Insight: What is happening in Europe and Asia in March 2026?

Asia:

1. Iran War Disrupts Strait of Hormuz, Triggering Asia-Wide Energy Shock

   LN - The U.S.-Israel war on Iran has erupted the Strait of Hormuz crisis, setting the global energy supply chain into turmoil and countries scrambling for energy security. Asia’s dependence on the Gulf states’ shipments of crude oil, liquefied natural gas (LNG), fertilizers, refined oil products, aluminium, and helium exposes the structural vulnerabilities.
   

   Repercussions have been felt as the logistics industry faces surging fuel prices and paused deliveries, while air fare doubles in price and hinder travel plans. Restaurants and manufacturing are forced to ration their supply or switch to time-consuming alternative methods. Countries reliant on foreign LNGs, such as Thailand, must navigate electricity shortages. Experts fear the looming risk on the global food supply as the Strait of Hormuz carries approximately one-third of global fertiliser trade to Asia, while Asian agricultural exports cannot reach Middle Eastern consumers. Despite the acute shocks, governments are taking immediate responses to the impediments on gas and oil imports. Asia’s state leaders are outlining proposals to reduce demand, conserve current stockpiles and engage in diplomatic talks to secure more energy supply [Reuters, AP News, The Guardian, The Economist]

2. China approves 15th Five-Year Plan, outlining long-term economic priorities

   LN - In mid-March, Beijing’s policymakers approved the 15th Five-Year Plan—the pivotal developmental blueprint for China’s modernization for the upcoming 2026-2030 period—specifying 20 indicators. Amidst the current geopolitical turmoil in the Middle East and global supply disruptions, China seeks to become a global economic anchor in the uncertain world. China further stresses economic resilience and technological self-reliance as permanent strategies, rather than short-term reactive responses. Recognizing the key role of innovation in high-end manufacturing and digital economy, China sets out to increase Research & Development spending by 7% and digital economy to reach 12.5% of national GDP. This transition from low-cost manufacturing economy to high-tech production requires the integration of frontier technology—such as artificial intelligence, quantum technology, semiconductors, brain-computers interfaces, 6G and robotics [The State Council of The PRC, Chatham House]
   

3. Anutin Charnvirakul re-elected as Thailand’s prime minister LN - Anutin Charnvirakul has been reelected Prime Minister of Thailand, the first reelected in the past two decades, winning a strong parliamentary vote of 293/499 against political opponents. Anutin’s success is the result of political pragmatism and timing. By capitalizing on the decline of the Pheu Thai Party and repositioning his Bhumjaithai Party between rival elite factions, he secured a central role in coalition politics and ultimately formed a governing alliance. His pro-military and pro-monarchy stance has also helped consolidate support among traditional power structures. Despite this strong mandate, Anutin will face significant challenges. As Thailand’s economy demonstrates slowing growth, high household debt burden and weak tourism recovery has declined the nation’s competitive attractiveness in foreign investments and exposed the nation’s vulnerability to external shocks (e.g. Middle East conflict). Anutin’s administration promises to alleviate ongoing border tensions with Cambodia and expand volunteer forces. Overall, while his reelection may bring short-term stability, deeper structural and economic issues remain unresolved [CNBC, DW, Reuters]
   

4. South Korea and Philippines sign 10 MOUs to deepen bilateral ties LN - President Ferdinand Marcos Jr. hosted South Korean President Lee Jae Myung in Manila early March, signing 10 memoranda of understanding (MoUs). This effectively strengthens bilateral cooperation across several sectors: artificial intelligence (AI), nuclear energy, defense materials procurements, agriculture, trade and investment, infrastructure, language training, police cooperation, etc. Following the momentum of the Philippines-ROK Comprehensive Strategic Partnership established in 2024, this collaborative enhancement aims to mutually consolidate supply chain capacity and economic resistance. In the Philippines’ efforts for economic modernization and high-value industries, Manila highly regards South Korea’s technological  expertise and a major source of foreign investments. Institutionally, the partnership is being reinforced through improved coordination mechanisms, such as an enhanced Joint Commission on Trade and Investment, in order to facilitate smoother business operations and aligning industrial strategies. Overall, the partnership reflects a strategic effort towards bilateral cooperation in an era of geopolitical uncertainty [Government of Philippines, AA, Insider, Manila Standard].
   

5. Israel reopens Rafah crossing amid renewed Gaza ceasefire negotiations LN - The Rafah border crossing between the Gaza Strip and Egypt was partially reopened by Israel, upon agreement, in mid-March 2026 after three weeks of closure. This enabled limited movement of wounded Palestinians. Following a ceasefire agreement of October 10, 2025, the crossing was reopened on February 2 to be shut again on February 28 due to joint U.S.-Israeli air strikes on Iran. As Israel controls border access, security screening and entry approvals, Rafah no longer remains a neutral or Palestinian-managed crossing. The emergence of Israeli-backed militias, non-state armed actors such as the Popular Forces, are taking on state-like roles including conducting security checks like “customs officials”. This is a contradiction to the prior formal peace commitments to demilitarize Gaza, suggesting continued uncertainty regarding Gaza’s future governance [Reuters, AA, France24]

Europe:

1. Giorgia Meloni suffers setback as Italy rejects judicial reform in referendum MA - Italy’s March 2026 constitutional referendum on judicial reform — strongly backed by Prime Minister Giorgia Meloni — was rejected by voters, with roughly 53–54% voting “No” against about 46–47% in favor. The proposed reform aimed to significantly restructure the judiciary by separating the careers of judges and prosecutors, splitting the governing body of the judiciary into two, and introducing new disciplinary mechanisms. Supporters argued these changes would modernize and increase efficiency in Italy’s legal system, while critics warned they could undermine judicial independence and expose prosecutors to political influence. The defeat represents a major political setback for Meloni, weakening her authority and disrupting her reform agenda, even though she has said she will remain in office. The result boosts opposition parties and exposes vulnerabilities in Meloni’s previously strong political position, while also highlighting deep divisions in Italian society over democracy [BBC, Reuters, The Economist, PBS].

2. European Council summit ends with limited progress amid internal divisions

   MA - The European Council summit held on March 19, 2026 focused heavily on Ukraine, security, and the Middle East, but produced limited concrete breakthroughs. Leaders reaffirmed continued support for Ukraine, including commitments to strengthen defense capabilities and maintain pressure on Russia. They also addressed escalating tensions involving Iran, emphasizing regional stability and security concerns. Alongside foreign policy, discussions touched on migration and economic resilience, but largely reiterated existing priorities rather than introducing new agendas. Despite the broad agenda, the summit exposed internal divisions and a lack of decisive collective action. Reporting highlights that disagreements among member states — particularly over strategy in Ukraine and responses to geopolitical crises — limited the EU’s ability to act cohesively. The outcome was seen as underwhelming, with critics arguing that the bloc appears increasingly constrained in moments requiring unified leadership, reinforcing a pattern of cautious consensus rather than ambitious policy moves [European Council, Reuters, Politico].

3. EU approves €1.5 billion defence programme to boost military production and support Ukraine

   MA - The EU has approved a €1.5 billion European Defence Industry Programme (EDIP) for 2026–2027 to expand military production, strengthen industrial capacity, and deepen cooperation with Ukraine. The funding prioritizes scaling up key defence outputs — such as missiles, ammunition, and counter-drone systems — with over €700 million allocated to production, alongside €260 million specifically to rebuild and integrate Ukraine’s defence industry. Additional funds support joint procurement (€240 million), collaborative cross-border projects (€325 million), and defence startups (€100 million), all aimed at reducing fragmentation and boosting Europe’s overall defence readiness. Alongside this, the EU is investing in faster, innovation-driven defence through smaller targeted programs like the €115 million “AGILE” initiative, designed to accelerate cutting-edge technologies (e.g., AI, robotics, quantum systems) from development to deployment within 1–3 years [European Commission Defence Industry and Space, Kyiv Independent, Brussels Times].

4. European Parliament approves controversial migration ‘Return Regulation’ expanding deportations

   MA - The European Parliament has approved a controversial new “Return Regulation” aimed at increasing deportations of irregular migrants and harmonising return rules across the EU. The reform strengthens enforcement by enabling mutual recognition of deportation orders across member states, expanding detention powers (up to two years in some cases), and imposing stricter penalties on those who resist removal. It also formalises the creation of “return hubs” in non-EU countries, allowing rejected asylum seekers to be transferred outside the bloc while awaiting deportation, in an effort to address low return rates and streamline the system. However, the measure passed amid sharp political and ethical divisions, reflecting a broader rightward shift in EU migration policy. Supporters argue it restores control and credibility to the system, while critics — including human rights groups and left-leaning lawmakers — warn it risks undermining legal protections and outsourcing responsibility. Particular concern centers on offshore “return hubs,” which critics fear could become poorly monitored “legal black holes” with weakened safeguards for detainees. The vote now opens negotiations with member states, but already signals a tougher, more securitized EU approach to migration [Euronews, France24, Politico, The Guardian]

5. European Commission allocates €11 million to boost disaster preparedness and aid in Asia

   MA - The European Commission announced nearly €11 million in new funding for 2026 to strengthen disaster preparedness and humanitarian aid across Asia, reflecting growing regional vulnerability to climate-related disasters and conflict. Most of the funding — over €8.7 million — focuses on preparedness, particularly in ASEAN countries, Nepal, and Sri Lanka, supporting early warning systems, climate resilience, and “anticipatory action” to help communities respond before disasters escalate. An additional €2 million is allocated for humanitarian aid in the Philippines, targeting populations affected by recurring cyclones and ongoing conflict. The initiative signals a broader EU strategy shift toward prevention rather than just response, emphasizing local capacity-building and stronger social protection systems for at-risk populations. In countries like Nepal, funding will also improve health emergency readiness, while regionally the EU aims to integrate disaster risk management with long-term resilience and climate adaptation [European Commission, EC European Civil Protection and Humanitarian Aid Operations]

Contributors:

LN: Luna Nguyen

MA: Laksmitha Anindyanari