Robert Gilpin, a founding thinker in geoeconomics, once described the concept of power as “one of the most troublesome in the field of international relations.” You can tell alot about the current moment by paying attention to how power is articulated, and following how its definition has changed. Is power something wielded, captured or cultivated? 

30 years ago, American political scientist Francis Fukuyama wrote his seminal work ‘The End of History and the Last Man’ on the culmination of all history into an ultimate liberal order. In this treatise, divisive ‘power’ was a defunct tool of a bygone era. If everyone was contributing to a shared global market, it seemed unreasonable that anyone would take steps to endanger their market positions, slow trade, or lessen return on investment. 

For a short time, we believed the hard power ambitions of rising powers were subdued by the promises, potential and supposed stability of a rules based system. As evidenced by the conflicts and tensions today, market imperatives were no promise of peace. Fukuyama’s work has been approached again with discontent and confusion, the focus of numerous critical editorials asking one of two questions: ‘What went wrong?’ or ‘What changed?’ 

The Geoeconomics Revival

A long dormant link between foreign policy, state intervention and economics has been revived in both practice and study. Countries are using economic levers to secure national aims. This is exactly why geoeconomics is the resurging focus of many opinion editorials, new policy institutes, conferences, academic initiatives, and is even a central dimension of the 2025 Davos Summit – the prestigious whos-who annual business meeting hosted by the World Economic Forum. 

Why should I care about the surging interest in this niche field? 

The return of Geoeconomics marks our current moment. This once overlooked intersection of political science and economics stands at odds to the principles of a rule based, market-driven neoliberal system. A geoeconomic theory of power centers around coercion and self-interest. Geoeconomics is the study of how nations use economic levers to pursue foreign policy goals. Its central question is how nations are able to use economic leverage to induce actions that would not be taken otherwise. 

Geoeconomic theory gives ample attention to a vast economic toolbox available to nations; tariffs, quotas, sanctions, regulatory promises, market access, or subsidized exports, just to name a few. It is not that these levers were unheard of or unused before, but from the 70’s on, such state interventions were riskier, needing to be calculated, justified, and explainable. Now, acts of state intervention make up a growing European industrial policy thrust, balancing a mix of such protections and incentives to drive climate action and stimulate technological growth. In 2023, Ursula Von Der Leyen called for a “common European industrial policy  with common European funding”. The European industrial policy response, balancing a complex mix of incentives and protections, are facilitating climate action and stimulating competitive technologies. Two decades ago, a strategic industrial response would have been highly unpopular – now, it is seen as a necessity. 

Tariffs, Tech, and Tension

Within hegemonic fragmentation, the current tariff war, low-growth forecasts and intensifying regional divides, these tools are being considered and utilized again. This is exemplified by the EU’s establishment of the anti-coercion instrument in 2023, enabling coordinated response to acts of economic pressure or interference by third parties. 

The EU has set regulations placing levies on carbon-intensive imports through the Carbon Border Adjustment Mechanism (CBAM), pursuing strong sustainability goals while straining relationships with carbon intensive industry exporters. 

We are also witnessing stronger export controls put in place regarding key technologies, and stronger security screening on foreign investments to mitigate risks and protect critical infrastructure. Strong, sweeping measures and regulations are being employed to meet security, sustainability and resiliency needs. 

Europe’s Balancing Act

It is abundantly clear: Europe has started taking upon a geoeconomic approach to foreign policy in recent years, using international trade as a manner to secure its strategic position and strengthen its competitiveness. Europe is rearming, focusing on energy independence, and running a tight pocketbook by raising debt limits and tightening monetary policy to fund long term objectives while managing inflation. 

In line, the EU and many member states are cutting their development aid budgets. Commissioner Von der Leyen has indicated the Commission must become an ‘Investment Commission,’ indicating fiscal goals and strategic position become increasingly relevant dimensions of foreign spending. 

Europe’s ‘De-Risking’ agenda is no longer tied to just self-reliance and sustainability, but staving off a possible recession while drastically increasing security capabilities. The Atlantic alliance has been destabilized, and transactionality is the resurging logic of global affairs. 

As trust erodes in a global, rules-based, international system, the EU will need to forge new multilateral arrangements to pursue regional interests. Making friends upon this changing ground will give preference to pragmatism and direct mutual benefit – promises and posturing will not suffice. 

The European Council of Foreign Relations recently released an interactive ‘multilateral matchmaker,’ highlighting how Europe will need to make themselves an attractive global partner – ensuring “future cooperation is not perceived as moralising or uncredible.” Those last five words are swift and bitter – a timid gesture to the idea Europe will need to trade ‘moral authority’ for security. 

To pose an either-or between values and security would be not just naive, but disingenuous. Certain risks are real though. Increasing frequency and risks of cyber attacks throughout the continent demonstrate risks posed to critical infrastructure and institutions. Russian interference in democratic elections throughout Germany and Eastern Europe demonstrates Putin’s aspirations go far beyond Ukraine.  Trump’s isolationist America with imperialist characteristics is less interested in sufficiency as it is bending other nations to his will, taking advantage of economic shock, and bolstering a network of right wing allies. 

The political and infrastructural integrity of the EU rests not just in deterrence or defense against these threats, but developing a strategic position and shared identity defined by that which differentiates us from the US, Russia or China. Balancing the conflicting imperatives for security, trade and investment, self-sufficiency, and relative competitiveness will require a new calculus for establishing constructive and sustainable global relationships. 

Resilience, Not Retaliation 

Where the EU is committed upholding the rule of law and protecting the rights of its citizens, Russia and the US more easily sacrifice the dignity and rights of their population for political goals. Look only recently at Trump’s unconstitutional deployment of the national guard to quash protests in Los Angeles, California. Strongmen leaders experiment upon their population and state institutions until they know just how far they can go, and what they can get away with. Europe has worked to insulate itself from such dangerous centralizations of power. 

Europe’s strengths must derive from its dynamism and plurality while cultivating self-sufficiency from the capacities of its citizens. Europe is in a position where it must draw power from its institutions, not against them. The EU is not a union of convenience – it is a union of commitment. Even with growing eurosceptic, nationalist and populist sentiments, the EU works because it gives a platform across a diverse social and cultural terrain to accomplish long-term projects, fostering interconnectivity and trust. Civil participation and understanding is a critical aspect of institutional legitimacy. Europe needs both this social and political infrastructure  to coordinate strategic geoeconomic policies. 

As the EU works to strengthen the single-market environment, we are further reminded that economic resilience is not just a strategic endeavor, but a measure of collective determination. Disagreements and imbalances between member states can and will be leveraged. Certain countries, sectors and industries can be disproportionately affected by geoeconomic instruments, especially if retaliation escalates with the US. The Netherlands would be more affected by tariffs on semiconductor chips, France is more affected by tariffs on agri-food and drinks, while Germany is at great risk facing tariffs on steel and aluminum. This fragmentation becomes a great risk when member states start negotiating individually instead of collectively. What is clear is that burdens left unshared risk tipping the entire boat. 

Europe’s Strategic Crossroads

The EU has proven itself to be highly responsive and prepared for the risks faced today. What still remains to be worked on? 

Our flexibility. Full political alignment may no longer be feasible when building critical new partnerships. Take South Africa, whose position in BRICS and stance on the Russian invasion put them at great odds with the EU. Simultaneously, South Africa critiques the EU’s double standard between Gaza and Ukraine, having brought forward a case at the ICJ accusing Israel of Genocide, drawing mixed consternation and support from various EU countries. 

South Africa is furthermore highly critical of the EU’s Carbon Border Adjustment Mechanism , which has severe consequences upon their aluminum exports. Nevertheless, cooperation with South Africa is necessary to drive the global sustainability transition, and create supply chains resilient to global shocks. The condition of full political alignment for partnership may need to be waived for the benefit of realizing shared strategic interests. 

The security, economic and environmental risks facing Europe are clear, and the crossroads they stand at never more visible. Geoeconomic thought is returning because it is useful when operating in a power-politics world. And although we find ourselves in a more precarious position — Europe need not appease, but adapt. 

We need to remember the protectionism employed in geoeconomic conflict risks igniting tit-for-tat escalation. Large nations enjoy the privilege of changing the world as one would their mind, legitimizing their every whimsy with force. But nations don’t suffer the consequences of the conflicts they create. People do. Trade will not save the EU, nor will a strong military – there is a need for forms of cooperation that pierce the veil of the ‘great power’ or ‘grand civilization’ myths that sustain hard-power politics. 

Navigating Geoeconomic Realities 

Between Russia’s slide into a war-economy pariah state, China’s increasing reputation as an untrustworthy lender, and America’s retreat from the world stage, there is room for Europe to develop an international position invested in mutually beneficial arrangements and transparency. Driving trade solutions that serve people over local elites, prioritizing long-term infrastructure projects, and establishing standards for sustainable development may be necessary to unlock the alliances necessary for de-risking and strategic autonomy. 

Part of this adaptation will involve pragmatism, and a new voice that speaks with, and not at, trade partners. But fundamentally, the EU’s prospects going forward must draw from their civil, regulatory and institutional strengths. 

Business leaders rank geopolitics as the most significant risk to economic growth. They have the order wrong. The question is less if geopolitical tensions pose a risk to business, but how a globalized economy has come to carry such perceived risks to sovereignty. The belief our global market ever transcended the nation state has been dismantled in a flurry of conservative victories and conflicts. We are no longer under the illusion that history ended with the liberal order. We are facing a future fraught with competing philosophies of power, state ideologies, and interacting crises. 

The EU has worked tirelessly over the last 50 years to create a unified vision of the future, betting heavily on ‘peace dividends,’ trusting enormously in the stability of the American project, believing there to be a universal alignment of values brought through trade. This illusion may be gone, and many fear European Countries risk sliding into deeply resented old world forms  – militarized, chauvinistic, more reactive than reasonable. 

This fear is just as illusory. Europe is capable of navigating geoeconomic waters without sacrificing itself at the altar of populism or imperialism.