Fuelling the fire: the biggest geopolitical risks to look out for in 2023 Geopolitics looks set to be a big driver for markets and the economic outlook in the year ahead. Geopolitics came to the fore in 2022, primarily in the form of the war in Ukraine. The conflict accentuated the supply-side inflationary pressures facing a global economy already struggling to emerge from the pandemic. Next year too looks like it could be fraught with geopolitical turbulence, and not just in Ukraine. Here is where Scott Livingstone, International Advisor to NatWest Group, sees the likeliest sources of risk in 2023 across the geopolitical landscape. War in Ukraine: time is on nobody’s side The balance of power currently resides with the Ukrainian forces, which currently have better Scott Livingstone morale, momentum, and munitions than the Russian troops. But while Ukraine has the advantage International Advisor right now, a harsh winter will take its toll. We’re entering the prime weeks and months for Russian pressure to take effect, both through restrictions on energy flowing to Europe and the destruction of civilian infrastructure in Ukraine. As we get into the winter, as we see the economic and the energy cost rising in Europe and possibly “Ukrainian after the US midterms, we could see an environment more conducive to some kind of off ramp for forces, which the crisis. But Putin’s actions recently suggest he is not looking for an off-ramp, and evidence of currently have Russian war crimes and increasingly focused attacks on civilian infrastructure do not lay the political better morale, groundwork for a peaceful resolution. momentum, Even if there’s a peaceful resolution to the war in Ukraine, Russian oil and gas returning to the world and munitions market would come with a heavy tax burden. Reparations may also be an issue as the question of who pays to rebuild Ukraine is yet to be answered. There will be conversations in Washington and than the Russian European capitals about bringing Russian energy back to the market as part of a package that troops.” deals with that question. In the medium term, we cannot rule out a collapse in Russia’s capability and forces in Ukraine as its forces struggle with logistics and command and control. My view is that there is no doubt whatsoever that whatever happens in Ukraine, Russia will emerge in a weaker position. And into that vacuum other players, notably China, could step up their regional influence, particularly in Central Asia. For any terms used, please refer to this glossary The Year Ahead 2023 | 15