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Title: January 21, 2026

GZB 2026 GLOBAL FORECAST
 
2026 Forecast: Re-anchoring the West
 
China has effectively replaced Russia as a global power.
 
Global
 
In 2025 we noted that the world was becoming more unanchored compared to years past. Since World War II, the global order had an anchor, a system of two great powers – the U.S. and the Soviet Union – around which the rest of the world was organized.
GZB has reported on increased military budgets and unprecedented military buildup, across the world. Regional conflicts, the battle for resources and shifting geopolitical landscapes perhaps creates a bleaker outlook than normal — or what we perceive as to be normal within our lifetime. While I don’t have a crystal ball — I do have a Magic 8 Ball. 🎱
Other countries could align with one side or the other, or they could remain neutral, but even the non-aligned countries were set in place by spheres of influence exerted by the U.S. and the Soviet Union. Their respective allies often clashed – in South America, Korea, Vietnam, Afghanistan and the Middle East – but by and large, the conflict was relegated to proxies. It wasn’t perfect, but it obviated the need for a larger war between Moscow and Washington, and in doing so, it created a semblance of stability. (This was aided, of course, by the proliferation of nuclear weapons.)
 
After the collapse of the Soviet Union, two things changed the global order: Russia steadily declined as a global power, especially after the invasion of Ukraine in 2022, when its focus became primarily regional and its economy remained far from global, and China steadily emerged as a great power. The U.S. no longer had the military imperative to resist Russia wherever it showed itself, and it has developed a new imperative to increasingly challenge China on economic and political fronts. As the new global system evolves, regional geopolitics is also changing.
 
This is a normal process – one that will evolve further in 2026. China and the U.S. are already engaged in military and economic competition. Although both have substantial military capabilities, neither benefits from going to war with the other because, ignoring the fact that neither can be assured of victory, they depend on each other economically. China needs the U.S. to buy its products, and it has always relied on Western investment to fuel its economic growth. The U.S. needs to import cheap products for consumers and downstream industries to control inflation, and it needs to divert investment into more innovative and profitable economic sectors.
 
Put simply, the U.S. can’t maintain hostilities with a country on which it depends economically. Neither can China. Given this reality, Washington had to rationalize its relationship with Beijing without engaging in outright conflict. Its method for doing so was tariffs, the imposition of which created a serious weakening of the economy in China, raised unemployment and created severe weaknesses in its real estate and financial sectors.
 
It also created economic problems in the U.S. by increasing the price of consumer goods. The effect on the Chinese economy was more significant than on the American economy. The solution, then, will be two-fold. First, the United States and China will reach an agreement to ease military tensions. Second, the U.S. will remove or at least moderate tariffs.
 
A military accommodation would be relatively easy to achieve based on things like informing each other of planned military exercises to avoid the fear of surprise. However, the situation is complicated by Taiwan, which is allied with the U.S. but claimed territorially by Beijing.
 
The island nation is a military asset for the U.S. because it’s part of a geopolitical stranglehold on China. There is a string of islands off China’s Pacific coast – generally referred to as the first island chain – that can potentially limit China’s access to the Pacific and thus threaten its export-oriented economy. This becomes even more acute in times of war. Ideology aside, Beijing wants to retake Taiwan so that it can open a much larger gap between Japan and the Philippines that provides wider and less predictable access to the Pacific. Thus, Taiwan is a fundamental military issue that must be resolved for any lasting agreement to take hold.
 
A potential compromise could be reached with Taiwan being recognized as formally part of China but an autonomous region in principle like Hong Kong, although autonomous to a far greater extent. Beijing would simply need assurances that the U.S. would cap certain military commitments there and that it, like China, would avoid participating in military exercises around its waters. Given the economic imperatives on both sides – to say nothing of the political evolution taking place in Taipei – some kind of understanding along these lines seems plausible in 2026.
 
This would establish a radical new global geopolitical system: a bipolar world with two powers not engaged in either economic or military confrontation. (Considering what happened after World War II, this kind of change isn’t unprecedented.) If such an agreement was reached between the U.S. and China, there would be serious challenges to overcome, but the world would be anchored again, and the risk of conflict would be dramatically reduced.
 
Geopolitically, a critical outcome of this change would be a further decline for Russia. The Soviet Union has been shattered, and Moscow has lost some degree of control over its traditional spheres of influence in the Caucasus, Central Asia and the Baltic states. It was only the relative weakness of these regions that kept Russia’s regression from being too big a problem. If there is an entente between the U.S. and China, Moscow will face a new threat along the border it shares with China, a historical competitor. Russia may be a nuclear power, but so are the U.K., France, North Korea, Israel, India and Pakistan. Russia should be seen as a member of this class of regional, not global, powers. That honor belongs to the U.S. and China.
 
The reduction of Russia’s relative power would raise a fundamental question over the future of Europe in general and the European Union in particular. The EU’s gross domestic product is a bit larger than China’s, and were it to ever exist within a single nation, it would inarguably become a world power. If there were an understanding with China, and with the danger from Russia militarily already dubious, the European nations operating alone would all be minor actors in the new world order. That unification would be of value to the Europeans does not make unity imperative or likely.
 
We therefore consider U.S.-China relations to be the most important geopolitical issue in 2026. There are few barriers to accommodation and many incentives for cooperation. To be sure, cooperation will not bring lasting peace to the world, but it will bring some degree of re-anchoring and order to the global system.
 
The war in Ukraine, however, deserves an honorable mention. To put it bluntly, we cannot predict the timing of the end of the war because it has become essentially a political, rather than a geopolitical, affair. From a geopolitical perspective, the war is over, even if the killing is not. It has become a frozen conflict in which Moscow is unwilling to accept defeat but is incapable of taking Ukraine for its own. It is extremely unlikely that Russia could or already has mobilized a force that could achieve this end; if it did, it would have done so by now. In addition, Kyiv is unable to force the Russians out of the parts of Ukraine they have taken. When the conflict comes to an end, then, is in the hands of a few political leaders – and the timing of a cessation of the killing is unpredictable.
 
Forecast
 
The United States and China will reach an understanding on economic and military relations.
 
Both nations need to reach an agreement on economic affairs; China’s economy has been weakened by tariffs and limited access to the U.S. market, while the U.S. needs to bring down the price of consumer goods. Washington will not, however, enter an economic understanding unless there is a similar military understanding, so expect each country to at least inform the other of planned military exercises and consultations.
 
The U.S.-China reconciliation will put Russia in a more difficult geopolitical position. Russia will not have the military resources to invade other regions.
 
Russia and China share a long border, and historically their bilateral relations are a study in tension and hostility, so their recent cooperation should be seen as transactional, not eternal. The stalemate in Ukraine and its associated sanctions have undermined Moscow’s ability to replenish its military resources. The national economy, meanwhile, has become a top priority for Russia. Both of these factors will restrain Russia from taking new military action elsewhere.
 
Though U.S. policy toward Europe will bring about new political postures, the U.S. will not leave NATO.
 
European nations will be forced to reevaluate their positions on a variety of topics – including whether Ukraine is a fundamental issue for the Continent as a whole. This will lead to disagreements within and among countries, potentially leading to political paralysis and raising questions about the viability of the European Union.
 
The U.S. will increasingly prioritize its interests in the Western Hemisphere. Now that regime change is underway in Venezuela, Washington will focus on Cuba, even as it tries to bring about more modest changes in other Latin American countries.
 
Cuba’s location makes it critical to U.S. maritime security on its southern coast – and in the Caribbean more broadly. U.S. action against Venezuela will deprive Cuba of oil and other forms of support, the deterioration of which will put pressure on Havana. Washington hopes this pressure will lay the groundwork for instability that brings about regime change.
 
Asia-Pacific
 
East and Southeast Asia are located at the intersection of global trade, maritime security and great power competition. Asymmetrical development, historical dependencies and overlapping spheres of influence characterize the region. Asia-Pacific geopolitics is structured around a dominant central power (China), external great power penetration (by the United States) and several advanced and emerging regional actors pursuing strategies to balance against the two.
 
The region is a core driver of globalization and industrial production but also one of the primary theaters of strategic rivalry. Maritime routes, technology supply chains and alliance networks define both cooperation and conflict.
 
Forecast
 
China and South Korea will deepen economic and strategic cooperation, resulting in more trade agreements, high-level meetings and coordination on regional security issues.
 
Beijing and Seoul already have an interest in bilateral trade, economic integration and cooperation in technology and digital sectors; South Korea must remain aligned with China to safeguard its export-driven industries. They will thus cooperate more closely on regional security, particularly on the North Korea nuclear issue – a necessary adjunct for U.S.-China reconciliation.
 
U.S. allies in the Indo-Pacific will expand security engagement and diplomatic coordination with China as U.S.-China relations soften.
 
Countries such as Australia, Japan, South Korea and India will have no choice but to adapt to the new normal, so to remain aligned with the U.S. without alienating China, they will engage in collective and individual measures to keep security and diplomatic communication channels active, resulting in more frequent meetings and new bilateral and multilateral agreements. This engagement will reduce the near-term risk of escalation, particularly in the South China Sea.
 
China will strengthen security cooperation and confidence-building measures with the Association of Southeast Asian Nations, even as external actors step in to manage regional instability.
 
Beijing will engage with multilateral frameworks as it prioritizes regional stability over unilateral power projection. Meanwhile, economic uncertainty will fuel protests in parts of Southeast Asia. Existing flashpoints (the Cambodia-Thailand border dispute and Myanmar’s civil war) will attract more active mediation by China, the U.S. and ASEAN partners, all of which are expected to favor diplomatic solutions over coercive measures.
 
Latin America and the Caribbean
 
Latin America consists of four subregions: Mexico, Central America, the Caribbean and South America. There is a high degree of homogeneity in the region, though Brazil and certain Caribbean nations are the exceptions. The political landscape traditionally oscillates between far-left and far-right political ideologies. Most of the region’s economies are driven by the export of commodities and natural resources, while its many natural barriers facilitate illicit activities like smuggling and drug trafficking, making organized crime one of the region’s biggest security threats. Latin American geopolitics is defined by proximity to the U.S. and its distance to every other region in the world. After years of relative dormancy, the U.S. is actively reengaging with the region from a position of dominance and strength.
 
Forecasts
 
Latin American countries will diversify their economic relationships to include greater participation by European (France and Germany) and Asian (Japan, South Korea and India) countries.
 
Concerns over U.S. tariffs and Washington’s volatile economic policy will drive these efforts. Brazil and Chile will lead the way in areas such as South Atlantic development, traditional energy, critical minerals, technology and AI – all of which are meant to reduce the risk of strategic dependencies on the United States.
 
Several countries (Ecuador, Argentina, Chile and Costa Rica) will develop and implement new strategies to replicate the success of El Salvador’s security crackdown.
 
Driving the reform are social pressure, the need for better economic environments and, crucially, the desire to avoid being targeted for intervention by Washington. The programs will focus on organized crime, migration and border controls.
 
Europe
 
Europe is best understood as a group of interconnected subregions, each exerting distinct pressures on the Continent’s stability and strategic direction. The traditional Western-oriented model under which it has long operated is giving way to a more diffuse organization. In this model, the Franco-German core and the U.K. are engaging more with the Poland-Romania-Greece containment line, the Balkans and the Mediterranean frontier, all of which form overlapping strategic zones. The Black Sea, meanwhile, is an arena in which borderlands meet, making it a geopolitical node that also shapes European security. The interaction of these five forces determines Europe’s security posture, shapes its economic governance and influences its political cohesion – not to mention its military posture. The U.S. decision to pull back from Europe has complicated this model.
 
Forecasts
 
Economically, the European Union will remain the dominant force in Europe.
 
The EU is still the world’s largest integrated international market – indeed, the eurozone is still expanding – but leaders in Brussels are increasingly being challenged by sovereigntist movements calling for common policy to be subordinated to state-based policy. (The U.S. withdrawal will likely aggravate this trend.) Meanwhile, the Franco-German engine will be constrained as domestic economic stagnation in Germany and socio-political instability in France limit their capacity to lead and preserve the EU at almost any cost.
 
Europe will start to devolve into a multiregional system rather than a unified bloc.
In response to security challenges, including the war in Ukraine, the EU will either strengthen political unity in the face of shared security threats or break apart. (We believe the latter is more likely.) The result will depend on how quickly decisions are made on European reindustrialization and the outcome of the Ukraine war, potentially including a negotiated settlement.
 
The United Kingdom will be the leading European security actor outside the EU, informally shaping NATO and EU security agendas alongside France and Germany.
The U.K. will remain a first-tier European security actor, exercising influence through the coalition of the willing, intelligence dominance and military credibility. A de facto European “security directorate” will persist around Ukraine, with the U.K. providing hard power and intelligence, France strategic framing and nuclear weight, and Germany financial and industrial backing.
 
The Poland-Romania-Greece axis will anchor Eastern Europe’s containment line. Turkey will be the dominant power in the Black Sea.
 
This trilateral containment line will become increasingly explicit and institutionalized as it emerges into the security axis connecting the Baltic Sea, the Black Sea and the Eastern Mediterranean. It will anchor deterrence, logistics and strategic coordination along the eastern and southeastern flanks, and as important, it will bypass Turkey when necessary.
 
Russia-Turkey dynamics in the Black Sea will test NATO cohesion while elevating Romania to a position of regional security hub.
 
Relations between Russia and Turkey are likely to grow tactically accommodating, driven by shared interests in the South Caucasus and the Middle East, even as tensions persist in the Black Sea. As the European coalition of the willing pushes for a firmer posture there, Turkey’s caution, and its desire to preserve its strategic autonomy, will complicate NATO cohesion. Romania, meanwhile, will work with Turkey and Bulgaria to secure the Black Sea and facilitate Ukrainian trade while strengthening military mobility through the Danube and connectivity with Poland. It will thus be compelled to maintain an equilibrium among these actors, accelerating the operationalization of its role as a key security and logistics hub.
 
Russia
 
Russia – the largest country by territory – is a vast landmass stretching from the Baltic Sea in the west to the Pacific coast in the east and from the Arctic in the north to the Caucasus Mountains and the Caspian Sea in the south, making the country a de facto region in its own right. Its resources are unevenly distributed, as are its residents: Two-thirds of the population lives in the European part of the country, while resource-rich Siberia and the Far East remain sparsely populated and lack sufficient infrastructure for development. The collapse of the Soviet Union left Moscow with an economy in crisis and unprotected borders, prompting the Kremlin to revive growth and ensure security. Historically, Russia has experienced threats and pressure from the West, and thus sees NATO’s presence near its borders as the main threat to its security. Many of the areas the government controlled during the Soviet era are still subject to Russian influence, though even that is starting to change.
 
Forecast
 
Russia will try to take advantage of new business opportunities in Europe.
 
Washington’s new policy of (measured) withdrawal will open doors for Russia in Europe. Political rhetoric aside, expect business climates to warm between Russia and countries such as Germany, Italy and France – all of which are in danger of economic stagnation. The mutual need to revive their economies will force them to search for new business partners and investment opportunities, even if they hail from former adversary countries.
 
Russia will reduce engagement with allies in the Western Hemisphere.
 
Russia’s relations with the United States will determine how Moscow interacts with its allies in the Western Hemisphere. Put simply, Russia will pull back some of its support in Latin America – namely, Venezuela and Cuba – to curry political favor with the U.S. as talks over Ukraine continue. Russia will support these countries only as far as the U.S. allows.
 
Central Asia
 
Situated at the heart of Eurasia and bounded by Russia to the north, the Caspian Sea to the west, Iran and Afghanistan to the south, and China to the east, Central Asia is the most landlocked region in the world. Inhabited largely by ethnically Turkic populations, it has historically been dominated by Russia. Following the collapse of the Soviet Union, five sovereign states emerged, all of them endowed with vast energy and mineral resources. Over the past quarter century, China has steadily expanded its influence across the region – more in some countries than others. Kazakhstan and Uzbekistan are the two principal regional actors that shape the region’s political and economic dynamics.
 
Forecast
 
Kazakhstan and Uzbekistan will lead the region as their governments test the limits of modest reform and manage internal pressures, all while navigating the shifting dynamics of the U.S., China and Russia.
 
Domestically, each government will weigh the benefits of incremental change against the risk of popular unrest and threats to its own authority. On foreign policy, they will try to exploit opportunities presented by great-power competition, seeking aid, investment and strategic cover from one or more external actors. This dual focus will define regional stability as governments attempt to maximize their autonomy without entangling themselves too much in broader affairs.
 
Central Asia will be shaped primarily by developments in Ukraine, Afghanistan and Iran.
There is growing competition between new and old players in the region: the U.S., China, the EU, Turkey, India and Russia. This rivalry threatens Moscow’s traditional role as the region’s security guarantor and political arbiter. The war in Ukraine will constrain Moscow’s ability to project power southward, creating openings for China and the U.S. to expand influence. Afghanistan will continue to be a major source of uncertainty, while domestic political upheaval in Iran could open up opportunities for Central Asian nations to access ports on associated infrastructure.
 
South Caucasus
 
Situated between the Black Sea and the Caspian Sea, the South Caucasus is a vital land bridge that links Europe and Asia. Its strategic position has long made it an arena of competition for Russia, Turkey and Iran. Following the collapse of the Soviet Union, Azerbaijan, Armenia and Georgia emerged as independent states, but Russia was still the preponderant power in the region. Over the past few years, however, Russia has lost much of its power, creating an opening for Turkey to expand its influence, particularly in the aftermath of Azerbaijan’s 2020 military victory over Armenia. More recently, the U.S. has exploited a strategic opportunity in southern Armenia via a transportation corridor that has upended the regional balance of power.
 
Forecast
 
Azerbaijan will enhance its regional influence, but political developments in Iran could derail the process.
 
The government in Baku will parlay its victory over Armenia in the Nagorno-Karabakh war into greater regional power. The U.S. will back its play because Washington is keen for the region to become a transport hub that links the West with Eurasia. Azerbaijan will exploit U.S. interests to gain diplomatic leverage that will further enhance its influence. However, the political transition underway in Iran could, depending on how it turns out, change Baku’s strategic calculations, disrupt trade routes or alter the balance of power along its southern border.
 
Elections in Armenia scheduled for June could trigger a political crisis that jeopardizes Yerevan’s efforts to pull away from Russia.
 
Armenia will proceed with its strategic reorientation away from Russia as it tries to diversify security partnerships and deepen economic ties with the West and other regional actors. However, structural constraints – namely, its reliance on Russia in strategic areas – will limit the speed and scope of its reorientation. Meanwhile, potential destabilization brought on by national elections could empower revanchist or anti-Turkic forces. This disruption would raise the possibility of renewed Russian involvement in regional security.
 
Middle East
 
The Middle East is encapsulated by the Mediterranean, Black, Caspian and Arabian seas. For more than 1,000 years, this predominantly Arab region has been dominated by non-Arab powers. During the Cold War, regional geopolitics crystallized around four principal actors – Turkey, Israel, Iran and Saudi Arabia – complemented by a set of influential secondary players such as the United Arab Emirates and Qatar.
 
Forecast
 
Iran has entered a period of systemic uncertainty in which it will no longer be able to project much influence in the region. In 2026, it will struggle with civil unrest, regime transition and the need to reach an accommodation with the United States.
 
It’s unlikely that the regime will outright collapse because there’s no unified opposition to speak of. Even so, the regime will evolve – a process that has been years in the making – and the evolution will gain momentum as the Islamic Revolutionary Guard Corps weakens, the supreme leader is replaced and mass unrest continues. The government, then, will be in no position to project power; instead, it will adopt a risk-averse defensive posture, prioritizing internal control over foreign activism. This will lead to not so much a true reconciliation with the U.S. but some kind of pragmatic accommodation, without which it will struggle to manage its political transition.
 
Regional rivalries will create new fault lines in the Levant, the Eastern Mediterranean, the Horn of Africa and the Gulf of Aden that will threaten regional stability and undermine U.S. geostrategy.
 
The competition between Israel and Turkey will intensify. There will be a high risk of confrontation, particularly over competing objectives in Syria. Saudi Arabia, meanwhile, will resist taking on more regional responsibilities except as they relate to Yemen, the policies toward which will accentuate strategic differences between Riyadh and the government of the United Arab Emirates. These differences will obstruct U.S. efforts to offload certain responsibilities to allies, so expect Washington to mediate and selectively engage these nations to prevent regional instability.
 
South Asia
 
Also known as the Indian subcontinent, South Asia comprises the area of land extending from the arc of mountains running from the Hindu Kush to the Arakan Mountains, down to the Indian Ocean. It is the most densely populated region in the world and is marked by extraordinary ethnic and cultural diversity. With the exception of the past eight decades, South Asia has been dominated by external powers. In the post-World War II era, three principal nation-states – India, Pakistan and Bangladesh – have emerged, and their enduring rivalries have largely shaped the region’s geopolitical dynamics.
 
Forecast
 
India will focus on improving its standing with the U.S., even as it maintains ties to Russia.
 
India’s relationship with the U.S. has been subordinated to Washington’s efforts to accommodate China and restore relations with Pakistan. To hedge against this strategic uncertainty, New Delhi will leverage its ties to Russia so that it can have greater autonomy in defense, energy and diplomacy. The government, meanwhile, will make every effort to reach a trade understanding with Washington.
 
India will enhance its influence by expanding its naval capabilities into the Indian Ocean.
Maritime security is increasingly becoming central to India’s strategic autonomy, so expect New Delhi to pay more time, attention and money to building out blue water assets that will, in theory, counter China’s influence in South Asia and create a more favorable balance of power.
 
India will be forced to manage tensions on its eastern and western borders.
 
To the west, Taliban-supported proxies and Baloch insurgents will destabilize Pakistan as its security forces struggle to stabilize the periphery. Islamabad will have to balance internal security with external commitments and deepen its reliance on selective regional partnerships, especially with the United States. (India will try to improve ties with the Afghan government in an effort to counter Pakistan.) To the east, the government in Bangladesh is trying to manage the rise of Islamist forces, even as it orients its foreign policy more toward India’s regional competitor or, China. This realignment will narrow India’s strategic depth to the east and alter the balance of influence in the Bay of Bengal.
 
Africa
 
Africa can be broken down into four regions that have their own distinct characteristics – Southern Africa, East Africa, West Africa and North Africa. North African governments prioritize domestic control and security while maintaining good trade relations with Europe. For East Africa, development and conflict and crisis management are a necessary adjunct to trade relations, particularly for inland countries such as Uganda, Rwanda and South Sudan. In West Africa, there is a security vacuum that Islamic extremist groups have tried to fill, and their emergence has started to threaten coastal nations. This will likely result in military action to contain the unrest. Southern Africa is relatively stable and is looking to attract investments in industrialization activities to increase the profit share from their own critical mineral reserves. All four regions will continue to be areas of competition, but new actors are seeking deeper involvement as traditional powers try to up their engagement (largely as a means to access resources).
 
Forecast
 
The competition between the U.S. and China in Africa will take shape along strategic resource corridors.
 
Each will prioritize extractive and logistics-focused investments tied to critical minerals, hydrocarbons and transport infrastructure. The presence of Arab Gulf states, India, Russia and Europe will intensify the competition, resulting in a weakening of local leverage over long-term economic outcomes and a strengthening of transactional agreements.
 
Foreign security partnerships and information control will become central tools of regime survival. Partnerships could include France, which had been run out of certain Sahelian countries.
 
Governments facing questions of legitimacy will rely on external security assistance – usually from Moscow but also increasingly from the Middle East – and online controls to contain dissent, further limiting prospects for institutional reform. France will also return to West Africa, to some extent or another, to help prevent military coups that install pro-Russian, anti-French dictators.
 
Be vigilant.
 
Stay informed.
 
Train.
 
Prepare to respond & recover.
 
Nobody is Coming.
 
It’s up to us.
 
—END REPORT