Prof. Dr. Kai Andrejewski, Senior Partner A Shifting Geopolitical Order The world economy is entering a new phase of structural volatility. The unipolar order of the post-Cold War era has fractured into a multipolar landscape marked by rival economic blocs, fiscal fragility, and rising policy divergence. Globalization, once a driver of growth and efficiency, is giving way to fragmentation and protectionism. The intersection of geopolitics, ESG, finance, and technology has become the defining arena of competition. Europe exemplifies the challenge. The constant collapsing of governments in France in 2025 underscores how political instability can quickly translate into fiscal uncertainty. France’s national debt has climbed to €3.4 trillion—115.6% of GDP—by late 2025, with debt service expected to hit €66 billion by 2026, becoming the country’s single largest budget item. Meanwhile, investment levels have fallen for six consecutive years. These dynamics heighten fears that Europe’s second-largest economy could become the epicenter of a renewed Eurozone debt crisis, undermining confidence in the euro and complicating monetary coordination. Across Europe, rising public deficits, populist politics, and monetary fatigue are converging into a dangerous feedback loop. Fiscal tightening risks political backlash; fiscal expansion risks market punishment. The region’s financial system, once a pillar of global stability, now appears vulnerable to shocks from both within and without. America’s Strategic Recalibration Across the Atlantic, the United States is pursuing a deliberate repositioning of its economic power. After decades of serving as the consumer and financier of last resort—absorbing global surpluses through its twin deficits—Washington is signaling fatigue with that role. The U.S. government argues it has borne disproportionate costs for maintaining the world’s liquidity and financial stability. A framework known as the Mar-a-Lago Accord, outlined by Stephen Miran, Chair of the Council of Economic Advisors, reflects this shift. The plan emphasizes a weaker dollar, selective treatment of foreign Treasury holders based on duration and yield, and a willingness to use America’s fiscal and monetary reach as a strategic instrument rather than a public good. In effect, the U.S. aims to weaponize its balance sheet—using access to its currency, markets, and debt as levers of influence. This represents a subtle but profound transformation: from a provider of global liquidity to an architect of global leverage. It reasserts financial dominance while distributing the costs of that dominance more selectively. Stablecoins: Financial Innovation Meets Statecraft Within this evolving strategy, stablecoins have emerged as one of the most consequential innovations in modern finance. These digital tokens pegged to real-world assets—primarily the U.S. dollar or gold—combine technological efficiency with monetary reliability, enabling near-instant, low-cost cross-border transactions. The passage of the GENIUS Act in July 2025 marked a turning point. For the first time, the United States established a comprehensive federal framework for stablecoins, requiring full backing by dollars or U.S. Treasuries, monthly audits, and unified state-federal oversight. The implications extend well beyond the digital-asset industry. By tying stablecoin issuance directly to U.S. government debt, the Act effectively links digital finance to the strength of the U.S. fiscal system. In doing so, it reinforces the dollar’s role as the world’s reserve currency. Today, roughly 99% of all stablecoins by market capitalization are pegged to the U.S. dollar. Under the new framework, each coin represents not only a claim on digital liquidity but also a micro-investment in U.S. sovereign debt. The geopolitical logic is straightforward: the more the world uses dollar-backed stablecoins, the greater the demand for U.S. Treasuries—and, by extension, for the dollar itself. By mid-2025, stablecoin issuers held $182 billion in Treasuries, with Tether alone controlling over $105 billion directly and another $21 billion indirectly. These entities now rank among the top 20 foreign holders of U.S. government debt, sitting alongside Japan and China. The United States has, in effect, discovered a new, decentralized mechanism for financing its deficits—a digital extension of its global monetary hegemony. The Dollar’s Digital Reinforcement The geopolitical implications are immense. The GENIUS Act not only stabilizes the regulatory environment for digital finance; it 'locks in' U.S. dominance in the crypto-asset ecosystem, ensuring that most global digital transactions continue to orbit around the dollar. As White House 'Crypto Czar' David Sacks remarked, the Act will 'extend U.S. dollar dominance globally' by aligning innovation with state power. Over time, this alignment could turn stablecoins into a strategic chokepoint. The U.S. might restrict access to its regulated stablecoins to allies or make participation conditional on compliance with its sanctions and trade regimes. In the energy sector, for example, Washington could encourage or pressure producers such as Saudi Arabia, the UAE, and Qatar to denominate exports in U.S.-backed stablecoins, digitizing the petrodollar system and extending American leverage into the blockchain era. Risks Beneath the Surface Yet the same forces that strengthen U.S. influence also introduce new vulnerabilities. If stablecoins become major holders of U.S. Treasuries, a sudden loss of confidence in bond markets could trigger forced liquidations, creating a self-reinforcing sell-off—a 'digital fire sale'. Moreover, as stablecoin issuers typically hold long-term assets against short-term redemption liabilities, the structure resembles the maturity mismatch that felled Lehman Brothers. There are also macroeconomic side effects. Expanding stablecoin issuance increases global demand for short-term U.S. debt, potentially altering yield-curve dynamics and reducing the Federal Reserve’s ability to manage liquidity through traditional channels. In extreme cases, this could amplify monetary volatility, blurring the boundary between regulated finance and decentralized markets. Corporate Implications: Navigating the Digital Dollar Order For global corporations, the rise of regulated stablecoins is not an abstract macro story—it is a strategic inflection point. The GENIUS Act provides long-sought regulatory clarity, opening opportunities for faster, cheaper, and more secure cross-border payments. Companies operating across multiple jurisdictions can expect lower settlement friction, improved transparency, and enhanced liquidity management. However, these benefits come with new compliance and geopolitical challenges. The U.S. framework effectively sets the global standard. Firms dealing in stablecoins must therefore ensure full alignment with U.S. financial, data-protection, and sanctions laws—even if headquartered elsewhere. The line between financial regulation and foreign policy is increasingly blurred. To adapt, companies should: 1. Audit their exposure to digital assets—review how stablecoins intersect with payment, treasury, and financing operations. 2. Integrate geopolitical risk analysis into financial planning, recognizing that access to certain digital currencies may depend on political alignment. 3. Diversify settlement systems to avoid over-reliance on a single currency or jurisdiction. 4. Invest in compliance and digital-finance capabilities, particularly in AML/CFT, data governance, and blockchain auditing. 5. Engage proactively with regulators and industry bodies to shape standards before they harden into global norms. In this new era, financial agility becomes a form of geopolitical resilience. Corporations that can adapt to regulatory shifts, manage digital liquidity, and align innovation with compliance will be best positioned to thrive. The Strategic Value of Stability Stablecoins illustrate a broader truth about today’s global economy: stability itself has become a strategic asset. What began as a niche experiment in cryptocurrency now sits at the crossroads of monetary policy, technological innovation, and national strategy. The U.S. has seized the moment to reassert monetary leadership through innovation, while Europe grapples with structural debt and institutional inertia. China, meanwhile, continues to expand its digital yuan framework—offering an alternative model rooted in state control rather than market trust. The competition between these systems will define the next decade of global finance. For the corporate sector, the message is clear. The boundaries between technology, ESG, finance, and geopolitics are dissolving. Companies must think not only about profitability but also about sovereignty, compliance, and systemic interdependence. As digital currencies become instruments of power, strategic foresight and adaptability will separate the resilient from the exposed. In the emerging order, innovation without stability breeds fragility—but stability without innovation breeds irrelevance. The challenge, and the opportunity, lie in mastering both.

I n the Agora Strategy Group geopolitics podcast “The Future of Power”, Dr. Timo Blenk (CEO) invites decision-makers from diplomacy, business, politics and the military to discuss current geopolitical developments on a monthly basis. The core of this project is to provide information about the influences of these developments and to create a sound basis for decision-making.   This month's guest is Susanne Wiegand, experienced German executive, defense industry expert and Volkswagen Group supervisory board member! In the 34th episode of our podcast, Dr. Blenk and Susanne Wiegand discuss the transformation of the German industry, the defense turnaround and future markets!   You find our podcast with subtitles on Youtube: https://www.youtube.com/watch?v=FkzxmtZhIjU&list=PLbZnFG9qqYIBOFIkiSxzf5d7KiaN7QDtE This month's highlights Germany's industrial revival: Structural changes, bureaucracy reduction and innovation are key Defense industry 2.0: Focus on speed, air defense and scaling Recognizing opportunities: India's digital dynamics and renewed partnerships with Canada, the Nordics and Japan     In-house announcements All other episodes of the podcast “Agora Strategy Group” website “Agora Strategy Group” on LinkedIn Current projects, publications & events of the Agora Strategy team Agora Institute Executive Membership Agora Strategy Executive Briefing: La France, inquiète: Macron has only one year to secure his economic and European legacy Agora Strategy Special Report: The strategic role of space and Europe's answer Agora Essential Reads: "From Strategy to Action - Implementing the EU Black Sea Strategic Approach"

Agora Strategy Executive Briefing on France Executive Summary The fall of the Bayrou-government in September signals that France will remain politically unstable at least until the 2027 presidential election. During this period, the inability of the political center to agree on reforms makes a deterioration in economic conditions and an intensification of the debt crisis likely. A victory of the far-right Rassemblement National (RN) in the 2027 presidential election would be a tipping point for the EU and the European integration process. Implications for International Business Companies already invested in France or planning on doing so should prepare for an end of Macron's pro-European and business-friendly policies, as an RN win in 2027 would most likely imply a nationalist agenda with protectionist policies. While the debt crisis is increasingly viral and austerity measures loom, demands on the political left are becoming more radical. Violent protests cannot be ruled out in the coming months, increasing instability and political risk in France. State of Play Macron’s grip on France’s political system is loosening In September, President Macron appointed Sébastien Lecornu as the fifth prime minister since he started his second presidential term in 2022. Governments have been changing rapidly after the president’s party, and its allies lost their majority in Parliament in 2022. Since only 15% of French voters think positively of Macron today, the president lacks legitimacy to counter the loss of confidence in the political establishment. Numerous politicians, particularly right of center, are preparing for his succession in 2027 when a term limit kicks. The ongoing instability will likely benefit forces at the political extremes and especially Marine Le Pen’s RN. The next test of the political balance of power is programmed for March 2026 with the nationwide local elections. Key Issues Inability to reform makes radical solutions more likely The last two prime ministers, Francois Bayrou and Michel Barnier, both toppled over budget plans. In view of rising deficits, French politicians, especially those on the center-right, have for decades called for greater budgetary discipline without implementing corresponding savings plans or reforms. French sovereign debt keeps climbing up after the deficit rose by an extraordinary 5,8% of GDP in 2024. That same year, the European Commission launched an excessive deficit procedure, expecting France to meet the Eurozone’s Maastricht criteria again in 2029. The procedure reflects growing concerns about the stability of the eurozone. Some observers have likened France's financial situation to that of Greece during the sovereign debt crisis. Unsurprisingly, days after the fall of the Bayrou government, Fitch Ratings downgraded the government's credit rating from AA- to A+, as analysts do not trust the French to comply with eurozone rules and austerity plans and cut new borrowing. France’s debt problem extends beyond successive governments’ inability to rein in the deficit. New debt has been taken on in recent years to mitigate economic consequences of exterior shocks. Facing the lockdowns during the COVID pandemic, Macron promised to do “whatever it takes” to protect French households from rising living costs and economic instability. Similar dynamics were at play during the energy crisis following Russia's invasion of Ukraine in 2022. Significant parts of the deficit thus indirectly benefited all French citizens alike. Yet, while new Prime Minister Lecornu has launched negotiations for the 2026 budget, responses to the national debt-problem vary significantly across the political spectrum. The French left seeks to tax large fortunes much higher to increase fiscal justice, with one key proposal made by UC Berkeley economist and director of the Paris-based EU Tax Observatory, Gabriel Zucman. Opponents on the right fear that the “Zucman-tax” will drive away investment and entrepreneurs and undo the positive momentum that Macron’s supply-oriented policies have created since 2017. The far right, for its part, is calling for radical cuts in specific areas of public spending: French transfers to the EU are to be reduced, international development aid is to be reviewed. Although their economic plans have become less radical (like “Frexit”) and more coherent, a RN-led government would add another €14bn to the French deficit without credible growth reforms. France's borrowing costs already match those of Italy and RN economic policies would deepen investor mistrust, further raise borrowing costs, and erode the country's competitiveness in the Eurozone. In addition, leading politicians (including Macron and Bayrou before his demise) have promised referendums. Also, the RN claims to be in favour of more direct democracy, a key demand of the Yellow Vest movement of 2018/19: The party wants a referendum on restricting social welfare benefits for people without French citizenship or residence rights – a potentially devastating signal for international professionals and investors. Continued instability weakens foreign policy capabilities and European unity For a long time, French politics appeared relatively stable, not least because of the president’s constitutionally granted exclusive powers, in particular in foreign and security policy. Macron’s unchallenged role in foreign affairs, however, belies the fact that France is far from consensual even in these policy areas. One telling example of the growing influence of domestic politics on France’s international policies is the EU-Mercosur free trade agreement. Farmers' associations have announced protests against the deal for the coming weeks, while the European Commission and many member states would like to adopt it as quickly as possible. Any concession at EU level would now come at a high price for Macron. Another example is the noticeable strengthening of nationalist positions in the defense industry. Aircraft manufacturer Dassault, which successfully tapped into export markets in recent years (France was the world's second-largest arms exporter in 2024), is pushing to carry out major future projects at national level and is willing to break with European partners such as Germany and Spain (within the framework of the Future Combat Air System, FCAS). This new mood in Paris could undermine confidence in France's willingness to contribute to security on NATO's eastern flank (currently mainly in Romania and the Baltic states). Instead, nationalist forces may seek to reverse Macron's shift in priorities in terms of France's global presence - from the Global South toward Europe - and resume involvement in its old ‘spheres of influence’ in West and Central Africa, the Middle East, and even the Pacific - at the expense of its European commitments.   As in other countries, parties on the political fringes primarily focus on domestic policy issues such as migration and social justice. However, this does not mean that, for example, the RN’s rise to power would not cause massive disruptions in foreign and European policy. After an electoral victory, a referendum on immigration would challenge European institutions like the Commission or the EU’s courts, with the party exploiting the subsequent clashes in line with its sovereigntist agenda. While the party has given up on earlier calls for withdrawal from the EU or NATO to not scare off potential voters in the French middle class, it would still rattle those institutions. That said, it also promised continuity in foreign policy to allay the concerns of French business associations such as Medef.   Still, the surge in support for the RN from the MAGA movement, seeking to strengthen right-wing populists across Europe, means that the 2027 presidential election could be decisive for the future of the entire EU. In late May, representatives of the Heritage Foundation met with RN leaders in Paris. The French far right is seeking American support in the upcoming presidential election; some dream of a French equivalent to “Project 2025.” If France falls to the hard right in 2027, it could trigger a domino effect in Europe and end the European unification process in its current form.

Agora Strategy offers regional expertise and analyses on geopolitical risks and developments worldwide. The company is supported by its global network of more than 300 Senior Advisors and Fellows. Global Network Our 350 + senior advisors and fellows drawn from the fields of politics, diplomacy, security and defense, business and academia, are regionally and locally-connected across the world. Operating successfully in foreign markets requires a profound understanding of political, economic and social conditions. Selected Agora Experts Filter elements by name All [Region] Filter elements by name All [Expertise] Expertise Regions Reset filter Filter by Home / Global Network /

The Agora Strategy Risk Report 2025 analyses 8 risks of high relevance to businesses, followed by key implications and recommendations Home / Agora Strategy Institute / Risk Report 2025 / Is Autocracy Winning? Eight Geopolitical Risks to Watch in 2025 👉 Click here to read the foreword by Prof. Dr. Wolfgang Ischinger, Dr. Timo Blenk, Prof. Dr. Kai Andrejewski Executive Summary - The World in 2025 Risk #1 | Rivalry and Unpredictability I: America driving turmoil Donald Trump's return to the White House will bring more serious upheaval than his first term. Beyond that, it is almost impossible to predict policy actions of a president whose focus will be to push through his idea of American superpower, whatever the cost. Trade wars with China, the EU and America’s neighbors beckon, as well as aggressive protectionism, nationalism and unpredictable deal-making. At the same time, the United States faces major domestic problems: The national debt is huge, rising interest rates threaten the budget, and the likely effects of Trump’s aggressive protectionism on the American economy and the high costs of living make its implementation questionable and dangerous. 👉 Businesses must navigate a geopolitical environment characterized by high volatility, uncertainty, and the looming threats of increased trade barriers across their supply chains. Global companies will benefit from increasing their US presence in a geopolitical environment characterized by rising protectionism and uncertainty. Reducing the supply chain dependency of local US manufacturing on other countries, including NAFTA partners, will be essential. Risk #2 | Rivalry and Unpredictability II: China waiting to respond China is facing serious challenges in 2025: a sluggish economic outlook, a persistent real estate sector crisis, rising national debt, and high unemployment are set against an intensifying strategic rivalry with the US, including the trade war threat. President Xi Jinping´s wait-and-see approach to Trump´s unpredictability towards China adds uncertainty for the rest of the world, which would be affected by economic countermeasures. Already, Beijing is making efforts to ensure supremacy in strategically important industries and critical minerals and safeguard domestic stability by amplifying government control over society and economy. 👉 Adapting to a new world of exports controls, (counter-)sanctions and supply chain disruptions becomes key for firms to ensure business continuity across their global operations. Risk #3 | The Power of Technology In 2025, the dominance of Big Tech and disruptive technologies like Artificial Intelligence (AI), quantum computing, and clean tech will continue to radically reshape global markets, business models, and geopolitics. The rise of techno-nationalism, marked by President Trump’s coterie of tech moguls, will heighten risks of digital trade wars not only between the United States and China, but also across the Atlantic with the EU. Businesses face growing cybersecurity threats from the rapid advancement of offensive cyber capabilities through disruptive technologies, as well as key regulatory challenges, such as the implementation of the Data Act or key provisions of the AI Act, which come into force in 2025. 👉 Firms must strengthen... ... Want to read more? Exclusive content More about the Agora Executive Membership Full access only for members of the Agora Strategy Institute Contact us The Risk Report 2025 analyses the following 8 risks of high relevance to businesses, followed by key implications and recommendations: Risk #1 | Rivalry and Unpredictability I: America driving turmoil Risk #2 | Rivalry and Unpredictability II: China waiting to respond Risk #3 | The Power of Technology Risk #4 | Simmering Geopolitical Flashpoints Risk #5 | Democratic Backsliding and Weak Governance Risk #6 | The Chokepoints of Trade and Markets Risk #7 | Climate Change and the Weaponization of Energy Risk #8 | Financial Crisis 2.0

Together with the pro EU government, Agora Strategy conducts a stakeholder mapping, identifies relevant non-governmental actors, and enlists senior advisers of its network to support its outreach strategy. Agora Strategy’s action plan results in a reliable and durable network of supports for the government, designs beacon programs with a high chance of success and constructs a narrative to support further progress. Government consulting Our 300 + senior advisors and fellows drawn from the fields of politics, diplomacy, security and defense, business and academia, are regionally and locally-connected across the world. Operating successfully in foreign markets requires a profound understanding of political, economic and social conditions. The Challenge The European Union is beset with enlargement scepticism. Despite mounting and undesirable influence from Russia and China, a need for internal cohesion, and the desire for a long-run EU perspective, many governments remain openly opposed to further EU enlargement. A pro-European government on the west Balkan with EU candidate status and a clear perspective for membership ascension approaches Agora to facilitate the establishment of resilient and comprehensive ties to leading European institutions, key-pundits, corporations, and players. The client wishes to improve its odds of timely EU ascension and push relevant stakeholders in this direction. The Agora Approach Agora first conducts a comprehensive stakeholder mapping of relevant EU-players together with the pro-European government. Here, Agora identifies vital entities beyond government that encompass civil society organisations, cultural institutions, foreign direct investment sources, individuals, and corporations. The engagement strategy is supported by Senior Advisors with diplomatic, military, entrepreneurial, and governmental backgrounds. Second, Agora devises a step-by-step program to induce sustainable cooperation between stakeholders with the goal of establishing enduring alliances. With this, Agora singles out beacon programs of high mutual acceptance and likelihood of success and aids in subsequent formation of favourable narratives for diverse target audiences. At all stages, Agora is in close communication with the pro-European government to insure maximum transparency and exchange of ideas. Home / Services / Government consulting / The Outcome At various levels, a diverse partnership network of supporters emerges. The newly established alliances prove to be resilient and stable in pursuit of the client’s stated objectives The desired narratives are widely adopted, deployed, and accepted. Beacon programs pertaining to, e.g. Visa-free travel, student exchanges, and industry cooperation, are greenlit The pro-European government can demonstrate successful progress at home to shore up domestic support while further increasing the range of their cause regionally and internationally