Hard power returns, but soft power will win
The decisive contests of the next decade will be won through persuasion, not coercion.
In a nutshell
- Defense spending has surged amid renewed great-power rivalry
- Nations neglecting diplomacy risk isolation despite military might
- Soft power paired with deterrence is emerging as the optimal strategy
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In the decades following the Cold War, soft power gained prominence. Many believed globalization, trade and shared norms would dampen military rivalry. Yet the illusion of a post-hard-power world was shattered in February 2022 when Russian forces launched a full-scale invasion of Ukraine. The event re-centered traditional geopolitics: territorial aggression, deterrence and security alliances. It also revealed the limits of economic interdependence. Pipelines, commodity flows and supply chains – once symbols of stability – were turned into weapons.
The Ukraine war has coincided with escalating competition between China and the United States, tensions in the Indo-Pacific and heightened volatility in the Middle East. Together, these factors have accelerated a worldwide reorientation toward hard power as the dominant language of international affairs.
Rising defense budgets
The most visible indicator of this shift is military expenditure. In 2024, global defense spending reached $2.7 trillion, a 9.4 percent real increase over the previous year – the steepest annual rise since the late 1980s. Defense now makes up 2.5 percent of global gross domestic product (GDP), a level not seen in decades.
Europe has led the surge, reversing years of underinvestment. Germany launched a 100 billion-euro special defense fund, Finland and Sweden abandoned neutrality to join NATO and Japan broke its informal defense spending cap of 1 percent of GDP. Middle Eastern states, facing both regional insecurity and economic diversification plans, have also sharply increased spending. Even regions previously shielded from direct conflict are recalibrating their strategies. The age of the “peace dividend” is over.
Uneven national trajectories
United States: Eroding soft power
The U.S. still commands the world’s strongest military and retains formidable cultural and scientific influence. Yet recent political choices have weakened its soft power. During Donald Trump’s second presidency, budgets for diplomacy, development and academia have been cut. USAID has been merged into the State Department with reduced resources, and the National Science Foundation has faced clawbacks in grant funding. These moves signal a retreat from the instruments that traditionally made the U.S. an attractive ally.
Washington has also been relying heavily on sanctions, export controls and tariffs to signal its hard power in the Indo-Pacific. These tools may achieve short-term leverage but erode the credibility of U.S. leadership on the global stage. America risks being seen as powerful but unreliable – a dangerous mix in an era when legitimacy counts.
Israel: Soft power sacrificed after October 7
Following the October 7 attacks, Israel has traded its soft power for hard power. Long known for its “Start-Up Nation” image, this influence has collapsed due to the war in Gaza. Once admired for technological innovation and cultural exports, Israel is now perceived as a regional bully that is defined internationally by its hard-power response to the Hamas conflict. Its reputation rankings have plunged to historic lows, and it is on the verge of becoming a pariah state.
Facts & figures
Global military expenditure
While this reaction to the trauma of October 7 was understandable in the first few months of the war, it now comes with long-term costs: strained relations with key European partners, potential erosion of the Abraham Accords and declining appeal to investors and collaborators who fuel the country’s innovation ecosystem.
China: Blending hard and soft power
China presents a contrasting case. Beijing continues to rapidly modernize its military while simultaneously investing in soft power. Its Belt and Road Initiative remains a viable vehicle for projecting influence through infrastructure and development financing.
More recently, China has sought to lead in setting international rules for emerging technologies. In July, it unveiled a Global AI Governance Action Plan at the World Artificial Intelligence Conference in Shanghai, proposing UN-based standards and even a new cooperation body. By including the Global Majority and presenting itself as a rallying leader, Beijing casts itself as a rule-maker rather than merely a rival. This dual strategy – hard power for deterrence, soft power for legitimacy – is paying dividends.
Gulf states: Soft power as diversification
The Gulf monarchies, particularly Saudi Arabia and the United Arab Emirates, are investing significant effort into building up their soft power. Through investments in sports, tourism and mega-events, they seek to rebrand themselves as global hubs.
Saudi Arabia’s Vision 2030 includes a $1 trillion investment in tourism infrastructure, while the Public Investment Fund has bought football clubs, organized high-profile sports leagues and funded cultural festivals. These moves diversify economies while projecting modernity and openness. For the Gulf countries, soft power is not an afterthought, but a pillar of their long-term strategy.
The need for balance
The lesson of recent years is that hard power is again indispensable. Russia’s war, Chinese assertiveness and Middle Eastern volatility underscore the need for credible deterrence. Yet hard power alone is a floor, not a ceiling. Without soft power, coalitions are brittle, legitimacy erodes and influence wanes.
Smart power – the deliberate combination of coercion and attraction – remains the optimal strategy. The West’s ability to rally allies against Russia, secure technological alliances and mobilize support for sanctions showed how hard and soft power can work together. But sustaining these coalitions requires investments in persuasion, not only in weapons.
Operationally, this means maintaining robust defense while reinvesting in diplomacy, education and cultural ties. It requires acknowledging reputational costs as strategic liabilities and using convening power in areas like AI safety and climate governance, where new norms are not yet defined.
Why soft power still matters
AI governance
Artificial intelligence creates systemic risks: disinformation, bias, autonomous weapons and cyber vulnerabilities. No single state can manage these risks alone. The U.S. has emphasized hard-power instruments – export controls, chip alliances, investment screening – while deregulating domestically. China, by contrast, promotes inclusive, UN-anchored frameworks and offers technology-sharing to developing states. Europe projects regulatory soft power through the AI Act, exporting standards through its market size.
Soft power is crucial here. Standards for responsible AI – such as watermarking, data-sharing for safety research and transparency in model evaluations – will only gain legitimacy if backed by trust. Shared frameworks could include compute-for-safety pools accessible to Global Majority researchers, or incident hotlines to prevent misinterpretation of AI-related failures in high-stakes contexts.
A fragmented governance landscape, driven solely by hard power, risks creating parallel AI ecosystems. That outcome would heighten the danger of misuse and raise the costs of innovation by reducing interoperability. By contrast, collaborative governance, rooted in attraction and legitimacy, offers stability and predictability. When it comes to AI, soft power is not a luxury but a prerequisite for safety and global adoption.
Climate change
Climate challenges are equally resistant to unilateral hard power. The war in Ukraine redirected attention toward energy security, sparked short-term fossil rebounds and drew resources away from climate diplomacy. Meanwhile, rising defense budgets add to carbon emissions and crowd out green investment.
Long-term climate progress hinges on persuasion: mobilizing finance for developing countries, standardizing clean-tech markets and building verification regimes. Soft power in climate policy takes the form of moral leadership and agenda-setting. At-risk coalitions like the Climate Vulnerable Forum have been able to put loss-and-damage compensation on the international agenda. The EU has exercised normative power by setting global benchmarks on emissions trading and carbon border adjustments.
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Moreover, climate diplomacy increasingly requires platforms where adversaries can still cooperate despite rivalry elsewhere. Shared early-warning systems, joint disaster response protocols and technology partnerships are all enabled by trust. Soft power is the connective tissue that makes cooperation possible when hard security concerns dominate headlines.
Hard power’s comeback is real and rational in a more dangerous world. Yet the states that will shape the future – of AI, of climate, of global norms – will be those that still know how to attract.
Scenarios
Most likely: Hard power dominant, soft power neglected
Governments continue raising defense budgets while cutting aid, diplomacy and scientific collaboration. Deterrence is credible, but coalitions weaken as trust erodes.
In AI, governance fragments into competing blocs – U.S.-led export controls versus China’s multilateralism – with minimal cooperation on safety standards. Climate finance stagnates, leaving the Global Majority disillusioned. States become stronger militarily but more diplomatically isolated and their ability to mobilize allies weakens.
Moderately likely: Smart power balance
Governments sustain robust defense while deliberately reinvesting in soft power. The U.S. combines export controls with academic partnerships. Israel gradually restores credibility through humanitarian access and regional cooperation. China’s soft-power campaigns meet coordinated Western responses.
AI governance converges in plurilateral clubs that publish shared safety baselines, while climate negotiations regain traction through expanded finance and standardized technology rules. This scenario offers the best chance for durable order and cooperative problem-solving. Hard power creates stability; soft power gives legitimacy.
Less likely: Soft power revival, hard power constrained
Fiscal pressures, public opinion or climate imperatives slow military spending. Countries rely more on persuasion, cooperation and multilateral institutions. Climate agreements advance and AI standards are harmonized worldwide with significant participation from the Global Majority.
However, reduced deterrence creates vulnerabilities, as revisionist powers may test boundaries. Legitimacy gains are offset by security exposure, underscoring the risk of underinvesting in defense.
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