For more than three decades, the prevailing belief around the world was that economic interdependence would restrain geopolitical rivalries. The assumption was that the free movement of capital, goods, and technology would make conflicts less likely and lead to a more stable international environment.
However, developments in recent years — from Ukraine and the Middle East to the Strait of Hormuz — demonstrate that reality has taken a different course. Geopolitics has not only failed to recede; it has returned as the dominant force shaping international affairs.
The end of the Cold War created the impression that globalization would become the foundation of a new international order. International trade expanded at an unprecedented pace, investment flowed across national borders, and technology connected economies that had previously operated independently. Economic integration was regarded not only as the driving force behind growth but also as a guarantee for preserving peace.
In practice, however, events unfolded differently. Russia demonstrated through its military interventions — most notably its invasion of Ukraine — that economic ties alone are not sufficient to serve as a deterrent.
At the same time, China leveraged globalization to emerge as a global economic and technological powerhouse, without abandoning its strategic ambitions. Meanwhile, Iran demonstrated that a state may be willing to bear significant economic costs when it believes they serve broader geopolitical objectives.
The deeper shift, however, goes beyond the return of geopolitical rivalry. Economics itself is becoming geopolitical. Trade, investment, technology, energy, and infrastructure are no longer treated simply as engines of growth; increasingly, they are also instruments of power, leverage, and strategic influence.
From economic efficiency to strategic vulnerability
These developments are gradually changing the way governments and businesses perceive globalization. Economic efficiency remains important, but it is no longer the sole criterion.
Alongside it, priorities such as security, supply chain resilience, the protection of critical technologies, and reducing dependence on strategic rivals have become increasingly important. In other words, the economy is now expected to serve the needs of national security as well.
The principle that defined the previous phase of globalization — maximum efficiency at the lowest possible cost — is therefore being challenged by a different calculation: how much strategic dependence can a state or a company afford? Efficiency has not disappeared, but vulnerability has acquired a price of its own.
The significance of this shift is reflected in the so-called strategic “chokepoints” of international trade. The Strait of Hormuz is a prime example. Their importance extends far beyond the transportation of oil, reaching into the overall functioning of the global economy.
The crisis in the region is already affecting energy markets, maritime transport, industrial production, and international financial markets, demonstrating just how interconnected — and, at the same time, how vulnerable — the global economic system remains.
Hormuz illustrates the new equation particularly clearly. Geography can become leverage, leverage can become geopolitical power, and geopolitical power can rapidly translate into economic cost. Markets may determine prices, but they cannot eliminate the strategic geography through which trade must move.
The same applies to other critical sectors. The production of advanced semiconductors, the processing of strategic minerals, and the manufacturing of specialized industrial equipment are concentrated in a limited number of countries.
The pandemic, geopolitical crises, and trade disputes have highlighted that excessive dependence on a small number of suppliers can evolve into a serious strategic risk.
Globalization reorganized around power
This shift is already reflected in the policies pursued by the world’s major economies. The European Union is moving toward a stronger focus on economic security, Japan is reinforcing policies aimed at protecting supply chains, and India is seeking to strengthen its strategic autonomy through new trade and technological partnerships.
Businesses, for their part, now assess not only production costs but also the geopolitical risks that may affect their operations.
What is emerging, therefore, is not simply a retreat from globalization. It is a reordering of globalization around strategic priorities. The central question is increasingly not only where goods can be produced most cheaply or capital deployed most efficiently, but where dependence is politically tolerable, technology can remain controllable, infrastructure can be protected, and supply chains can survive geopolitical disruption.
The most likely scenario is neither a return to unrestricted globalization nor the complete fragmentation of the international system into rival blocs.
Instead, the world appears to be entering a prolonged period of transition, in which economic cooperation will continue but will coexist with intense competition, heightened uncertainty, and a constant pursuit of strategic autonomy.
The era in which economics was considered sufficient to guarantee international stability appears to belong to the past. Today, power, security, and control over critical infrastructure have once again moved to the center of international politics.
Globalization is not collapsing; it is being transformed. And as geopolitical tensions continue to multiply, economic decisions will increasingly be made not only with growth in mind, but also with national security, resilience, and strategic power as guiding priorities.
The defining contest of the emerging order may therefore not be between globalization and deglobalization, but between efficiency and strategic control. Economics has not ceased to matter. What has changed is the hierarchy: power is increasingly determining the conditions under which economics is allowed to operate.
George S. Skordilis is Editor-in-Chief of geo-trends.eu.