We just don't know yet whether military spending has risen even more steeply and exceeded three trillion: an amount equivalent to France's GDP and significantly exceeding the GDP of Russia, Canada, or Brazil. All we can say about the beginning of 2026 is that it will bring another record.
Record government spending and arms manufacturers' profits are driven by international conflicts—some ongoing, but mainly those that states are preparing for. Of the dozens of ongoing conflicts, at least two are global in nature: Russia-Ukraine and Israel-Iran. In addition to the warring parties, geographically distant superpowers are also indirectly involved in these conflicts, for whom the conflict is so important that its escalation could lead to a direct superpower clash and the risk of nuclear conflict.
Peace may not be close at hand
Peace is not within reach in either case. Nevertheless, the prospects in Ukraine are somewhat more favorable than in the Middle East. In both cases, it is essential that the Trump administration, which is the main indirect participant in both conflicts, is interested in peace that corresponds to the current situation. But the cases differ in the strength and influence of the supporters of war.
Russia has a certain interest in the continuation of the war in Ukraine, as it has not yet conquered all the territories it considers its own. Although the current situation does not correspond to Russia's goals, it is coming close to them. With each passing month of war, they will come closer until Russia realizes that it already has what it needs militarily. The resolution of other issues, such as the status of Ukraine in the future (reconstruction, armed forces, foreign policy orientation), is a matter for diplomacy, backed, of course, by Russia's ability to push Ukraine against the wall. Trump appears to be prepared to accept such a solution.
On the side of war are the Zelensky regime and Europe. Zelensky's position has a perverse rationality. As long as the fighting continues, he survives politically and physically, but with the end of the war, neither is certain. Without European support, however, he would have already fought to the end. The European Union and the United Kingdom have made the proxy war with Russia their top priority, and their representatives say they are even heading for a direct confrontation. Let's leave aside what is ideological blindness, what is opportunism, and what is a complete loss of judgment.
The bottom line is that Trump despises both Ukrainian and European leaders, does not feel bound by their ideas, and is looking for alternatives. However, he is coming up against his own deep state, which he does not fully control. Part of it wants to continue Biden's policy with Europe and is undermining Trump's peace policy in Ukraine.
What will Europe's reaction be?
Europe's reaction to the collapse of the Kiev regime, which can be expected this year, will be important: Kiev is running out of money and people. Will the European elite, accustomed to lying in the morning, afternoon, and evening, respond by washing their hands of Ukraine and coming up with a new lie that they were right all along and actually won?
That would be the second-best path to peace. The best would be a radical change in the European elite, but that cannot be expected this year. Or are they so crazy that Paris, London, and Berlin will push Eastern Europeans into war with Russia in the hope of convincing the Americans to get involved?
In that case, Russia would first resort to demonstrating its power against selected European targets – it already has its nutshells ready. This, too, could be Europe's path to peace.
Strange forms of truce
Two strange truces reign in the Middle East today. One in Palestine, which Washington agreed with Hamas.
The other is with Iran, which followed the American and Israeli attack on Iran and Iran's military response – tangible for Israel and symbolic for the US. Israel wants neither. It continues to liquidate Palestinians, which it can do on its own, and at the same time wants to finish off Iran, which it cannot do without American help.
Trump apparently does not like the fact that Israel is destroying his peace plan for Gaza. Nor does he want a war with Iran after he boastfully announced a great victory over Iran and the destruction of its nuclear weapons program in the summer. At the same time, he probably understands that a war with Iran would destroy his current policy in the Middle East and drag the US into a quagmire that would make the adventures in Iraq and Afghanistan look like a walk in the park. Moreover, it could strengthen existing anti-American alliances and create new ones.
Although Israel is smaller than Ukraine and a dwarf compared to Europe, it has leverage over Washington that no one in Europe could even dream of. The American Zionist lobby can demand or force Trump to do whatever it needs.
Israeli Prime Minister Netanyahu sees the demonstrations that have been taking place in Iran since the end of the year as an opportunity for regime change. They are not motivated by sympathy for the West or Israel or other political reasons, but by the economic dissatisfaction of a population plagued by US sanctions. This does not rule out the possibility that they are being instigated by the US or Israel. They could shake the regime in Iran. To Trump's slight enthusiasm, Netanyahu accepted an invitation to Florida at the end of last year to explain everything to him.
Trump seems to have understood. He immediately threatened to attack if anyone was killed in Iran during the suppression of the demonstrations. It almost sounds like a call to Israel for its Iranian agents to take care of some shooting in Tehran. And if Trump hesitates, Netanyahu will present him with a fait accompli. Israel will launch the attack on its own, and the lobby in Washington will then exert enough pressure to ensure that it does not remain alone.
Even if Israel were successful with American support and the Iranian regime collapsed, it would not lead to peace in the Middle East. For a time, Israel's preferred scenario of armed chaos weakening its enemies could come to pass. However, others, including Muslim powers, would also benefit from such a situation. Israel fears them, whether they are Shiite Persians, Sunni Turks, or Wahhabi Saudis. Without the American restraining influence, it considers each of them an existential threat.
But Washington's interest in the Middle East is waning; rather than Arabs, Persians, or Turks, it needs to restrain the Chinese. However, if Israel manages to drag the Americans into the war, they can at least hope that they will stay for some time.
Venezuela as a local event
Compared to Ukraine or Iran, Venezuela remains only a local event. Further developments will show whether the American New Year's intervention, the bombing of the capital, and the gangster-style kidnapping of President Maduro will lead to a new stability under Washington's control, demonstrating American power, or to a long civil war, proving American weakness.
Either way, the Americans will first be able to deter other powers from military involvement in the Western Hemisphere. Venezuela will not become a hotbed of superpower conflict.
The risk of superpower conflicts
However, it is not existing conflicts that consume the most resources, but the expectation of superpower conflict. Europe is currently closest to such a conflict, with military spending growing faster than elsewhere. But any attempt by Western Europe to go to war with Russia would probably be quickly ended by the aforementioned Russian show of force.
The situation in East Asia is particularly serious. The US is trying to encircle China geopolitically and is claiming a position in the region that no other superpower in the Western Hemisphere would tolerate. China will not be happy with this in the long term either. However, neither the Chinese nor the Americans want a direct confrontation, and for now, they are doing everything they can to prevent it.
However, a proxy war cannot be ruled out, in which their local protégés are sacrificed for American interests, i.e., a Ukrainian scenario in the Pacific. Taiwan could be the trigger, but there are other possibilities. China has territorial disputes with everyone. In the East China Sea with Japan and South Korea, in the South China Sea with Vietnam, the Philippines, Malaysia, and Indonesia. It also disputes part of its border with India, although Beijing and Delhi have been trying to overcome the conflict in recent years.
That is why the Japanese prime minister drew China's wrath when she declared in November that her country would not stand aside in the event of a Chinese attack on Taiwan. She hinted at what such a proxy war might look like: Taiwan in the role of Ukraine, Japan in the role of Europe. The consequences would be devastating, and not only for the direct participants.
The region accounts for a significant share of global economic output, including the global supply of hard-to-replace goods and raw materials. The US would also suffer heavy losses. But Washington may conclude that a proxy war between Japan and Taiwan against China offers a last chance to prevent Chinese global dominance. In that case, the sooner the better.
Asian leaders are acting cautiously and rationally for now. However, we were used to this in matters of war and peace from European leaders as well, but then 2022 came and they began to swear for war. No one is immune to the madness of war. In any case, the good times are not over for arms manufacturers.