Country Risk Month Ahead: June 2025

Our country risk experts provide insight into events that could impact the geopolitical landscape in June.

South Korea’s presidential election

South Korea will hold a snap presidential election on June 3, 2025, following the impeachment of former president Yoon Suk Yeol. The ruling People Power Party (PPP) has nominated Kim Moon-soo, while the opposition Democratic Party of Korea (DPK) has chosen Lee Jae-myung, who leads polls with 51% support compared with Kim’s 31%.

A PPP victory would entail a continuation of Yoon’s policies, focusing on market deregulation, tax cuts and a strong US alliance. A DPK win under Lee would align the presidency with the DPK’s parliamentary majority, enabling the passage of significant progressive reforms previously vetoed by the Yoon government. These include labor protections and at least partial implementation of a universal basic income plan, funded through increased land and capital gains taxes.

In foreign policy, the PPP would likely continue its strategy of expanding security cooperation with the US and Japan to “contain” North Korea. A DPK government, in contrast, would seek neutrality in the broader US-China strategic rivalry and would pursue dialogue with North Korea, offering sanctions relief and mediation between the US administration and North Korean Supreme Leader Kim Jong Un. 

Netherlands hosts annual NATO summit

The Netherlands will host NATO’s 2025 summit in The Hague on June 24–26. The summit will focus on negotiating increased defense spending among member states. While NATO has not officially proposed a new benchmark, NATO Secretary General Mark Rutte has reportedly called for an increase in the core defense spending target from 2% to 3.5% of GDP by 2032, with an additional 1.5% earmarked for broader defense-related spending. Combined, these two benchmarks align with US President Donald Trump’s call for NATO members to spend 5% of GDP on defense.

The US currently contributes 64% of NATO’s total defense spending, or 3.38% of its own GDP. No member state meets the proposed 5% benchmark, with Poland (4.12%), Estonia (3.43%) and the US leading the ranking. As of 2024, eight of the 32 NATO member states had yet to meet the existing 2% target. Also on the summit’s agenda is the criteria for what qualifies as defense spending, as NATO seeks to channel more resources toward military capabilities such as procurement and research and development. 

Mexico’s judicial elections

On June 1, Mexico will hold its first judicial elections following a constitutional overhaul to the judiciary in late 2024. Voters will elect 881 federal judgeships, including the nine magistrates for the Supreme Court. Out of Mexico’s 32 states, 19 will hold elections for state-level judgeships.

According to May 2025 polls, between 50% and 60% of those surveyed claim they were “likely to vote,” roughly aligning with the average turnout for Mexican federal elections over the past decade. However, electoral authorities will set up 84,000 voting booths nationwide — less than half of the number installed in the previous two federal election cycles — and voters will have six different ballots with dozens of individual candidate names, without party-like references to differentiate them, which some domestic observers of election practices have said is likely to complicate the procedure for voters.

Opposition parties have rejected the election altogether, claiming that it will hinder judicial impartiality and that it is likely to discourage some supporters from voting. Labor unions, private-sector organizations and political parties from the ruling coalition have been active in mobilizing their members to vote for candidates favorable to their interests. The new judges will be sworn in in September 2025.

EU’s Syria sanctions to expire

The EU’s Syria sanctions are set to expire on June 1. The EU voted to lift all economic sanctions imposed on Syria on May 20, 2025, after US President Donald Trump announced on May 14 that the US would remove sanctions, enabling the new government to begin signing investment contracts.

Following the fall of the Assad government in December 2024, the EU in February 2025 lifted restrictions on the Syrian energy and banking sectors, but sanctions will remain against former Assad government individuals for human rights violations. The EU will continue monitoring the Syrian Transitional Government (STG) for its use of international funds, counter-terrorism efforts and the treatment of minorities for continued sanctions relief.

The EU pledged in March €5.8 billion to Syria over the next two years to support recovery and reconstruction. These funds cannot be deployed effectively to nonhumanitarian operations until sanctions are lifted by the US. In the US, congressional approval is required for multiple sanctions packages imposed under US regulatory bodies.

The security environment will be the biggest obstacle for investors and companies operating in Syria, and for the full winddown of sanctions, with civil war risks remaining severe. Significant capital investment, estimated in the tens of billions of US dollars, would be required to rebuild key sectors of the economy, including industry, agriculture and energy output, which has declined by 70%-90% since 2011. Initial funding is likely to be directed to electricity and transport infrastructure, oil and gas extraction, port development, and residential infrastructure reconstruction.

East African Community budgets

During the week of June 9, East African Community (EAC) member states will unveil their budgets for fiscal year 2025-26, which commences on July 1. Kenya, Tanzania and Uganda will present their fiscal policies simultaneously, reflecting a regional effort toward a harmonized fiscal calendar.

S&P Global Market Intelligence expects Kenya’s budget to prioritize the Bottom-Up Economic Transformation Agenda, focusing on agricultural transformation, support for micro-, small and medium-sized enterprises (MSMEs), housing, healthcare, and the digital economy.

Tanzania will emphasize infrastructure and industrial growth, with funding for key projects such as the Standard Gauge Railway and the Julius Nyerere Hydropower Project. Uganda will focus on agro-industrialization, tourism and mineral-based industrial development, particularly in oil and gas.

A key theme of the EAC budget proposals for 2025–26 remains fiscal consolidation. Budget briefs highlight the need to streamline expenditure and increase internal revenue generation. This relates to mounting debt burdens, with significant portions of revenues going toward interest payments, crowding out development spending. All EAC budgets rely heavily on concessional loans and grants, which are exposed to risks of delay or reduction due to shifting bilateral and multilateral relations or failure to meet performance benchmarks.