Strategic Rivalries in a Fractured Global Order

For decades, economics ruled the world stage. Markets dictated policy, and political choices were increasingly constrained by economic imperatives. Hyperglobalization, built on the foundations of liberal economics, was seen as the ultimate peace project. That era is now behind us.

We have entered a new age. Today, politics sets the agenda, often at the expense of economic rationality. This return of politics is driven by strategic anxiety, hegemonic rivalry, and systemic fragmentation.

Thucydides Trap: The Return of Geostrategic Conflict

Around three or four years ago, speculation began to emerge that World War III may not erupt in a singular explosion, but rather unfold gradually through interconnected conflicts and proxy wars. What once seemed alarmist now sounds plausible.

Ukraine, Gaza, Taiwan, and now Iran, each is a stage of contestation. The dynamics echo what has come to be known as the Thucydides Trap, a modern concept coined by political scientist Graham Allison (2017), based on the ancient Greek historian’s observation that the rise of Athens, and the fear this provoked in Sparta, made war between them inevitable.

Allison’s interpretation frames this historical insight as a structural pattern: when a rising power threatens to displace a ruling one, the likelihood of conflict increases. The U.S.–China rivalry today closely follows this logic, and we observe the ripple effects worldwide.

Kindleberger Trap: Leadership Vacuum in a Multipolar World

If Thucydides explains the risk of hegemonic transition, the Kindleberger Trap helps us understand today's global disorder.

Charles Kindleberger’s warning about the 1930s remains uncannily relevant. Back then, Britain could no longer provide global leadership, and the United States was not yet willing. The result was systemic collapse.

Today, the risk is not that the major powers are retreating, but that neither is willing to take responsibility for global stability. Today, hegemonic ambition is the main driver of what resembles an "orderless order" in international politics.

We are not in a Kindleberger Trap in the classic sense, but we can liken the potential results to the 1930s: fragmentation, protectionism, and unmanaged crises. The difference is that today’s vacuum is not one of absence, but of contested authority, where competing powers remain engaged, yet unwilling to coordinate.

The result? An unstable multipolar world where no one is steering.

According to the World Bank’s June 2025 Global Economic Prospects report, global growth is slowing significantly. Much of this stagnation is not cyclical, but geopolitical.

The major culprits:

• Tariff wars that undermine trade predictability.

• Export controls and supply chain bifurcation, especially in critical technologies.

• Sanction regimes that turn finance into a weapon.

The Flight to Metals: Hedging Against Systemic Risk

As the U.S. dollar weakens, capital is seeking refuge in gold and now other precious metals like silver, palladium, and platinum. This shift isn't about inflation hedging. It is about portfolio diversification since the U.S. Dollar has weakened and gold has reached a high level. However, the recent escalation between Israel and Iran could interrupt this trend, and trigger a possibly temporary flight back to the U.S. dollar.

The consequence? Rising industrial costs, particularly in high-tech and green industries that rely on these metals. Inflation, once thought to be tamed by central banks, is now being fueled by geopolitical hedging and strategic resource hoarding.

China’s Rare Earth Strategy and the Oil Puzzle

China’s control over rare earth elements, critical for everything from wind turbines to missiles, has become a lever of geopolitical influence. Export restrictions are no longer economic disputes, they are strategic acts, challenging the material foundation of rival powers.

Meanwhile, oil prices are rising. But unlike the 1970s, the world has reduced its dependency on oil today. In 1975, it took 0.12 tonnes of oil equivalent (TOE) to produce $1,000 of GDP. By 2022, it was just 0.05 TOE thanks to renewables and efficiency gains.

Still, for energy-importing economies, especially in the Global South, rising oil prices remain a heavy burden amplifying inflationary risks and threatening fragile fiscal balances.

Fragmented and Polarized World

We are no longer witnessing a world where politics is tamed by markets. Instead, markets are being commandeered by politics. This is a reversal of the neoliberal logic that dominated since the 1980s.

What does this look like in practice?

• Industrial policy over comparative advantage.

• Bilateral trade deals over multilateralism.

• Security alliances over efficiency-driven integration.

This shift also aligns with the realist school of international relations, which argues that states pursue power and security above all else. Economic liberalism is giving way to strategic realism.

What’s Next: Strategic Disorder

The convergence of the Thucydides Trap, Kindleberger Trap, and resource nationalism signals not just instability, but a systemic transformation. The global order is no longer anchored in shared economic interest. It is fragmented, rivalrous, and uncertain.

In this climate, calls for a peaceful global order risk sounding naïve and utopian.