Globalization and geopolitics: the rules of the game have changed

In 1991, the world, expectant, witnessed a historic change that would initiate a new global era: the collapse of the Soviet Union. It is the end of the Cold War, and the starting signal for the period of economic globalization that will change the balance of power in the world: the

The era begins in which the multinationals of the main Western economies make the world their market, in which they maximize their profits. Once emerging economies improve their institutional and financial quality, multinationals establish themselves productively to take advantage of low production costs, especially labor costs. Little by little they sophisticate their global supply chain and come to make the location of their production almost irrelevant. Thus is born global productive specialization, the global value chain (GVC). Geography seems to lose importance, in this phase, as logistics adapts to globalization of production efficiently, and brings products, intermediate or finished, to any corner of the world. It is the just in timemodel: supplying products just when the customer needs them, neither before nor after. This synchrony of international trade makes global logistics the veins of capitalism.

It is the liberal boom. The intoxication with the success of capitalism leads to the belief that, through economic interdependence between countries, any open conflict will be avoided: the more commercial, financial, productive, energy, innovative, etc. interrelation there is between two economies, the more solid and resistant their relations will be.

And 2014 arrives. Russia invades Crimea, in Ukraine, and annexes it. First warning that this liberal assumption is questionable. And 2017 arrives. First Trump presidency, with an illiberal narrative widely accepted in his country (and beyond): globalization has mostly benefited the working classes of China and the global elites owning Western multinationals, and has weakened the workers of the United States and their middle class. In 2018, the trade and technological war between the United States and China begins (tariffs, bans on access to certain technologies, export controls...) The mantra that liberal globalization promotes stability and cooperation is called into question. It is the beginning of the end of an economic era.

The blow of the pandemic

And here comes 2020. Covid-19 calls into question the logic of globalization in a comprehensive way. A significant part of global production is paralyzed, but above all, its international mobility is interrupted. It becomes clear that the legitimate pursuit of maximizing a company's profits can be detrimental to its resilience. And it calls into question corporate profit as the ultimate good, as it is argued that it can be detrimental to national interest. Likewise, it highlights that the world has changed, and that certain emerging economies are essential for global functioning. The system now structurally needs China, Taiwan, South Korea, India, the Gulf countries...

And here comes 2022. Russia invades Ukraine. It is the end of the liberal dream. Beyond the dramatic event itself, it is a global shock: interdependence does not guarantee stability, nor peace. The West applies several rounds of significant sanctions against Russia and reconsiders the globalization model. The rules of the game have been broken. Europe, the United States, China, Russia, India... initiate processes of national economic strengthening to avoid depending on other countries in strategic sectors: this is the model of strategic autonomy.

And here comes 2025. Second Trump presidency. It is the end of the other dream: the West no longer exists. There are no longer allies, there are interests. And volatile ones. Economic, financial, and technological interdependence has gone from being a desired asset to a strategic vulnerability. And it must be corrected as soon as possible. Threats and hard power become commonplace in international relations. Governments are to play an essential role in their economies: reindustrialization policies, promotion of the defense industry, accelerated energy transition, and massive digitization policies, with the aim of achieving maximum possible strategic sovereignty in the shortest possible time.

And here comes 2026. The war between Israel and the United States against Iran, and its reprisals against the Gulf countries, once again highlight two facts: global trade flows are very vulnerable and energy dependence on third parties is unsustainable due to its volatility in both supply and price.

Resilience and proximity

Multinational corporations in strategic sectors (food, electrical and electronic, semiconductors, pharmaceutical, strategic chemical...) are subject to uncertainties that make them rethink their global strategy. The already frequent disruption of supplies due to logistical weakness; growing geopolitical instability; protectionist and coercive measures by some major economies; difficulties in accessing certain technologies and raw materials depending on alignments, or government pressure to condition the location of their investments, means they have to sacrifice economic benefits in favor of greater resilience and reliability. The new globalization is more fragmented among large protectionist economies, more government-directed, more unpredictable, and more regionalized, but above all more multipolar.