Key Global Shifts in Geopolitics, Political Economy, and Defense Technology
The world today is experiencing simultaneous upheavals across multiple dimensions. In the political realm, the unipolar moment of U.S. hegemony is fading, giving way to an “interregnum” of competing great powers. In economics, the long era of unfettered globalization is reversing – supply chains are being “weaponized” by states and restructured for security. In military affairs, cutting-edge technologies – from AI and drones to hypersonic missiles and cyber tools – are revolutionizing warfare. Crucially, these shifts reinforce one another. Rivalry between Beijing and Washington simultaneously fuels trade decoupling, state-led industrial policy, and a high-tech arms race. Similarly, resource nationalism both responds to and shapes defense procurement (e.g. rare-earth shortages driving domestic chip initiatives). Below we analyze each domain and how they interlock, with examples and recent data.
#### Geopolitical Realignments ###### Multipolarity and the Decline of Unipolarity
The post–Cold War order is fracturing. The United States now views itself less as the global guarantor and more as one great power among several. As one analysis observes, Washington’s 2025 strategy explicitly ends the idea of “propping up the entire world order like Atlas”. Under this approach the U.S. is shifting focus to its immediate neighborhood (even reverting rhetorically to “spheres of influence” in the Americas). The consequence is an increasingly “disordered” international landscape: analysts note that “international politics is governed by a concert of major powers” rather than a single hegemon.
No single nation or bloc now fully dominates. China and Russia, the other chief contesting powers, are advancing alternative models. Beijing largely operates within existing institutions but is aggressively expanding China-led ones. Chinese strategists have made deepening Global South ties and building multipolar forums a priority: official commentary stresses “strengthening ties with the Global South and advancing multipolar frameworks like BRICS+ and the SCO”. China hosts regular forums (BRICS, Shanghai Cooperation, Belt and Road, etc.) to court allies in Africa, Asia and Latin America. Russia, for its part, positions itself as a bulwark against Western influence. Moscow has forged new security pacts with authoritarian governments and invested in strategic chokepoints (e.g. pipelines, ports) in Africa and the Middle East.
Both countries explicitly challenge the liberal “rules-based order.” They argue it is Western-centric and no longer fits the global reality. To that end, China and Russia are cultivating alternative groupings as counterweights. The expanded BRICS, for example, now includes key oil exporters (UAE, Iran) and African economies, enabling it to claim control over roughly 42% of global oil supply. The Kazan 2024 BRICS declaration spoke of creating a “cross-border payment system” for member currencies, explicitly to reduce reliance on the U.S. dollar. In short, Beijing and Moscow instrumentalize multipolarity as a vision for the Global South, inviting developing countries to engage “à la carte” with non-Western powers.
United States–China Rivalry
The U.S.–China competition now defines much of the global agenda. Both states perceive the other as a strategic rival across economics, technology and security. In practice this means steep trade barriers and targeted sanctions on one side, and reciprocal nationalistic policies on the other. In 2024 the U.S. imposed stricter export controls on semiconductors and restricted Chinese investment in advanced technologies; Beijing denounced these measures as economic containment. NATO and U.S. leaders have even labeled China a direct threat: in 2024 NATO declared that China’s “stated ambitions and coercive policies” challenge the alliance’s security.
This rivalry drives both economic decoupling and military competition. The U.S. and its allies have made explicit plans to reshore critical industries (chips, batteries, rare-earth processing) through massive subsidies and joint ventures. China, meanwhile, has funneled state funds into its own technology sectors – for example, channeling roughly $912 billion into AI startups over a decade and restarting its $48 billion semiconductor “Big Fund”. Militarily, each side accelerates weapons development: China has tested more hypersonic missiles than the West (a former U.S. official said Chinese testing is “orders of magnitude greater” than America’s), while the U.S. expands naval deployments around Taiwan. In short, U.S.–China tension interweaves strategic competition in trade, finance and force, with each domain reinforcing the others.
###### Assertive Global South and Middle Powers
Across Asia, Africa, Latin America and the Middle East, many countries are carving out independent stances. The old Cold War binary is gone: states increasingly pursue pragmatic “non-alignment” or “multi-alignment” strategies. India is a leading example. Prime Minister Modi proclaims support for a “balanced multipolar world”. India simultaneously deepens ties with the West (membership in Quad, logistics pacts with U.S./Japan) and with its neighbors (BRICS, SCO, South Asian forums). It has even resumed military and trade dialogues with China, seeking to reduce border tensions.
Other middle powers – Indonesia, Brazil, Saudi Arabia, Nigeria, etc. – are similarly hedging. They exploit their strategic assets to diversify partners. Analysts note that many emerging states are turning minerals, sovereign wealth and geography into bargaining chips. For instance, Saudi Arabia and UAE (oil-rich BRICS members) and Nigeria (energy-exporting pivot state) talk openly about leveraging production cuts or local investment to secure infrastructure and diplomatic support. South Africa and Brazil use their UN Security Council seats to negotiate concessions. In sum, rising states view the diffusion of power as opportunity: they expand influence by engaging all sides, rather than being mere proxies.
Political-Economic Transformations
###### Deglobalization and Nationalism
Economic globalization is fraying. By the mid-2020s, leaders and experts openly describe a shift from integration to strategic fragmentation. Former central banker Mark Carney declared that “the world is now in the midst of a rupture, not a transition,” warning that “the old order is not coming back”. Indeed, trade and finance are increasingly viewed as fields of geopolitical contest. Modern states routinely use tariffs, export controls, sanctions and investment restrictions as instruments of policy.
The 2022–2025 conflicts were key catalysts. Russia’s full-scale invasion of Ukraine turned energy and grain markets into tools of war. Europe rushed to sanction Russian oil and gas, and even froze roughly $300 billion of Russia’s foreign reserves. This showed that no asset is truly immune: countries began diversifying reserves away from the U.S. dollar into gold and local-currency assets. Similarly, the U.S.–China tech confrontation morphed into bilateral economic decoupling. What began as tariffs in 2018 expanded to export bans on advanced chips, forced technology transfers, and sweeping restrictions on entire sectors. Today, semiconductor supply chains are treated as national security programs rather than open markets.
The COVID-19 pandemic further convinced policymakers of the fragility of lean supply chains. Lockdowns in 2020 caused empty shelves and sky-high shipping costs, exposing “vulnerabilities in over-reliance on international supply networks”. As a result, many firms and governments shifted from pure efficiency to resilience. They are reshoring production or friend-shoring it to allies (for example, re-routing factories to Mexico and Southeast Asia instead of China). A 2025 analysis observed that “deglobalisation marks a structural shift from globally interconnected supply chains to regionalised production”. This transition is costly – it often drives inflation by adding buffers and redundancy – but political leaders now deem it a necessary price for economic security.
These forces show in trade flows. The Trump administration’s tariff war (2025) was especially dramatic: U.S. average tariffs jumped to levels not seen since the 1930s. America slapped steep duties on steel, aluminum, autos, and even imports from close partners (Canada, Mexico). This “America First” trade policy aimed partly to spur domestic industry, but also sent a signal of protectionist intent. Globally, companies are responding. The Port of Long Beach (California) reports U.S. imports from China down from ~70% of cargo to ~60%, as goods shift instead from Vietnam, Thailand and Malaysia. European ports note the same realignment. As one CEO quipped, the era of “cheap production in China, cheap energy from Russia, and cheap defense from the U.S.” is ending. In practice, this means new trade deals: in 2025 the EU moved forward on an EU–Mercosur agreement with Brazil and others, and even Canada pursued direct trade talks with China, in part to mitigate U.S. policy shocks.
State Capitalism and Industrial Strategy
Parallel to deglobalization is the resurgence of state-directed capitalism. Governments are once again heavy players in the economy, using public finance to secure key industries. Today’s state capitalism is a far cry from the Soviet model; instead, countries blend market incentives with political control. A recent study describes it as a “state-private alliance” where the state supplies capital and influence for corporate profit. In practice this means sovereign wealth funds, development banks and national champions actively invest abroad in strategic sectors.
NATO and Western states have responded by adopting similar tactics. In 2025 NATO members launched a joint “Innovation Fund” (~€1 billion) to back frontier tech startups in defense, recognizing that the Pentagon cannot drive all R&D alone. The U.S., Japan and EU have also created multi-government funds to reshape supply chains – for example, dedicating government equity to domestic chip fabs and battery plants. Even U.S. defense leadership embraces unconventional partnerships: Silicon Valley entrepreneurs and venture capitalists are now routinely embedded with the Department of Defense, pushing AI and cyber projects.
China’s version of state capitalism is especially grand. Its government-backed investors channeled an estimated $912 billion into AI start-ups over the past decade. Beijing maintains tight direction over big tech firms and has centralized foreign affairs to align all trade and investment with national goals. Its major funds (the National Integrated Circuit Fund, National Big Data Fund, etc.) received tens of billions of dollars to achieve technological self-reliance. In short, across the board we see governments fusing into the economy: what were once private markets are increasingly tools of geopolitical competition.
Resource Nationalism and Supply-Chain Security
Energy, minerals and other raw materials have again become instruments of power. After years of global market integration, producer states are asserting more control. The Ukraine conflict gave an early warning: Russia’s attempt to leverage gas exports prompted European buyers to diversify. Meanwhile, major powers fret that dependencies on foreign commodities leave them exposed.
Critical minerals for high tech and defense – lithium, cobalt, nickel, rare-earths, uranium and more – illustrate this trend. Today a small number of countries dominate each step of these chains. For example, China accounts for over 60% of global processing capacity in lithium, cobalt and manganese, and controls more than 70% of the world’s graphite refining. When Beijing announced rare-earth export curbs in late 2024 (citing new export rules), global markets spiked. Other governments mirrored this approach: the Democratic Republic of Congo (which supplies most of the world’s cobalt) banned unprocessed cobalt exports in 2025, and Indonesia long ago banned nickel ore exports to force local refining. Likewise, the UAE and Saudi Arabia use oil production cuts as diplomatic leverage, while Western states debate lifting or reimposing energy sanctions based on geostrategic calculations.
The upshot is that many countries are rebalancing access to resources. Some seek to grow domestic mining and processing (Australia’s resources strategy is a recent example). Others forge long-term bilateral supply agreements. And many recognize they cannot go it alone. As one analysis concludes, even the largest resource consumer cannot rely solely on internal sources – “the national interest is best served by structured international cooperation with selective domestic expansion”. This pragmatic view underlies new frameworks like the U.S.–EU Critical Minerals Alliance and Japan-Australia rare-earth partnerships. In effect, strategic assets – from oil fields to semiconductor-grade sand – have become currency in diplomacy. Militaries factor them into planning: the need for minerals in missile guidance systems or electric fleets ties trade policies directly to national defense.
Together, these economic shifts (deglobalization, state capitalism, resource control) recast the global order. They reinforce the multipolar power competition: for instance, sanction regimes hasten China’s push for alternative finance (e.g. a BRICS currency network), while China’s tech-nationalist economy spurs U.S. and EU industrial subsidies. In short, economic policy is now inseparable from geopolitics and security.
Transformative Defense Technologies
###### AI and Autonomous Warfare
Artificial intelligence and robotics are transforming battlefields at record pace. The 2022–2024 Ukraine war has functioned as a testbed for these technologies. Both sides field an unprecedented number of drones, loitering munitions and autonomous sensors. U.S. analysts describe Ukraine as a “laboratory” for modern war: cheap off-the-shelf quadcopters and fixed-wing drones (including FPV “kamikaze” drones) swarm frontlines. Even homemade kits, often built by volunteers, can be armed and networked cheaply. Combat outlays of such systems are huge – one study found unmanned systems now cause roughly 70–80% of battlefield casualties.
AI has supercharged this trend. Automated targeting and computer vision dramatically improve small-drone lethality. In early drone attacks, human operators often missed moving targets 50–70% of the time. Now AI-enabled drones can achieve hit rates around 80%. Civilians worldwide have even affixed inexpensive AI “brains” to hobbyist drones for target identification – one report notes a module enabling autonomous targeting costs as little as $25. Western leaders are taking note: the U.S. Army’s Replicator program aims to mass-produce simple autonomous aerial vehicles, and NATO countries exchange lessons on drone swarm tactics.
Meanwhile, formal force structures are changing. Ukraine established a national Unmanned Systems Forces command in 2024 (Russia followed with a similar branch later that year). Ukraine is training and equipping large drone units – by 2025 it plans to deploy AI-guided drone swarms and ground robot vehicles on the front lines. Private industry is moving fast: an American defense startup (Anduril) sold Ukraine a new autonomous attack drone as soon as October 2024, after the system was evaluated in combat. In late 2024 Ukraine even conducted its first all-drone assault: dozens of drones (both airborne and ground) struck Russian positions simultaneously, coördinated via digital networks.
These events underscore a new reality: armed AI and robotics have left the lab. Armies are investing heavily in unmanned systems (from swarms of loitering munitions to logistics bots) and in defenses against them (electronic jammers, autonomous interceptor drones, etc.). The blurring of lines between civilian tech and military use means a small tech innovation can spread rapidly into warfare. As one observer put it, we may be at an “Oppenheimer moment” for AI in combat.
###### Hypersonics and Advanced Missiles
Hypersonic weapons – missiles and glide vehicles exceeding Mach 5 – are another strategic disruptor. Both China and Russia have deployed new hypersonic missiles, alarming Western defense planners. A U.S. Defense Intelligence report in late 2024 bluntly stated that Beijing now “has the world’s leading hypersonic missile arsenal”. U.S. officials warned that China’s DF-17 hypersonic (a boost-glide anti-ship missile) could theoretically strike a U.S. carrier strike group from over 1,500 miles away in minutes. In the same period, Russia flaunted its own systems: in November 2024 it test-fired a new “Oreshnik” boost-glide missile at Ukraine, giving just 30 minutes’ notice – a provocative practice it likened to announcing a nuclear strike. The U.S. and UK condemned this as “significantly escalatory”.
Western countries recognize they are behind. No NATO member currently fields an operational hypersonic missile, and existing air defenses are ineffective against maneuverable high-speed threats. In response, allies are pouring resources into hypersonics. The UK has set aside roughly £400 million for joint hypersonic programs with France, Italy and Germany. The U.S. Air Force, Navy and DARPA have accelerated their hypersonic test flights, while major firms are building new propulsion tech (for example, GE and Lockheed Martin successfully tested a “rotating detonation” ramjet in January 2026). Even so, experts caution that catch-up may be slow. In 2025 a U.S. venture firm observed that Chinese hypersonic test flights occur at a vastly higher rate than American ones. The hypersonic race thus exemplifies how cutting-edge defense tech both reflects and deepens strategic gaps.
###### Ubiquitous Drones and Unmanned Systems
Beyond high-end combat drones, an extraordinary proliferation of lighter unmanned systems is occurring globally. Commercial quadcopters, some armed with small payloads, are now used by insurgents, cartels and even civilians for reconnaissance or attack. All armies – from Colombia to Ukraine to Niger – are integrating such low-cost UAVs into doctrine. Many special forces and infantry units now deploy portable drone kits to scout ahead or mark targets. Simultaneously, major powers are developing larger armed drones (like the U.S. MQ-9 Reaper, Turkey’s Bayraktar, or Israeli Herons) for strikes and ISR. The effect is that drones are becoming as common in conflict zones as rifles were in earlier eras. Defense planners must now account for swarms and anti-drone systems at every scale of warfare.
###### Cyberwarfare and the Digital Battleground
Cyber operations have become a central element of great-power rivalry. State-sponsored hacking, espionage and disinformation campaigns are in high gear. In 2024, Microsoft reported a steep rise in AI-powered cyberattacks by adversaries. Its digital forensics team identified over 200 instances of foreign hackers using AI-generated content to manipulate or infiltrate networks – more than double the previous year’s count. These attacks target governments, critical infrastructure (power grids, hospitals), and private industry. Notably, Russia’s cyber units (often linked to the GRU) continue to probe and breach U.S. and European networks, while China’s cyber corps (like APT10) target intellectual property across the West and Asia. Iran and North Korea also deploy cyber tools aggressively: Tehran-backed groups engage in digital espionage and sabotage around Middle East hot spots, and Pyongyang’s hackers have used AI-created fake personas to gain access to Western defense firms.
In response, alliances have made cybersecurity a high priority. NATO’s 2024 summit declared cyberspace an official domain of warfare and agreed to build a new NATO Integrated Cyber Defence Centre to improve collective network security. Member states are increasing cyber intelligence budgets and running joint cyber exercises. The U.S. Cyber Command and similar agencies in Asia are developing offensive capabilities to deter attacks. Ultimately, cyberwarfare is now inseparable from traditional military competition – many experts view the strategic landscape as already half-digital, with persistent cyber conflict running in parallel to conventional tensions.
#### Interconnections and Feedback Loops
These shifts in geopolitics, economics and technology are deeply intertwined. The U.S.–China rivalry, for instance, simultaneously drives trade decoupling and the tech arms race. U.S. export curbs on chips in 2024 prompted China to accelerate its own semiconductor industrial policy, which in turn spurred allied subsidies for domestic chip production. Similarly, economic nationalism and security concerns feed into defense. Countries tightening export rules on rare earths or 5G gear do so partly out of fear those resources could be used for military purpose, which then pushes the other side to militarize those very technologies.
Global South dynamics also link economy and security. Emerging markets leverage their strategic assets to extract defense and tech cooperation from great powers. For example, several African governments have tied Chinese infrastructure loans to arms purchases or technology transfer. Oil exporters (Russia, Gulf states) coordinate production cuts that have security implications for importer allies. Multilateral forums illustrate this nexus too: the expanded BRICS often discusses energy, trade and security issues together. The 2024 BRICS declaration in Kazan, for example, paired plans for oil and gas collaborations with talks on infrastructure financing (via the New Development Bank).
The net effect is a more transactional world. Countries now consciously trade technology, finance and military support as bargaining chips. Security assistance (like arms sales or base access) is negotiated alongside economic deals (investment, debt relief). Many analysts argue that the emerging order lacks a single unifying ideology – it is less “Cold War” moral crusade and more a multi-polar scramble for advantage. In such an environment, alliances can be fluid and conditional: one summit’s partner may veto military aid from another bloc, or shift trade partners according to changing interests.
In summary, the 2020s are witnessing a profound confluence of trends. Power is diffusing from the West to a broader set of states. Economic systems are becoming more managed and strategic. And technology is reshaping how conflict is waged. These phenomena reinforce each other: geopolitical rivalries drive economic realignments, which in turn enable or constrain military technology development. Together they form a feedback loop that is remapping international relations. Understanding this interconnected nexus – beyond any single headline – is essential to grasp where global affairs are headed.
Sources: Insight and data are drawn from current analyses of world affairs, including think-tank reports and recent news on the Ukraine war, BRICS expansion, and advances in military technology.