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● Putin’s Expansionist Ambitions

European Economic and Security Outlook This Quarter – Increased Defense Spending, Support for Ukraine, and Vigilance Against Russian Power Expansion

1. Rapid Changes in the European Economy and Increased Defense Spending

Recently, the economic development engine of Western Europe has significantly weakened.
Germany is losing its international competitiveness due to disruptions in Russian energy supplies, and France and the United Kingdom are also experiencing projected growth rates of less than 1% this year.
As the “umbrella” support from the United States decreases, each country is in a situation where they must significantly increase their budgets to cover the insufficient defense spending.
For example, Germany has declared rearmament within five years, foreshadowing a massive injection of resources.
The rapid increase in defense spending alongside the global economy is acting as a significant variable in the economic outlook.

2. France and Western Europe's Political and Diplomatic Strategies

France traditionally prides itself on its leadership in Western Europe and is likely to directly provide security support and actively support Ukraine if the United States withdraws.
In particular, President Macron is countering Russia by asserting France’s firm stance instead of a nuclear umbrella, which is intertwined with the issue of spheres of influence in Africa.
This is expected to have a significant impact on domestic politics, coupled with the strong conservative public opinion within France.

3. Internal/External Burden Due to European Support for Ukraine

European countries advocate for the protection of freedom and human rights through support for Ukraine, but the public is concerned about excessive budget expenditure on distant countries amid economic difficulties.
Domestic economic crises and increased defense spending are fueling dissatisfaction in European political circles, and the rise of radical right-wing and opposition parties is anticipated.
These changes in the political landscape could directly affect the status of Western European leaders.

4. Strategic Shift in Stance by Hungary and Eastern European Countries

As former U.S. President Trump mentioned, Hungary is showing moves to strongly maintain its relationship with the United States within NATO.
Prime Minister Orbán’s politics are distant from Western European democracy, and there is a possibility that Hungary, a close ally, may 오히려 see windfall profits.
At the same time, Hungary and other Eastern European countries are readjusting their relationship with Russia based on their respective strategic judgments.

5. Expansion of Russia's Sphere of Influence and Historical Lessons

President Putin is implementing a strong security policy within the traditional sphere of influence, reflecting the history of the Russian Empire and the Soviet Union.
There is a high possibility that he will continue to attempt to expand the sphere of influence over countries that were formerly under Soviet influence, such as Ukraine, Georgia, and Moldova.
Russia will avoid a full-scale war with NATO countries, accept historical damages, and try to expand its influence only within its own territory.

6. Future Outlook – Interaction between Economy and Security

Europe is expected to inevitably face economic growth slowdown under the double burden of supporting Ukraine and increasing defense spending.
Western European countries face difficult choices to strike a balance between security and economic investment.
In particular, the response of each European country in the changing international landscape after Trump is expected to have a significant impact on the global economy and security market.

Summary

Recently, Europe is facing the problem of increased defense spending due to low economic growth and disruptions in energy supply.
France is actively supporting Ukraine to secure leadership, and domestic political instability is increasing as a result.
Eastern European countries such as Hungary are seeking strategic choices between readjusting relations with the United States and expanding Russian influence.
President Putin is expected to focus on countries within the sphere of influence based on historical lessons to strengthen security.
All these factors are expected to act as important variables in the analysis of the global economy, European economy, defense spending, Russia, and Ukraine-related markets.

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