Whiplash and war shape NZ’s foreign policy

by Sam Sachdeva

As New Zealand’s economy failed to live up to expectations, ‘survive through 2025’ was a popular mantra among New Zealand businesses – but the term applied about as well to the wider world, in what was a year marked by conflict and crises.

Foreign Minister Winston Peters describes the current global climate as “the most challenging environment of one’s lifetime”, no small thing given the 80-year-old was born the same year World War II ended.

“It just means that we have to be more present and more alert, more nimble and more committed to making sure that our interests are vigorously maintained alongside others who think like us and share the same beliefs in the rule of law, democracy and freedom.”

David Capie, the director of Victoria University of Wellington’s Centre for Strategic Studies, is likewise struck by the “sheer number of conflicts” that played out in 2025, across numerous countries and continents

“It feels like a really grim picture – I can’t remember a year where just so many crises and challenging events have happened, one thing after another.”

The new year has hardly started off on better terms, with Donald Trump authorising a surprise military operation to capture Venezuelan leader Nicolas Maduro and fly him to the United States to face trial for alleged involvement in drug trafficking. While some Venezuelans have welcomed the end to Maduro’s reign, a number of countries have expressed concern about the dangerous precedent set by the apparent breach of the United Nations charter.

While the mission was a surprise, the uncertainty sparked by the US President is of a piece with 2025. The world began last year bracing for Trump’s return to the White House, and he wasted no time in seeking to overhaul American foreign policy.

“Even people who thought Trump was going to be a disruptive feature in international life, I don’t think they could have expected it to be this disruptive –  it’s fundamentally different to the first term,” Capie says of the “whiplash” caused by the US President.

“The personalisation of foreign policy, the autocratic shifts at home, the degree of unpredictability … this was a year in which there was talk about annexation of Canada and Greenland, this was a year where Vladimir Putin was welcomed in Anchorage.”

The policy with the greatest direct impact for Kiwis was Trump’s ‘Liberation Day’ tariffs, with an initial 10 percent rate for New Zealand exports in April subsequently raised to 15 percent, undermining the Government’s argument that we were no worse off than any other nation.

A November decision to roll back tariffs on food imports in the face of rising inflation helped soften the blow for the agriculture and horticulture sectors, but American trade policy is likely to dominate the global agenda again in 2026.

“Trump calls tariffs the most beautiful word in the dictionary, it seems like that’s the one thing he’s been consistent on …, but there are also those signs that some of the iron laws of economics are actually coming home to roost,” Capie says.

There are also broader concerns about the future of US leadership in the Indo-Pacific following the withdrawal of most American aid, while its inconsistent support for Ukraine raises questions about how it would respond to any conflict in our region.

Having “unashamedly” asked for the US to step up its Pacific engagement during his last stint as foreign minister, how does Peters feel about suggestions that American leadership is waning?

“I’m in the business of dealing with the future the way I believe it’s going to be – not the way I like it, but the way it’s going to be – and I don’t hold that view at all,” he responds.

The minister clearly sees room for improvement, however, saying he would “very much value the chance to get inside the Trump room and have a talk to him about this part of the world, because this is a different situation where the people at the very top can tell you yea or nay”.

There was at least a hint of positive news in the Great Power rivalry between the US and China, after Trump and Chinese president Xi Jinping sat down in South Korea to put their trade war on hold.

But how long will that pause stay in place? Underlying tensions are never far from the surface, with the Chinese military carrying out live-fire drills in the Taiwan Sea in late December after the US sold more than US$10 billion in arms to Taiwan.

“My own hunch is structural differences between the US and China … the negative perceptions of each other are so baked into domestic politics in the US and similarly [with] nationalism in China, this is a temporary truce rather than a longer-term settlement,” Capie says of the Trump-Xi detente, which will likely remain close to the surface this year.

“What that really means for our region in particular, what that means in terms of whether or not the US is going to see itself as committed to the defence of Korea, Japan, Taiwan and so on – so much will flow from that US–China relationship.”

Another country sweating on American defence commitments is Ukraine, set to enter its fifth year of war with little sign of respite from invading Russian forces.

Capie describes 2025 as “a year in which European security fundamentally changed”, thanks to the Trump administration’s message that the continent can no longer rely on the US to come to its aid.

“You look at the changes that are taking place in Germany just in the space of, what, six months? The idea of Germany spending hundreds and hundreds of billions of dollars on defence, talking about an army that’s going to deploy well outside its own borders …”

With Russian drones and jets already making incursions into Nato airspace and Moscow pursuing hybrid warfare tactics in Europe, the fear is that Ukraine is forced into a deal that ultimately allows Putin to rebuild his military: “They’ll reconstitute their forces, they’ll take a deep breath, and then in a few years, they’ll come back and they’ll push into the Baltics.”

Then there is the war in Gaza, which has largely dropped out of the headlines after Israel and Hamas agreed to support a US-brokered peace plan in October.

The month before, Peters announced New Zealand would not recognise Palestine as a state – a decision he stands behind, saying the territory needs security before statehood.

“If peace breaks out then there’s the possibility of establishing the institutions with legitimacy, but that’s not now, and that’s as clear as daylight.”

Coalition’s ‘sheer uptick’ in diplomatic trips

That announcement came at the UN General Assembly in New York, just one of 12 overseas trips for the foreign minister in 2025, visiting a total of 34 countries in 85 days offshore.

Capie gives Peters and the Government credit for “just the sheer uptick in engagement”, living up to Prime Minister Christopher Luxon’s promise of “hustling” on the world stage.

“I think even people who disagree with Winston Peters’ domestic politics would generally concede that he’s done a very good job as foreign minister, and he’s been extremely active.”

That active approach has been accompanied by more muscular tactics in some cases, most notably in the Pacific where the Government paused aid to Kiribati and core budget support to the Cook Islands over diplomatic disagreements.

While there are signs of improvement in the relationship with Kiribati, Peters still remains at loggerheads with Cook Islands Prime Minister Mark Brown and in November extended the pause on direct payments.

“That willingness to use some tools of diplomacy that we haven’t seen New Zealand reach for very much in the past, basically that cutting off of, pausing of aid, [is] a more coercive set of tools than New Zealand usually likes to be associated with,” Capie says, with the possibility such tools will be put into use more often in a world where more traditional diplomatic approaches are less effective.

Peters remains confident the Cooks crisis is resolvable, but makes clear his dissatisfaction with Brown’s approach to date.

“Our relationship when it comes to the realm countries is, after all, between the peoples of New Zealand – not temporary governments, not temporary prime ministers, not temporary foreign ministers.

“That’s how we see it, so we’re going to make sure we fulfil our obligations.”

The New Zealand First leader has not been entirely happy with his coalition partners’ approach to foreign affairs either, clashing with Finance Minister Nicola Willis over the funding allocated for his ministry and overseas aid in last year’s Budget. Does that hint at further tension to come in this year’s Budget, the last before the election?

“I’m confident it portends more realistic discussions for the next Budget, but … we have improved our resourcefulness and getting other partners to help,” Peters responds.

Whether those realistic discussions result in more money remains to be seen, but one thing is clear – the Kiwi diplomats who are in post will have more than enough work to deal with, in what is already shaping as another difficult year.

Sam Sachdeva is Newsroom's national affairs editor, covering foreign affairs and trade, housing, and other issues of national significance.

The article was first published on Newsroom.