The West has shifted from treating markets as neutral arenas to viewing them through a lens of power dynamics. The previous rules-based global market is now defined by geopolitical strategies, as exemplified by the fragmentation into competing global blocs. Although institutions like NATO and the Bretton Woods system were meant to provide stability, recent events like Russia's invasion of Ukraine and China's rise indicate a return to a war economy mindset. The historical illusion of self-regulating markets has vanished, leaving national security considerations at the forefront of economic policy.
For eight decades the West, especially European nations, treated markets as neutral arenas governed by rules-not power. That era is over. The global economy is now shaped by rivalry, coercion, and control.
Trade is no longer just trade in a rules-based order, it has become part of geopolitical strategy. As IMF chief Kristalina Georgieva has warned, the world is fragmenting into competing blocs.
The end of the 80-year economic illusion is marked by the return of great power competition; economic liberalism no longer aligns with geopolitical reality, as national security now trumps price efficiency.
We are entering a war economy mindset, accelerated by two shocks: Russia's invasion of Ukraine and China's economic rise, leaving Europe vulnerable, especially regarding its energy supply.
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