The return of power politics
Post-Cold War integration increased prosperity but did not eliminate rivalry. Emerging powers and strategic risks are driving a prolonged transition.
In a nutshell
- Globalization has increased wealth but has also created dependencies
- Chokepoints, along with chips and minerals, have revealed vulnerabilities
- The strategic goals of nations often outweigh economic rationality
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In the post-Cold War era, policymakers believed that economic integration would reduce geopolitical rivalry, assuming that trade and investment would foster prosperity and lower the risk of conflict. This view emerged from success, not naivete. The Cold War ended without great-power conflicts. Global trade expanded, capital and technology moved across borders at unprecedented speed and former rivals joined a common economic system. Globalization seemed not only economically beneficial but strategically transformative.
That success, however, reinforced beliefs that proved more fragile than they seemed. Economic integration failed to end geopolitical rivalry, interdependence did not stop revisionism and prosperity did not ensure strategic convergence. Beneath these assumptions was a key premise: that the United States would continue to uphold the security architecture that sustains the broader system.
Russia dealt the first major blow to the rules-based international order. From the 2008 war in Georgia to the full-scale invasion of Ukraine in 2022, Moscow revealed the limits of interdependence and economic integration as restraints on revisionism and strategic competition.
China exposed a deeper flaw. Many believed that integration into the global economy would gradually lead to strategic convergence. The same mechanisms expected to encourage it helped create a competitor strong enough to challenge parts of the order that enabled its rise. Globalization accelerated China’s industrial, technological and financial transformation far more than it changed its strategic ambitions.
China’s rise brought major gains to the global economy. Yet it also highlighted how unevenly those gains were distributed. The “China shock” fueled political backlash against globalization and raised concerns about technological dependence and industrial capacity.
Iran revealed a further weakness in the interdependence thesis. Tehran has repeatedly accepted major economic costs to pursue goals that go beyond straightforward economic calculation. Prosperity matters, but it does not automatically outweigh strategic or political priorities.
The result is neither the collapse of the rules-based order nor a return to a purely geopolitical world. Instead, security and power have reemerged as central factors in economic and political decision-making. The belief that prosperity, integration and interdependence would steadily soften geopolitical competition has proved more limited than many expected. Economic considerations still matter, but they now compete more clearly with concerns about security, resilience and strategic advantage.
Multilateralism under strain
The return of power politics is reshaping not only relations among states but also the institutions and rules that govern international cooperation. Rules promoting openness now rub up against risk-management policies that protect critical capabilities and reduce dependencies.
At the center of these changes is a question that goes beyond any single institution: what role will the U.S. play?
The post-Cold War order relied not only on American power but also on a sustained U.S. commitment to an international system largely shaped by Washington. Open sea lanes, alliance networks, market access, institutional leadership and the provision of key public goods all reflected the judgment that maintaining that order served American interests.
Today, that judgment is increasingly contested. China’s rise, renewed great-power competition, technological rivalry and concerns about strategic dependence have changed Washington’s priorities. Globalization’s uneven gains, the political impact of the China shock, concerns about deindustrialization and skepticism about international commitments have intensified the debate over the current order’s costs and benefits.
The return of power politics is reshaping not only relations among states but also the institutions and rules that govern international cooperation.
The effects of this debate reach far beyond the U.S. American leadership was not just a feature of the post-Cold War order; it was one of its core pillars. As Washington reassesses its role, allies, competitors, investors and institutions are all adjusting to a world in which long-standing notions about U.S. engagement can no longer be taken for granted.
The institutions and rules of the post-Cold War order still operate, but the assumptions that ensured predictability are fading. Historically, systemic transitions have often been resolved through new concentrations of power, geopolitical settlements or crises. Today, none of these seem capable of establishing a widely accepted foundation for a new order.
The result is neither the demise of multilateralism nor a return to an entirely fragmented geopolitical landscape. Rather, the international system is evolving without undergoing a complete overhaul.
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The new calculus of economic integration
This shift is most visible in the changing purpose of economic integration. For much of the post-Cold War era, integration was valued mainly for the prosperity it produced. Today, governments expect integration to deliver more: resilience, technological leadership, security and strategic flexibility.
Globalization created unprecedented prosperity, but it also created unprecedented concentrations of dependence.
For decades, the pursuit of efficiency encouraged specialization. This created a global economy of vast scale, but one increasingly reliant on a limited number of critical hubs for production, transit and processing. As long as the international environment was stable, these concentrations seemed manageable. Recent disruptions, like the Covid-19 pandemic, have shown otherwise: many systems that support modern economic activity depend on a surprisingly small number of actors, places, routes and technologies.
Globalization created unprecedented prosperity, but it also created unprecedented concentrations of dependence.
The Strait of Hormuz’s importance extends far beyond oil. It connects energy markets, shipping networks, industrial supply chains and broader expectations of economic stability. A narrow maritime corridor can trigger effects that spread across continents, sectors and markets.
Some vulnerabilities are less obvious. Sulfur rarely appears in grand-strategy debates, yet it is essential to a host of industrial processes. Advanced chips sit at the center of modern economies, enabling everything from artificial intelligence and telecommunications to weapons systems and industrial production. Yet the semiconductor ecosystem depends on a highly concentrated network of design capabilities, specialized equipment, advanced materials and fabrication facilities.
Similar patterns recur across critical sectors. Strategic competition is now waged through the complex web of infrastructure, technologies, supply chains and transit routes that underpin the global economy.
Recognition of these vulnerabilities has prompted a search for new forms of integration that can balance openness with resilience.
The European Union’s turn toward economic security reflects this shift. Japan has folded supply-chain security, technological leadership and industrial policy into a broader national strategy. India is positioning itself in this emerging landscape by deepening ties with Europe, the Gulf, Southeast Asia and the U.S., while combining economic growth, technological modernization and strategic autonomy. A similar logic is visible among other middle powers.
Yet these adaptive strategies are better at managing uncertainty than resolving it. They improve resilience and flexibility, but they do not offer a new organizing principle for the international system.
Markets are adapting as well. Companies increasingly assess geopolitical exposure alongside traditional business risks, while investors pay closer attention to supply-chain concentration, technological dependence, regulatory fragmentation and strategic uncertainty. The goal is no longer simply to maximize efficiency, but to preserve flexibility in an environment where disruption is increasingly seen as structural rather than temporary.
Scenarios
Most likely: Protracted transition
The most likely outcome is neither a return to the earlier rules-based order nor its replacement by a new geopolitical equilibrium. The international system remains in a prolonged transition marked by persistent uncertainty, selective cooperation and intensifying great-power rivalry.
Major powers continue to compete while avoiding direct confrontation. What defines this scenario is the lack of a broadly accepted framework to manage intensifying competition. The institutions, rules and norms that have guided international cooperation for decades face growing pressure, but no player has the power or legitimacy to shape a widely accepted alternative.
The persistence of this transition reflects a fundamental reality: no actor is strong enough to impose a new order, yet no coalition is cohesive enough to build one. Dissatisfaction with the existing order grows, but agreement on what should replace it remains elusive.
As system-level predictability declines, governments, businesses and investors increasingly try to create it for themselves. Diversification, industrial policy, strategic reserves, supply-chain restructuring and strategic autonomy become enduring features of economic and national security strategy.
Rather than commit to fixed geopolitical camps, many states try to preserve room to maneuver by maintaining ties with competing centers of power. The international system increasingly operates through overlapping networks, shifting coalitions and selective partnerships built around specific interests, technologies and security concerns.
We find ourselves in a world that remains interconnected yet increasingly volatile, unpredictable and costly to navigate. While economic integration persists, it unfolds amid ongoing geopolitical competition and chronic uncertainty. What characterizes this future is not the establishment of a new equilibrium, but an ongoing transition.
Less likely: Competitive fragmentation
In this scenario, efforts to reduce vulnerability gradually reshape the international system. Strategic concerns increasingly influence decisions about market access, technology transfer, investment flows, supply chains and access to critical resources. Over time, confidence in the ability of universal rules, institutions and multilateral frameworks to manage geopolitical competition weakens further, accelerating the move toward more selective forms of cooperation.
Governments place greater emphasis on trusted partners, strategic industries, domestic capabilities and aligned technology standards. The cumulative effect of many decisions meant to reduce geopolitical exposure is a more segmented international system.
States and firms increasingly find that reducing strategic dependence requires choices about technologies, standards, investment ties, financing arrangements and supply chains. Efforts meant to strengthen resilience therefore help produce partially competing spheres of economic and technological influence.
Over time, fragmentation spreads beyond trade and supply chains. States face growing pressure to choose among partially competing systems rather than participate easily in all of them.
Middle powers find it harder to sustain hedging strategies. The flexibility that defines the transition scenario steadily narrows as governments face mounting pressure to align with one set of standards, technologies, financing arrangements and security relationships rather than another.
The result is not rigid blocs, but a gradual move away from the universal frameworks that defined the rules-based order. Cooperation increasingly takes place within narrower networks of trust, alignment and shared strategic interests. As these networks solidify, the space for neutrality, strategic ambiguity and flexible alignment shrinks. What distinguishes this future is not the disappearance of cooperation, but the fragmentation of the frameworks through which cooperation is organized.
Least likely: Major-power escalation
The least likely but most consequential scenario is a major-power confrontation that transforms geopolitical competition into a systemic security crisis. This outcome does not necessarily emerge from a deliberate decision to pursue large-scale conflict. Rather, it results from the gradual erosion of the mechanisms that have historically managed great-power competition and limited escalation.
A crisis involving Taiwan, the South China Sea, the Persian Gulf, the Black Sea or another strategically significant theater could become the catalyst. Yet escalation need not originate solely from a conventional military confrontation. Competition over critical minerals, strategic technologies, energy supplies, cyber infrastructure or other vital components of the global economy could also trigger crises with broader geopolitical consequences.
The principal danger lies not only in deliberate escalation but in the possibility that a limited confrontation expands beyond the intentions or expectations of those involved. History offers numerous examples of conflicts that became larger, longer and more disruptive than their participants initially anticipated. As strategic competition intensifies and trust declines, the risks of miscalculation, reciprocal escalation, signaling failures, alliance commitments and unintended consequences increase.
The immediate effects would extend far beyond the initial crisis. Energy markets, supply chains, transportation networks, financial systems and technology ecosystems would all be affected.
The more profound consequence would be the erosion of confidence in the international system’s ability to manage great-power rivalry without major confrontation. Assumptions that have underpinned international stability for decades would come under severe strain.
Under these conditions, governments would increasingly evaluate economic, technological and security relationships through the lens of strategic vulnerability. Supply chains, critical infrastructure, financial systems and technological ecosystems would be judged less by efficiency than by their contribution to resilience, deterrence and national security. Even if nuclear deterrence continued to prevent direct war among major powers, confrontation could increasingly unfold through cyber operations, space, economic coercion, information warfare, proxy conflicts and other forms of hybrid conflict. Such activities could generate profound disruption without crossing traditional thresholds of war, while creating new, less predictable pathways to escalation characteristic of modern warfare.
Paradoxically, arrangements that appear undesirable today, including a greater acceptance of geopolitical blocs and de facto spheres of influence, could eventually be seen as not the preferred outcomes. Instead, they may serve as mechanisms for imposing greater predictability on major-power competition and reducing the risk of uncontrolled escalation.
The defining feature of this scenario is not simply the confrontation itself, but the realization that major-power confrontation can no longer be treated as a remote possibility. The central question facing governments would no longer be how to navigate strategic competition, but whether it can be reliably contained. More fundamentally, such a crisis could mark the beginning of a broader historical transition.
Much as previous eras of confrontation reshaped the distribution of power, transformed international institutions and established new strategic realities, a major-power crisis could accelerate the emergence of a fundamentally different international order.
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