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GMF experts at the start of last year warily watched the growing Russian threat to Ukraine. “A full-scale Russian invasion has not been as salient a concern in a generation,” we wrote, still hoping one could be averted.

Now, the war is expected to remain central for another year, with little hope of a quick Ukrainian victory or of a cessation of Kremlin aggression. The conflict spurred Sweden and Finland to apply for NATO membership, something none of us envisioned in January 2022. Their accession should come this year, despite Turkey’s complicating the process. At the same time, the European Union’s political troubles will continue to mount with more acute energy woes. This will top a shocking, end-of-year corruption scandal that saw a European Parliament vice president among those arrested. In Germany, 2022 tested a new government in unexpected ways, but this year should reveal the coalition’s robustness and the true scope, at the national and European level, of its foreign and security policy Zeitenwende.

While Russia’s invasion of Ukraine has refocused attention on traditional transatlantic security and cooperation, escalating competition between China and the United States, especially as the former has refused to condemn Russia, also shaped the year just past. Systemic Sino-American rivalry will be even more of a key story going forward, not least in terms of security and access to technology. Internal developments in China will also be of particular importance as the country finally reopens after the dismantling of its zero COVID-19 policy.

Read below what GMF analysts will be watching as all this unfolds.

Rachel Tausendfreund, Senior Fellow

China, Russia, and the War in Ukraine

By Bonnie S. Glaser, Managing Director, Indo-Pacific

China’s role in Russian President Vladimir Putin’s war against Ukraine will come into greater focus this year. Chinese President Xi Jinping reportedly told Putin’s predecessor, Dmitry Medvedev, in December that Beijing is willing to mediate to end the conflict. French President Emmanuel Macron, who has said that he is keen to persuade Xi to assume a mediating role, will likely visit China early in 2023. But Beijing, lacking experience and fearing failure, is unlikely to try to broker peace. Only if Russia and Ukraine favor negotiations, and there is a clear pathway to an agreement, could China play a more proactive role as a facilitator of talks.

Even if negotiations do not materialize, there will be much to watch regarding China’s relationship with Russia, and Xi’s relationship with Putin. More purchases of Russian oil and gas, increased use of China’s currency in trade transactions with Russia, and joint military exercises can be expected. However, Beijing is likely to continue to refrain from helping Russia prosecute the war, which would trigger Western sanctions. Xi will instead persist in straddling China’s interests by maintaining the country’s strategic partnership with Russia while supporting Ukraine’s territorial integrity and upholding the principle of noninterference. Whatever steps China takes in its relations with Russia and in the war in Ukraine will inevitably impact relations with Europe. 

Deepening Instability of the Putin Regime

By Joerg Forbrig, Managing Director, Transatlantic Trusts

Russia’s invasion of Ukraine was meant to fortify the regime of President Vladimir Putin. Instead, it is increasingly undermining the Kremlin strongman. Doubts about Putin’s leadership have emerged among Russian elites and ordinary citizens as they face an unwinnable war, international isolation, and rising economic costs. Anxiety and anger will only grow this year. Expect increased fragmentation and infighting within the ruling class and apparatus, and rising social discontent, as more Russian sons return from Ukraine in body bags and living standards continue to plummet. Some of Russia’s regions and neighboring allies may also slip out of Moscow’s control.

In the early months of the year, the apparent erosion of Putin’s power will prompt him to terrorize Ukraine more. When this fails to subdue the country—and it will fail—questions about Russia’s political status quo will become prominent. This may well challenge the integrity of the state, spur separatism and regional conflicts, and, most importantly, raise the issue of centralized control over Russia’s sizeable nuclear arsenal. The transatlantic and global community must prepare for such a scenario, however far-fetched it may now seem.

Seeking a Common Path to Repair Globalization

By Karen Kornbluh, Managing Director, GMF Digital

This year will see laissez-faire globalization at a breaking point. After decades of strain caused by China’s rise, climate change, and growing inequality, the COVID-19 pandemic and Russia’s invasion of Ukraine finally exposed the fragility of the global economic system.

The United States has adopted a new industrial policy that subsidizes semiconductor manufacturing, clean energy, and infrastructure. The European Union has passed its Chips Act and new laws regulating “Big Tech”. Both parties have restricted exports of critical technology to China and Russia. The new approaches hold great promise but have also created tensions. Notably, as the United States has responded unilaterally to the weaponization of the international trading system by China, Russia, and others, Europe fears US protectionism while China has appealed to the World Trade Organization in an effort to overturn exports controls and other measures that restrict its access to semiconductor technology.

Transatlantic leadership will be needed this year to ensure that nationalist and authoritarian forces do not fill the global technology leadership vacuum. The EU-US Trade and Technology Council is not enough. The question is whether the transatlantic allies and their partners will work together to repair globalization and form a stable coordination mechanism to tackle key issues, beginning with the critical one of semiconductors.

Brace for a Rocky Political Year in Europe

By Martin Quencez, Director, Paris Office and Interim Managing Director, Risk and Strategy

A dangerous mix of war, economic crisis, and energy restrictions will have serious political implications across Europe this year, just when the continent desperately needs leadership and stability. The social impact of high inflation and lasting recession will shake the political landscape in key countries, while elections in Finland, Poland, and Spain are likely to prove crucial for the future of the European project. Another migration crisis could also heighten ideological frictions between the European Union and Hungary and Italy. Outside the EU, Turkey will hold its own consequential elections, and the United Kingdom could remain a haven of instability.

These developments are likely to test European cohesion and to destabilize governments, especially as Russia’s war against Ukraine continues to reshape strategic debates and the balance of power. French President Emmanuel Macron and German Chancellor Olaf Scholz are increasingly contested as champions of European interests, and no clear alternative has emerged to compensate for weak Franco-German leadership. The deep consequences of 2022’s shocks will reverberate in 2023.

What Kind of China Will Reopen?

By Andrew Small, Senior Transatlantic Fellow, Asia Program

China’s reopening is one of 2023’s biggest issues to watch. The country has been shut off from normal international interaction for nearly three years. Its society and economy have been subject to policies more focused on political control and propaganda than on finding an effective way out of the COVID-19 pandemic. Now, in another convulsive political lurch, the Chinese Communist Party (CCP) has embarked on a hasty, ill-prepared dismantling of the approach to the virus that it had deemed essential just weeks earlier.

This has led in the short term to an explosion in the number of cases and deaths rather than a resumption of social and economic life. But a new “normal” in China should appear later in the year. This will almost certainly include a more slowly growing economy. Less clear is whether the political control measures that President Xi Jinping found integral to his zero COVID-19 strategy reappear in new domestic restrictions or limitations on movement in and out of China. Any lingering public disquiet over the CCP’s decision-making abilities, recently manifested in popular protests, will also become apparent.

Xi’s return to the global stage in late 2022 has already impacted China’s dealings with Europe and the United States. It has offered “a resumption of some of the more practical, predictable elements of great-power diplomacy”, according to Kurt Campbell, the White House’s top Asia policy official. This year’s developments should be even more significant. They will show if China continues its autarkic trajectory or moves toward a genuine reopening.

US Cities and the Foreign Policy Establishment to Draw Closer?

By Paul Costello, Program Manager, GMF Cities

US Secretary of State Antony Blinken announced in October the establishment of a new State Department unit for subnational diplomacy. This came after Representatives Ted W. Lieu and Joe Wilson championed the City and State Diplomacy Act, with support from the German Marshall Fund, the Brookings Institution, and the Truman Center, among others. Special Representative for Subnational Diplomacy Nina Hachigian is the ideal person to lead such an office. She has had a successful State Department career after serving as Los Angeles’ first deputy mayor for international affairs.

That said, US cities and the State Department are not in the habit of closely coordinating with each other. Cities have independently developed international relationships for decades. The new unit for subnational diplomacy will need to show that it can support cities’ international engagement while leveraging it to further foreign policy more broadly. April’s Cities Summit of the Americas in Denver could be a first large-scale demonstration of the contributions cities and the foreign policy establishment can make to achieving mutually beneficial international goals. 

Key Elections in Poland and Slovakia

By Daniel Hegedus, Senior Fellow and Senior Program Officer

Elections this year may turn back the tide of autocracy in Poland but could return to power Russia-friendly populists in Slovakia.

Poland’s September vote offers a chance for the democratic center-right to oust the coalition government led by Jaroslaw Kaczynski’s right-wing populist Law and Justice (PiS) party. This would not only end PiS’s eight-year authoritarian experiment. It would also leave the autocratic regime of Hungarian Prime Minister Viktor Orbán more isolated and vulnerable within the EU. On the other hand, PiS’s retaining power would provide a fresh boost to Kaczynski’s autocratic project and further tilt Poland’s uneven political playing field.

Early elections in Slovakia appear inevitable following the recent collapse of the pro-Western, right-wing government. With the Hlas party of former Prime Minister Peter Pellegrini comfortably leading in the polls, there is less uncertainty about the next government’s leadership than about its strategic orientation. Pellegrini could team up with pro-EU and pro-NATO progressive parties or with the Smer party of his former boss, long-time Prime Minister Robert Fico. A coalition of Hlas and Smer may result in a government with a questionable commitment to NATO and close ties to the Kremlin, contributing to strategic uncertainty on the alliance’s eastern flank.

Strain among Germany’s Coalition Partners

By Jackson Janes, Resident Senior Fellow

The challenge that Germany’s governing coalition will confront in 2023 is ongoing unpredictability. Chancellor Olaf Scholz and his partners will be tested further, not least when it comes to sustaining the coalition’s cohesion. The dimensions of Germany’s multiple crises, and quickly changing circumstances, means Berlin needs to move swiftly to develop strategies and implement policies to address all the challenges. The synergy among and within the three coalition parties continues to be severely tested as they engage in ongoing crisis management. The “traffic light” coalition proclaimed in its 2021 agreement to “dare more progress”, but events have changed the agenda, and its leaders have been forced to shift priorities. The coalition will need to guide Germany through an uncertain period, which will require major adjustments to domestic and foreign policy. The coalition will also need citizens to “dare to have more confidence” in its ability to make those adjustments.

Lessons for National Happiness

By Martin Klingst, Visiting Senior Fellow

Given all the crises engulfing the globe, the outlook for 2023 is dark. But amid the gloom may be a small glimmer of hope: the results of the next United Nations’ World Happiness Report due out in March.

Most people probably believe that happiness is an individual choice or a question of household income. But this is insufficient. Life satisfaction is also a matter of national policy. It is no surprise that the happiest countries tend to be high-income ones that also have a high degree of social equality, trust, and government services, while poor countries or dictatorships such as Afghanistan, China, Iran, and Russia are at the bottom of the UN list. As we battle the ills of disease, war, climate change, and poverty, it is essential to remember the universal quest for happiness. And to remember that we know the winning formula. Perhaps the World Happiness Report will show some progress in implementing that formula.