Geopolitical Risk Brief: December 2025

Our country risk experts provide insight into key geopolitical events that could impact the economic environment in December. 

Newly elected Chilean president José Antonio Kast announced an “emergency government,” with a focus on combating crime and curbing illegal immigration, alongside tax and public spending cuts.

Kast, from the libertarian Republican Party (Partido Republicano [PR]), won the second round of Chile’s presidential election on Dec. 14, with 58.16% of the vote. Kast will take office on March 11, 2026. Kast proposes to enhance police and military operations in crime hot spots and borders, and to expel migrants lacking permanent regular status. He has pledged that in his first three months in office he will halve the number of illegal border crossings and has promised to build physical barriers on the northern border (with Bolivia and Peru).

He is also likely to downsize ministries and government departments to reduce public spending. Additionally, he has pledged that early in his term, he will expedite decisions on investment projects that have obtained environmental permits, but that are pending resolution in the Council of Ministers or other entities, aiming to unlock about US$10 billion in investment.

Tax reduction proposals are likely to advance. However, without a congressional majority, he is likely to have to make concessions on his proposal to cut the corporate tax rate, and a reversal of the prior administration’s pension changes is unlikely.

Likewise, lifting the current restrictions on lithium mining would require congressional support from outside Kast’s potential conservative and centrist allies. We assess it more likely that his government would modify the terms of existing lithium contracts or implement other administrative measures to encourage increased private investment. 

On Dec. 11, 2025, in the Caspian Sea, Ukraine’s Security Service conducted uncrewed aerial vehicle (UAV) strikes on oil platforms, prompting the suspension of oil and gas well operations on both platforms.

Then, on Dec. 12, in the Caspian Sea off Russia’s Kalmykia region, two Russian cargo vessels were hit. The vessels, sanctioned by the US for transporting Iranian military equipment to Russia, were reportedly carrying weapons at the time of the attack, with their AIS transponders switched off, according to S&P Global tracking data.

The Dec. 11 and Dec. 12 strikes are the first such attacks Ukraine has undertaken in the Caspian Sea and are consistent with Ukraine’s ongoing campaign targeting Russian energy infrastructure, including in the Black Sea and Baltic Sea. Ukraine is very likely to continue targeting Russian onshore and offshore energy assets at a high frequency over the next three to six months.