically resulted from energy price increase as Figures 2, 3, and 4 show. It is because European countries were heavily dependent on Russian energy. Figure 8 shows that a number of Eastern European countries were significantly dependent on Russian energy in 2020 before the Ukraine war. For example, Slovakia and Hungary depended on Russia for more than 50 % of their energy use. Moreover, Europe was the largest importer of natural gas in the world. Russia provided roughly 40% and 25% of EU’s imported gas and oil before the Russian invasion of Ukraine. As Figure 9 shows, major gas importers from Russia in 2021 were European countries.  Figure 8: EU member country’s dependence on Russia energy  Figure 9: Major EU importers from Russian Gas in 2021. However, since the Russian invasion of Ukraine in 2022, more than 9,119 new economic sanctions have been imposed on Russia, making it the most sanctioned country in the world. At least 46 countries or territories, including all 27 EU nations, have imposed sanctions on Russia. EU trade with Russia has been strongly affected by the sanctions, resulting in a 58% decline in exports to Russia and an 86% drop in imports from Russia between the first quarter of 2022 and the third quarter of 2024. In the response, as Figure 10 shows, Russia cut its gas exports to the EU by around 80% since the Russian invasion, resulting in higher gas price in Europe.  Figure 10: Monthly Russia-EU pipeline gas flows, 2022-2025 Nonetheless, Figure 11 show that Hungary, Slovakia, and Czech Republic have been major  importers of Russian gas and oil after Russia’s invasion of Ukraine, while Figure 12 shows that Hungary, Bulgaria, Slovenia, Slovakia, and Czech Republic have been major importers and consumers of Russian gas after the Ukraine war. Figure 11: Largest importers of Russian fossil fuels (January 1, 2023 to February 16, 2025)  Figure 12: Selected European countries’ imports of Russian natural gas as shares of total consumption. As energy prices in Europe skyrocketed, inflation, including food price also skyrocketed in Europe. As a result, consumption in Europe was down and GDP growth declined in Europe after the Russian invasion of Ukraine. As Ozili claimed, lower growth rate was also a perceived negative consequence of the Russian invasion of Ukraine. As Figure 13 shows, GDP in EU was down to 3.5 % in 2022 compared to 6.3% in 2021, and it was further down to 0.8 % in 2023 because of economic stagnation and high inflation caused by the Ukraine war.  Figure 13: Average annual GDP growth rate in EU, 1996-2025. Like EU countries, Russia, Ukraine and some Eastern European countries experienced negative growth rates in 2022 & 2023 after Russia’s invasion of Ukraine in February 2022. Russia’s economy has undergone significant transformation since its full-scale invasion of Ukraine in February 2022. As Figure 14 shows, Russia GDP growth rate for 2022 was -2.07%, a 7.68% decline from 2021. This decline in GDP was due to international sanctions, the withdrawal of foreign companies and overall economic uncertainty. However, the impact was largely offset by a favourable terms-of-trade from higher commodity prices and support from third countries – especially China, Turkey, the UAE and countries bordering Russia – which have served as conduits for sanctions evasion.  Figure 14: Russia GDP Growth Rate By 2023, the Russian economy had increasingly shifted to a war footing. As Figure 15 shows, military spending significantly increased after the Russian invasion of Ukraine. Surge in government spending such as military spending, counter-sanctions measures and credit growth boosted investment, construction and overall economic activity in Russia. The military-industrial sector benefitted the most, as did private consumption driven by war-related payments and high real wage growth resulting from the tight labor market. Meanwhile, sectors reliant on Western markets or foreign companies continued to struggle. As a result, Russia’s GDP grew by 3.6 percent in 2023 and 4.3 percent in 2024. Economic expansion resulted from rising government expenditure and investment in its military as it continues its war against Ukraine.  Figure 15: Russia military spending By the end of 2024 and in early 2025, however, signs of economic stagnation had become evident. Even the military-industrial sector began to stagnate. The economy had butted up against its supply-side constraints. In the first quarter of 2025, annual growth slowed to an estimated 1.4 % (from 4.5 % in the last quarter of 2024. Economic contraction was driven by falling activity in trade, mining, real estate and leisure, which growth in agriculture, manufacturing and public administration were not able to offset.  Figure 16: Ukraine GDP growth rate Russian invasion of Ukraine in February 2022 significantly affected Ukraine economy. As Figure 16 shows, Ukraine’s GDP growth rate for 2022 was -28.76%, a 32.08% decline from 2021. GDP growth rate in Ukraine averaged 1.33% from 2000 until 2025, reaching a record low of -36.60 % in the second quarter of 2022. Ukraine’s economy started to bounce back in 2023 and the GDP growth rate in Ukraine for 2023 was 5.32 %, a 34.08 increase in 2022. GDP growth rate reached an all time high of 19.30% in the second quarter of 2023. The GDP growth for 2024 was down to 2.9%. In the first quarter of 2025, Ukraine’s GDP grew 0.9%. However, the Ukrainian economy has been propped up by financial support from Western countries, including military and humanitarian aid, as well as loans from frozen Russian assets. Financing from abroad has been essential in sustaining Ukraine’s ability to survive. Ukraine’s 2024 public sector deficit rose to a record 1.832 trillion hryvnia, or almost 24 % of GDP. Over 60 % of spending went to defense and domestic security. Ukraine’s foreign partner countries provided approximately $42 billion in direct budget support in 2024, of which a large chunk ($17.5 billion) was provided via the EU’s Ukraine Facility. In 2025, Ukraine’s financing situation looks brighter compared to the beginning of 2024, when the EU’s 50-billion-euro Ukraine Facility and America’s over-60-million-dollar Ukraine aid package were blocked due to legislative intransigence. The structure of 2025 deficit financing in Ukraine represents a big change from 2024 as a substantial part of the deficit will be covered out of the yield on Russia’s frozen assets. Last summer, G-7 leaders agreed on an Extraordinary Revenue Acceleration (ERA) arrangement allowing for the use of 183 billion Euro of frozen Russian assets (end-2024) in the EU area to help Ukraine. The ERA program does not draw on the Russian assets directly but uses its proceeds to finance payments and costs of a $50 billion loan. As Figure 17 shows, ERA disbursements allocated to Ukraine will come to nearly $22 billion in 2025 and $11 billion in 2026. The new Trump administration has yet to withdraw from the ERA program, even if substantial cuts have already been made in e.g. USAID financing to Ukraine. The US remains the ERA program’s largest supporter, accounting for a total disbursement commitment of $20 billion. Figure 17: ERA program for Ukraine from Western countries, 2023-2026 Moreover, according to the Ukraine Support Tracker from Kiel University, Ukraine has received 267 billion euros in aid over the past three years. Half of this has been in weapons and military assistance, with 118 billion euros in financial support and 19 billion euros for humanitarian aid. European countries contributed more than the US: 62 billion euros in arms and 70 billion euros in other aid from Europe, compared with 64 billion euros in arms and 50 billion euros in other aid from the US. On the other hand, the Ukraine war caused a massive refugee crisis to Eastern European countries. The Ukraine war made millions of Ukraine people cross the border into neighboring countries in Eastern countries, affecting the economy of each nation. Table 1 shows the number of Ukraine refugees settled in Europe. Most of the Ukraine refugees settled in Poland and the Czech Republic, followed by Romania, Slovakia, and Moldova. These Ukraine refugees had significant impacts on Eastern European economy, in particular on Poland and Czech Republic. Table 1: Number of refugees from Ukraine settled in EuropeSource: UNHCR Operational Data The Ukraine war affected Poland’s economy in several ways, creating both difficulties and opportunities. First, there were problems with energy supplies that could threaten Poland’s access to power. The conflict in Ukraine has shaken up Poland’s energy market quite a bit, affecting its gas and oil supplies and leading to a spike in prices. Right after the conflict began, gasoline prices in Poland jumped by more than 40% as Figure 18 shows. This is mainly because Poland used to get a lot of its energy from Russia, and now, because of the Ukraine war and the sanctions that followed, there’s been a big disruption. As Figure 19 shows, food prices also skyrocketed just after the Ukraine war.  Figure 18: Gasoline price in Poland Figure 19: Food inflation in Poland Food inflation in Poland averaged 4.11 % from 1999 until 2025, reaching an all time high of 24.00 % in February of 2023. Moreover, there has been the arrival of more than 1 million Ukraine refugees, which put pressure on jobs and public services in Poland. The Polish government has had to increase its public spending significantly to provide housing, healthcare, and social services for the newcomers. This sudden increase in spending seemed overwhelming at first, but it also brought potential economic benefits in the long run. For example, the influx of Ukraine refugees boosted demand for local goods and services, which in turn stimulated the Polish economy. Despite both difficulties and opportunities that the Ukraine war brought to Poland, Poland’s GDP growth rate in 2022 was 5.3%. This indicates a strong economic performance, although it was slightly lower than the 6.9% growth rate in 2021. However, Poland's GDP growth rate in 2023 was down to 0.2%. This signifies a significant slowdown compared to the 5.3% growth in 2022. The slowdown was attributed to factors like energy inflation-induced decline in household spending and stagnant consumption. Poland’s real GDP grew by 2.9% in 2024, exceeding initial expectations, which were set at 2.8%. As inflation was down, it allowed for consumer spending and contributed to economic expansion. The Polish economy continues to grow by 3.2% in the first quarter of 2025. Figure 20: annual GDP growth rate in Poland, 2016-2024 The Czech economy has experienced significant impacts from the Ukraine war due to supply chain disruptions and rising energy & food prices. As Figure 21 and 22 show, gasoline and food prices in Czech Republic skyrocketed just after the Russian invasion of Ukraine. Gasoline prices in Czech Republic skyrocketed in June 2022 at 2.05 USD/Liter from 1.12 USD/Liter in May2020. Gasoline prices in Czech Republic averaged 1.48 USD/Liter from 1995 until 2025, reaching a high of 2.05 USD/Liter in June of 2022 and a record low of 0.72 USD/Liter in December of 1998. Figure 21: Gasoline price in the Czech Republic  Figure 22: Food inflation in the Czech Republic As a result, after a solid recovery from Covid-19 pandemic in 2021 with 4.0% growth rate, economic activity slowed down in 2022-2023 as a result of the consequences of the war in Ukraine, including EU sanctions on Russia and rising energy & food prices. Nonetheless, the Czech achieved a moderate growth in 2022 with a growth rate of 2.8% but the Czech economy contracted by -0.1% in 2023 and has been weak with a growth rate of 1.1% in 2024 and 0.7 % in the first quarter of 2025. Figure 23: annual GDP growth rate in Czech Republic, 2016-2024 Hungary’s economy has faced significant challenges due to the war in Ukraine, including increased energy costs, inflation, and disruptions to trade and supply chains. Hungary economy grew by 4.6 % in 2022, but declined to -0.91% in 2023 due to the extremely high inflation and weak consumptions. The consumer price in Hungary rose to a peak of 25.7% in January 2023, the highest rate in the EU. High inflation was driven by surging energy and food prices as Figures 24 and 25 show. The Hungary economy has been weak with the growth rate of 0.5 % in 2024. The GDP expanded by 0.1% in the second quarter of 2025. Figure 24: Gasoline price in Hungary Figure 25: Food inflation in Hungary  Figure 26: annual GDP growth rate in Hungary, 2016-2024 Bulgaria’s economy has faced challenges from the Ukraine ware, due to increased energy prices and disruptions in trade. As Figure 27 shows, the initial economic recovery was stronger than anticipated, with a 4.0% GDP growth in 2022, but the Ukraine war’s impact, coupled with inflation and global economic headwinds, led to a slowdown. Bulgaria’s economy expanded by 1.89 % in 2023. Then Bulgaria GDP bounced back to 2.8 % in 2024 and by 3.1% in the first quarter of 2025. Figure 27: annual GDP growth rate in Bulgaria, 2016-2024 Romania’s economy has experienced both positive and negative impacts from the Ukraine war. As Figure 28 shows, the Romanian economy displayed unexpected strength in 2022, with a 4.8% growth rate thanks to strong private consumption and investment. However, the Ukraine war’s effects, particularly on energy prices and supply chains, dampened Romanian growth. Romanian growth rate for 2023 was 2.2%, but it moderately rebound in 2024 with a 2.8% growth rate. The Romanian GDP increased by 0.3% in the first quarter of 2025. Romania faced challenges related to fiscal deficits, public debt, and inflation. Romania’s ability to navigate these challenges and capitalize on opportunities, such as EU support and its strategic geographic location, will be crucial for its long-term economic prosperity.  Figure 28: annual GDP growth rate in Romania, 2016-2024 Slovakia’s economy has faced significant challenges due to the war in Ukraine, mainly through energy & food price shocks and disruptions to trade and supply chains. As Figure 29 and 30 show, gasoline and food price in Slovakia significantly increased. Slovakia’s economy grew by 0.45% in 2022, a 5.28% decline from 2021. GDP growth rate for 2023 was 1.38 %. GDP growth in Slovakia moderately bounced back in 2024 with a growth rate of 2.0. In the first quarter of 2025, Slovakia economy grew by 0.2 %.  Figure 29: Gasoline price in Slovakia Figure 30: food inflation in Slovakia Figure 31: annual GDP growth rate in Slovakia, 2016-2024 In 2022, Slovenia experienced a slow economic growth with 2.7%, a 5.69% decline from 2021. due to the Ukraine war and subsequent energy price hikes and supply chain disruptions. Slovenia’s economy has been hurt by the Ukraine war and subsequent flooding in 2023 and 2024 with a 2.1 % and 1.5 % growth rate, respectively. Slovenia’s GDP growth was down to -0.7 % in the first quarter of 2025.   Figure 32: annual GDP growth rate in Slovenia, 2016-2024 III. Conclusion  This paper analyzed the economic effects of the Ukraine war on Russia, Ukraine, and Eastern European countries with a focus on inflation and GDP growth. The paper showed that after the Russian invasion of Ukraine in February 2022, inflation skyrocketed not only in the EU member countries, including Eastern European countries, but also in Russia and Ukraine. However, the pattern of inflation was different. Inflation in Russia and Ukraine did not follow the inflation pattern of EU member countries in which inflation skyrocketed in 2022 and then has slowly declined over time. Rather inflation in Russia and Ukraine skyrocketed in 2022 and then slowed down in 2023 and started to climb again in 2024 and 2025. Inflation in Eastern European countries followed the pattern of EU member countries in which inflation skyrocketed in 2022 and has then slowly declined over time. On the other hand, the pattern of GDP growth was different, depending on the individual conditions of each nation, although most countries experienced economic decline in 2022 relative to 2021. Some countries such as Ukraine and Russia experienced negative growth in 2022 and then recovered from 2023. Other countries such as Hungary, Romania, Bulgaria, and Czech Republic experienced moderate growth in 2022 and then slowed down over time. Still other countries like Slovakia and Slovenia experienced very low GDP growth over the period of 2022-2025.  References Biddle, Stephen D. 2022. “Ukraine and the Future of Offensive Maneuver.” War on the Rocks. November 22. https://warontherocks.com/2022/11/ukraine-and-the-future-of-offensive-maneuver/.Biddle, Stephen D. 2023. “Back in the Trenches: Why New Technology Hasn’t Revolutionized Warfare in Ukraine.” Foreign Affairs 102 (5): 153–164.Dijkstra, Hyllke, Myriam Dunn Cavelty, Nicole Jenne, and Yf Reykers. 2023. “What We GotWrong: The War Against Ukraine and Security Studies.” Contemporary Security Policy 44(4): 494–496. https://doi.org/10.1080/13523260.2023.2261298Ozili, P.K., 2022, Global Economic Consequence of Russian Invasion of Ukraine. Available online at: https://ssrn.com/abstract=4064770(open in a new window)

Energy & Economics
Global business connection concept. Double exposure world map on capital financial city and trading graph background. Elements of this image furnished by NASA

Liaison countries as foreign trade bridge builders in the geo-economic turnaround

by Eva Willer

Introduction Geopolitical tensions are making global trade increasingly difficult. In order to reduce the associated risk of default, companies are shifting their trade relations to trading partners that are politically similar to them. In the course of the beginnings of geo-economic fragmentation, politically and economically like-minded countries are also gaining in importance for German and European decision-makers. Liaison countries1 in particular can form a counterforce to the trend towards polarization in foreign trade - especially between the USA and China: they are characterized by a pronounced economic and trade policy openness that overrides differences between geopolitical or ideological camps. Consequently, the question arises: How can relevant connecting countries for Germany and Europe be identified? What opportunities and risks do closer trade relations with these countries offer in order to strengthen foreign trade resilience in geopolitically uncertain times?  With a high degree of openness - defined as the sum of imports and exports in relation to gross domestic product - of over 80 percent2 , the German economy is strongly integrated into global trade. Accordingly, the disruptive effect of geo-economic fragmentation on the German economy would be above average. The defensive strategy to strengthen Germany's economic security by pushing for trade policy independence would only reinforce geo-economic fragmentation. Against the backdrop of comparatively high economic vulnerability, it is necessary to focus on those potential partner countries with which German and European foreign trade could be developed and expanded even under the condition of increasing fragmentation.  Geoeconomic Fragmentation  The term "geo-economic fragmentation" is used to describe the politically motivated reorganization of global goods and financial flows, in which strategic, economic and political interests primarily determine the choice of countries of origin and destination for trade flows.3 In the scenario of geo-economic fragmentation, the result would be the formation of a bloc within the global community of states, which would fundamentally change the regulatory structure of global economic networking. In this case, trade and investment would probably concentrate from a previously diverse range of economic partner countries - prior to the formation of the bloc - on those countries that now - since the formation of the bloc - belong to the same bloc.  The likelihood of this scenario occurring and leading to an increased fragmentation of the global economic order has increased again in the recent past. For example, Donald Trump's second term as US president is causing increasing geopolitical uncertainty worldwide.  Statements on the concrete form of a possible demarcation of potential blocs are subject to a great deal of uncertainty. However, the division of a large part of the global economy into a "US bloc" and a "China bloc" is a conceivable scenario for which German politics and business should prepare.  Data already shows that, at a global level, foreign trade openness has decreased in the recent past. Data from the World Trade Organization (WTO) illustrates the increasing hurdles in global trade in goods. While 3.1% of global imports were still affected by tariff or non-tariff barriers to trade in 2016 - including under WTO rules - this figure rose to 11.8% in 2024 over the following years.4 This development goes hand in hand with a noticeable loss of importance and enforcement of the WTO since the 2010s, which previously played a central role as the guardian of the rules-based global economic order.  Studies by the International Monetary Fund (IMF) have already found indications of an incipient geo-economic fragmentation along potential bloc borders. It shows that trade in goods and foreign direct investment between countries that would belong to the opposing camp in the event of a bloc formation declined on average in 2022 and 2023 - in contrast to foreign trade between countries that are geopolitically close.5  In this initial phase of geo-economic fragmentation, liaison countries are beginning to establish themselves as a counterforce, holding the fragmenting global community of states together with new trade and investment routes.  Identification of liaison countries Specifically, liaison countries have the following characteristics: a pronounced openness to foreign trade in the form of a high foreign trade quota and low tariff and non-tariff trade barriers, as well as pronounced economic relations with partner countries from different geopolitical camps. The geopolitical orientation of countries can be examined using data on voting behavior within the United Nations.6 This involves analyzing whether a country can be assigned to the US or Chinese camp - or whether there is no pronounced proximity and therefore political neutrality or "non-alignment" in the sense of ideological independence. The data-based identification of connecting countries is relatively new. Empirical analyses are also limited to connecting countries in the context of US-Chinese foreign trade - specifically US imports from China. In this case, the characteristics of a connecting country can be broken down into (1) "non-alignment" - i.e. a geopolitical distance to both a Western and an Eastern bloc - as well as (2) an increase in imports and foreign investment from China and (3) a simultaneous increase in exports to the United States. In a narrower sense, this is an evasive reaction to trade restrictions, i.e. circumventing trade. If the foreign trade indicators - specifically the trade and investment data relating to the US and China - of "non-aligned" countries for the period from 2017 to 2020 show corresponding characteristic-related changes compared to previous years, these can be identified as countries connecting the US and China.  The analysis of trade data shows that the value of direct exports from China to the USA fell during Donald Trump's first term in office. At the same time, both Chinese exports to some of the "non-aligned" countries and exports from these countries to the USA have increased significantly. These countries have presumably stepped in as a link on the export route from China to the US after the previously direct trade flow was interrupted by trade barriers and had to find a new route. Companies producing in China are therefore likely to have sought new, indirect ways to maintain access to the US sales market.  A certain statistical inaccuracy in the foreign trade data makes it difficult to draw a definitive conclusion in this context. It should be noted: No single commodity can be tracked across national borders in trade data collection. Whether the additional goods imported from China actually found their way to the United States can only be assumed approximately. However, if the trade flows are aggregated, a clearer picture emerges and the circumvention trade via selected connecting countries - including Vietnam and Mexico - becomes visible.  Data on foreign direct investment rounds off the analysis.7 "Non-aligned" countries in which an increase in Chinese investment can be seen between 2016 and 2020 in addition to trade flows can be identified as connecting countries. Here, too, available data suggests that the companies concerned either exported their goods to the United States via a stopover or even outsourced parts of their production destined for the US market to connecting countries. Five connecting countries between the US and China Based on the 2017-2020 study period, various connecting countries can be empirically identified that were used to indirectly maintain access to the US market. In terms of foreign trade volume, the economically most important connecting countries include Mexico, Vietnam, Poland, Morocco and Indonesia.8 All five countries are characterized by the fact that both their exports of goods to the US and their imports of goods from China increased significantly between 2017 and 2020. In addition, greenfield investments (foreign direct investment to set up a new production facility) have risen significantly compared to the period before 2017.  However, the five countries show different priorities in their development, which differentiate them in their role as connecting countries between the USA and China. In Vietnam, exports to the USA in particular have risen sharply. China has been the most important procurement market for Vietnamese companies for years. Poland, Mexico and Indonesia are characterized as connecting countries primarily by the significant increase in imports from China. Morocco, in turn, was able to attract more Chinese foreign investment in particular. Greenfield investments have almost tripled here since 2017. However, Poland - a rather surprising candidate for the role of liaison country, as it is intuitively assigned to the US-oriented bloc - is positioned fairly centrally between the US and China according to the analysis of voting behavior within the United Nations9. In addition, Poland qualifies primarily due to the sharp rise in greenfield investments from China, primarily in the expansion of domestic battery production.10  It cannot be concluded from the previous studies on the USA and China whether German companies are also circumventing trade barriers from the USA via the countries identified. As the trade policy conflicts between the US and China differ significantly from those between the EU and China, there has been a lack of comparable empirical data to analyze connecting countries in the EU context. Opportunities and challenges As the German economy is strongly oriented towards foreign trade and is closely networked with both the USA and China, German companies play a particularly exposed role in the area of tension between the USA and China. Increased economic exchange with potential connecting countries would offer German companies an opportunity to mitigate the expected shock of a geopolitical bloc. They could at least maintain international trade to a certain extent and thus secure some of the endangered sales and procurement markets. On the other hand, there are also costs associated with expanding foreign trade relations with potential connecting countries. The greater complexity also increases the risk in the value chains. Companies that position themselves wisely within this trade-off buy themselves valuable time in the event of a shock to reorganize themselves against the backdrop of changed foreign trade conditions.  From the perspective of foreign trade policy, it is also possible to examine the extent to which stronger foreign trade cooperation with (potential) connecting countries could have advantages. The trade-off between resilience and complexity must then be assessed at a macroeconomic level, beyond individual company interests. In order to make it easier for companies to connect to potential connecting countries and to create appropriate framework conditions, German and European policy can build on existing comprehensive strategies at national and European level. Both the China Strategy11 and the National Security Strategy12 focus foreign policy on connecting countries as part of a stronger economic and political risk diversification. There is also a similar framework at European level with the EU's Strategic Compass13 . Following on from this, the German government could create targeted incentives to open up new markets in liaison countries, which would diversify critical supply chains and reduce one-sided dependencies.  At the same time, connecting countries pose a challenge. These can be used to circumvent foreign trade measures such as sanctions if flows of goods can find alternative routes via connecting countries more easily than before.  In order to realize opportunities and overcome challenges, close cooperation between science, politics and companies is required. This first requires the identification of a selection of potential connecting countries through scientifically sound analysis. This creates the basis for the subsequent steps in which European and German policymakers work closely with companies to create attractive framework conditions for trade with potential connecting countries - for example through bilateral trade agreements.  Attractive foreign trade framework conditions can create the necessary incentive to actually expand trade relations with potential connecting countries. Companies need to weigh up individual cases and make forward-looking decisions: To what extent is there a risk of a loss of production triggered by geopolitical conflicts? And how much would the complexity of the value chain increase if more potential connecting countries were included? Ultimately, the actual choice of preferred sales and procurement markets lies with the individual companies. LicenseThis work is licensed under CC BY 4.0 References1. Verbindungsländer werden im Sinne von Connectors verstanden, vgl. Gita Gopinath/Pierre-Olivier Gourinchas/Andrea F Presbitero/Petia Topalova, Changing Global Linkages: A New Cold War?, Washington, D.C.: IMF, April 2024 (IMF Working Paper) <https://www.imf.org/en/Publications/WP/Issues/2024/04/05/Changing-Global-Linkages-A-New-ColdWar-547357/>. 2. Statistisches Bundesamt (Destatis), Außenwirtschaft. 2025, <https://www.destatis.de/DE/Themen/Wirtschaft/Globalisierungsindikatoren/aussenwirtschaft.html#246 078/>.  3. Shekahar Aiyar/Franziska Ohnsorge, Geoeconomic Fragmentation and ‚Connector’ Countries, Online verfügbar unter:  <https://mpra.ub.uni-muenchen.de/121726/1/MPRA_paper_121726.pdf>.4. WTO, WTO Trade Monitoring Report, Genf, November 2024, <https://www.wto.org/english/tratop_e/tpr_e/factsheet_dec24_e.pdf/>. 5. Gita Gopinath/Pierre-Olivier Gourinchas/Andrea F Presbitero/Petia Topalova, Changing Global Linkages: A New Cold War?, Washington, D.C.: IMF, April 2024 (IMF Working Paper) <https://www.imf.org/en/Publications/WP/Issues/2024/04/05/Changing-Global-Linkages-A-New-ColdWar-547357/>.  6. Michael A. Bailey/Anton Strezhnev/Erik Voeten, »Estimating Dynamic State Preferences from United Nations Voting Data«, Journal of Conflict Resolution, 61 (2017) 2, S. 430-456, <https://journals.sagepub.com/doi/10.1177/0022002715595700/>.7. Gita Gopinath/Pierre-Olivier Gourinchas/Andrea F Presbitero/Petia Topalova, Changing Global Linkages: A New Cold War?, Washington, D.C.: IMF, April 2024 (IMF Working Paper) <https://www.imf.org/en/Publications/WP/Issues/2024/04/05/Changing-Global-Linkages-A-New-ColdWar-547357/>. War-547357. 8. Enda Curran/Shawn Donnan/Maeva Cousin, »These Five Countries are Key Economic ‚Connectors‘ in a Fragmenting World«, in Bloomberg (online), 1.11.2023, <https://www.bloomberg.com/news/articles/2023-1102/vietnam-poland-mexico-morocco-benefit-from-us-china-tensions/>.9. Michael A. Bailey/Anton Strezhnev/Erik Voeten, »Estimating Dynamic State Preferences from United Nations Voting Data«, Journal of Conflict Resolution, 61 (2017) 2, S. 430-456, <https://journals.sagepub.com/doi/10.1177/0022002715595700/>.  10. Enda Curran/Shawn Donnan/Maeva Cousin, »These Five Countries are Key Economic ‚Connectors‘ in a Fragmenting World«, in Bloomberg (online), 1.11.2023, <https://www.bloomberg.com/news/articles/202311-02/vietnam-poland-mexico-morocco-benefit-from-us-china-tensions/>.11. Auswärtiges Amt, China‐Strategie der Bundesregierung, Berlin, Juli 2023, <https://www.auswaertigesamt.de/resource/blob/2608578/810fdade376b1467f20bdb697b2acd58/china-strategie-data.pdf/>.  12. Auswärtiges Amt, Integrierte Sicherheit für Deutschland: Nationale Sicherheitsstrategie, Berlin, Juni 2023, <https://www.bmvg.de/resource/blob/5636374/38287252c5442b786ac5d0036ebb237b/nationalesicherheitsstrategie-data.pdf/>.  13. Rat der Europäischen Union, Ein Strategischer Kompass für Sicherheit und Verteidigung, Brüssel, März 2022, <https://data.consilium.europa.eu/doc/document/ST-7371-2022-INIT/de/pdf/>.

Energy & Economics
Countries within the Arctic Circle, political map. Countries within about 66 degrees north the Equator and North Pole. Alaska (U.S.), Canada, Finland, Greenland (Denmark), Norway, Sweden and Russia.

Russia’s Arctic Corridor: Between Ice and Isolation

by Manashjyoti Karjee

Russia’s Northern Sea Route (NSR) along its Arctic coastline has, for centuries, been as much a dream as a reality. The coastal corridor is a chance to cement Russia’s place as a polar energy superpower, and the presence of unexploited reserves of resources, the keeper of a possibly vital global artery. Yet the NSR’s story in the 21st century is not simply about ambition. It is about a paradox; two forces pushing in opposite directions. One force is geopolitical. A tightening of Western sanctions has cut Russia off from Western capital, technology, and partners that once underpinned its Arctic rise. The other is environmental: climate change. The melting of the sea ice at unprecedented rates is lengthening the navigable season and giving Russia a window of opportunity in the high north. Together they create a strange, almost theatrical tension – a stage where climate change is opening new Arctic pathways even as geopolitics seems to be closing them. This article traces how Moscow has adapted awkwardly at times and creatively at others to this paradox. The question is not whether Moscow still wants to realise the NSR’s promise. It does. The question is whether it can, and if so, at what cost. The answer lies in how Russia has substituted partners, improvised workarounds, looked inwards for domestic substitutions and leaned on risky logistics to keep its Arctic ambitions alive. The years after 2007 (to capture the pre-sanctions baseline and the waves of sanctions that followed), when Russia planted a titanium flag on the seabed at the North Pole, tell a story of Russia’s NSR adaptation, dependency, and resilience under constraint. The NSR’s economy runs on the same plumbing that moves everything from coffee to crude: finance, insurance, classification societies, maritime services, and high-end technology. When Western governments began sanctioning Russia over Crimea in 2014, the sanctions did not simply target individuals or issue symbolic bans. They went for the “nodes” in the global economy that Russia’s Arctic projects depended upon. This is a textbook case of weaponised interdependence. The theory explains how states that control critical financial and technological chokepoints in an interconnected global order can turn global connectivity into leverage. The effect was immediate. U.S. export controls banned Arctic offshore oil exploration technology, freezing ventures like ExxonMobil’s Kara Sea project. European and American banks withdrew. Insurers cancelled coverage for Russian vessels, and the International Association of Classification Societies expelled Russia’s maritime register. Without classification, many Russian-controlled ships lost their safety certificates and lost access to ports and insurance altogether. The 2022 invasion of Ukraine supercharged this process. Energy giants such as Exxon,  and Halliburton left Russia’s Arctic. Sanctions extended to almost every aspect of maritime trade. International Protection & Indemnity (P&I) clubs refused Russian risks, and the exodus of foreign expertise left Russia’s Arctic sector without many of the specialised tools it had once imported. In essence, sanctions acted as a structural stress test on Russia’s Arctic political economy, which raised financing costs, choking technology transfer, and narrowing partnership options for both upstream oil and gas exploration and midstream shipping and processing. Yet, the sanctions did not halt Arctic operations altogether. By 2023, the NSR cargo carried record volumes along the route. The moved cargo was roughly around 38 million tonnes of goods in 2024. This cargo was almost entirely Russian oil, gas, and minerals headed to Asia. The international shipping firms that had once dreamed of using the NSR as a global transit lane were seemingly gone. What remained was a “Russified” corridor: an export pipeline to friendly markets, sealed off from most of the world. Sanctions forced Russia to find replacements for Western finance, expertise, equipment, and markets. The most obvious substitute was China. The two countries already had growing energy ties, and after 2014, Beijing stepped in where the West stepped out. Chinese state banks provided roughly $12 billion in loans after Western financing dried up for Yamal LNG, the Arctic’s first LNG megaproject. China National Petroleum Corporation (CNPC) took a 20% stake in the project in 2013, and the Silk Road Fund took another 9.9% in 2016. Chinese shipyards supplied modular components, and by late 2017, the project was completed on schedule despite the constraints. This model, to replace Western inputs with Chinese ones, was carried over to Arctic LNG 2 on the Gydan Peninsula. CNPC and CNOOC each took 10% stakes by 2019, and Chinese yards again won construction contracts. A secondary interdependence formed: Chinese capital, shipbuilding, and market demand for LNG in exchange for Russian resources and Arctic access. But this substitution came with a catch. The relationship was asymmetric interdependence. Russia now relies far more on China than China does on Russia. For Moscow, the NSR and Arctic LNG capacity are strategic lifelines and Russia, under sanction, cannot so easily diversify its partners. But Beijing has other suppliers; the NSR is optional for Chinese trade. Beijing has used that leverage with a light but unmistakable touch by pressing for sanctions carve-outs and pausing when penalties threaten its global financial and commercial interests. When Washington sanctioned Arctic LNG 2 in late 2023, Chinese firms froze participation. CNPC and CNOOC invoked force majeure, and Wison (a Chinese manufacturer of LNG modules) recalled shipments and stopped work altogether. By 2023, roughly 95% of NSR transit cargo was bilateral Russia–China trade, mostly Russian oil moving east. When China pulled back, Moscow protested mildly; when Western firms did the same, the rhetoric was far harsher. The imbalance was clear. The NSR had become a lifeline for Russia, but only one option among many for China. Alongside external partnerships, Moscow sought to fill the gaps domestically. The flagship is the Zvezda shipyard in the Russian Far East, which was meant to deliver a homegrown fleet of Arctic-class tankers and LNG carriers. Initially a joint venture with South Korea’s Samsung Heavy Industries, Zvezda lost access to many suppliers after 2022. Building the specialised Arc7 LNG tankers proved harder than planned, and delays created a shipping shortfall. So, Moscow improvised at sea. The workaround was a fleet few had anticipated: the so-called “shadow fleet.” These are ageing, often 20-year-old tankers. Reflagged under flags of convenience to Panama, Liberia and the Marshall Islands, they sail without reputable insurance or up-to-date safety certification. After the EU banned Russian oil imports and the G7 imposed a price cap, Russia’s traders bought up and reactivated such ships. Some sail with AIS trackers off, earning them the nickname “floating time bombs” from former NATO commander James Stavridis. Regulators noticed. NATO began monitoring the dark fleet in 2023. The UK and Denmark tightened port inspections earlier; by mid-2025, Norway ordered inspections of all foreign tankers using its ports that had been involved in Russian Arctic trade. The cat-and-mouse is literal: AIS “spoofing,” loitering near transhipment points like Murmansk, and identity-masking tactics have all proliferated. The objective is simple – keep exports moving despite Western control over finance and insurance chokepoints. The method is naturally costly and risky. The environmental risks are also obvious, especially in Arctic waters. Yet by 2023, this shadow fleet had helped Russia stage a dramatic comeback on the NSR. Transit cargo, which had collapsed to around 41,000 tonnes in 2022,  hit a record 2.1 million tonnes in 2023, much of it oil to China. Of the 75 transit voyages (the most ever in a season) that year, 59 were in ships over 10 years old, and nearly 40% in vessels over 20. Three voyages were made by ships with no ice classification at all, possible only during the mildest late-summer window. This is resilience under constraint in action: maintaining volumes, but through seemingly riskier, costlier, and less sustainable logistics. The paradox deepens when nature itself becomes a player. The Arctic is warming roughly four times faster than the global average, a phenomenon known as Arctic amplification. This is thinning and shrinking its sea ice. Late-summer ice extent has declined by about 12% per decade, and the September ice volume is almost half of what it was in 1980. In a warm year like 2020, the NSR can see up to 88 ice-free days, extending the season well into October. The distance savings are tempting. After the 2021 Suez blockage, Moscow pitched the NSR as the more sustainable and safer,  with President Vladimir Putin setting targets of 80 million tonnes of cargo by 2024 and 130 million by 2035. Russia invested in infrastructure to shape the Arctic in its favour.  Chief among those investments is the series of nuclear icebreakers in the LK-60Ya class, intended to widen and lengthen the navigable seasonal window. Variability is the Arctic’s constant. In 2021, an early freeze trapped more than 20 ships in the Laptev Sea. A single harsh season or geopolitical flare-up could, according to one modelling study, cost up to $10 billion by closing the route for a year. Wind and currents can push ice into chokepoints, while storms and fog add further hazards. The message: averages entice; outliers punish. Major shipping companies remain unconvinced. The IMO’s Polar Code demands expensive safety upgrades, and giants like CMA CGM have sworn off the NSR, citing environmental and reliability concerns. Arctic shipping is feasible but rarely profitable for time-sensitive cargo under current conditions. In effect, climate change is lengthening the season but not guaranteeing it. Warm years can soften the impact of sanctions by enabling marginal ships to sail; cold years can erase those gains overnight. Moscow treats most of the route as water where it can write its rules with Russian regulations. The legal scaffolding rests on UNCLOS Article 234. The clause gives coastal states extra authority over ice-covered waters to protect the environment and, in places, on claims of historic usage through narrow straits. That interpretation has teeth. In 2019, Russia demanded advance notice from foreign warships before NSR transits. In 2023, Russia proposed stretching that notice to 90 days. The counter-view in Western capitals is blunt: key passages function as international straits with transit rights. Call it legal geopolitics. The idea that in contested spaces, law becomes an instrument of statecraft. With Western commercial presence all but gone since 2022, there have been few real-world tests of those competing claims. The ambiguity persists. So does the risk of friction if NATO navies decide to test freedom-of-navigation in the high north. The Arctic Council was built to keep geopolitics off the ice. War changed that. In early 2022, seven of eight members (everyone but Russia) paused participation, sidelining Russia’s chairmanship. Work resumed later that year without Russia; when Norway took the chair in 2023, that format stuck. The result: a governance gap where the Council once supplied common ground on search-and-rescue, spill response, and scientific cooperation. Into that gap have flowed unilateral and minilateral moves: EU sanctions to enforce oil price caps, national inspections of suspect tankers, NATO’s higher Arctic profile, and Russian military investments through the Northern Fleet. Moscow has doubled down on bilateralism, notably with China under a “Polar Silk Road” banner. Remove a pan-Arctic consensus, and states start to read the NSR less as a shared commercial asset and more as a strategic corridor. As long as the Council stays divided and the law stays fuzzy, the NSR looks less like a future global lane and more like a national project under duress. One under-appreciated dynamic is how weather and policy interact. A warm, low-ice year can partially offset sanctions by letting Russia move more cargo with sub-optimal ships and fewer partners. A harsh ice year can erase those workarounds; no amount of reflagging gets a thin hull through new ice without icebreakers. 2023 offered mild late-summer conditions and newly assembled logistics. Hence, the record season. 2021 offered an early freeze that embarrassed seasoned operators. Climate acts as the swing variable in Russia’s resilience equation. Targets mirror the tension. 80 million tonnes by 2024 proved aspirational as sanctions deepened and ice conditions fluctuated. The reset to 130 million by 2035 admits the need for a longer runway. More LK-60Ya icebreakers, more Arc7 hulls, more trans-shipment capacity, and, crucially, more reliable partners. The Zvezda bet may pay off, but replacing the full Western stack in the form of financing, kit, and specialised metallurgy takes time that geopolitics rarely grants. The shadow fleet moves oil, but at a cost. Older hulls, opaque ownership, weak insurance, and AIS dark zones each raise the chance of an incident. The high north does not forgive. A significant spill by an unclassed or uninsured vessel could slam shut political windows that the climate has opened. Every accident, real or narrowly avoided, argues for more scrutiny. For non-Russian shippers, reputational and compliance risk is decisive. The safety problem is moral, ecological and financial. Insurance premiums, capital costs, and compliance burdens spike when standards look variable and enforcement is vigilant. If the NSR is to attract rather than deter global carriers, four shifts stand out. The first is stable multilateralism. A thaw in Arctic Council politics that restores full eight-member cooperation on search-and-rescue, spill response, and scientific collaboration would reduce risk premiums. Without it, patchwork national rules and military signalling will continue to overshadow commercial priorities. The second is legal clarity. Narrowing the gap between Russia’s interpretation of Article 234 and Western views on straits rights, whether through litigation, negotiated guidelines, or pragmatic practice, would help calm the concerns of navies and insurers. Ambiguity, in this case, is costly. The third is infrastructure at scale. Expanding the fleet of LK-60Ya icebreakers, deepening the Arc7 fleet, ensuring reliable trans-shipment hubs from Murmansk outward, and building robust rescue and response capabilities would turn the Arctic’s volatile weather from a crippling hazard into a manageable variable. The fourth is safer logistics. Replacing dark fleet tonnage with transparent, classed, and adequately insured ships is unlikely under current sanctions, but any easing or targeted carve-outs could logically be traded for higher operational and environmental standards. Absent these shifts, the NSR will likely remain a niche corridor – reliable enough for Russia’s exports to a handful of partners – but not predictable or de-risked enough to attract the world’s container giants. In the end, the Route looks less like a global artery in waiting than a bespoke lane kept open by improvisation and political will. Russia has shown it can move volumes east without Western scaffolding. Still, the price is exposure: to China’s cautious leverage, to legal and governance ambiguity, to safety and insurance risk, and to a climate that can widen or snap shut the seasonal window with little warning. What emerges is resilience under constraint, capability sustained by workarounds rather than durable rules and partners. If geopolitics softens, the Arctic Council reactivates in full, and industrial bets from Zvezda to new icebreakers mature, the arc could still bend toward normalisation. Until then, this remains a sturdy yet narrow corridor; strategically vital to Moscow, serviceable for a few, and unlikely to host the time-sensitive traffic that defines a truly global route.