## GEOECONOMICS, REDISCOVERED

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**Canonical URL:** [GEOECONOMICS, REDISCOVERED](https://www.imf.org/-/media/files/publications/fandd/article/2026/06/lipsky.pdf)

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### Definition and contemporary framing
- Geoeconomics described as “the combination of finance and national security.”
- The Atlantic Council divides geoeconomics into three pillars:
  - The future of capitalism and trade.
  - The future of money, including stablecoins, cryptocurrencies, central bank digital currencies, and payment systems.
  - Economic statecraft, including sanctions, export controls, and tariffs.
- Today’s geoeconomics “lies at the intersection of finance, national security, and macroeconomics.”

### Historical precedents and institutions
- Coordinating Committee for Multilateral Export Controls (COCOM), launched in 1949, coordinated export controls among Western-aligned nations and built dual-use technology lists.
- CHINCOM, launched in 1952, imposed stricter controls on advanced computing exports to China.
- Society for Worldwide Interbank Financial Telecommunication (SWIFT), developed in the early 1970s as a consortium-led global messaging standard and headquartered in Belgium to avoid dominance by a single US bank.
- Bretton Woods (1944) cited as “the quintessential geoeconomic creation”—an example of policy designed during wartime to shape postwar economic order.

### Recent turning points and actions
- The pandemic and Russia’s invasion of Ukraine marked a shift away from the post–Cold War separation of economic policy from national security.
- 2022 G7 decision: “More than $300 billion in Russian central bank assets was immobilized, and most of it remains frozen today.”
- Since the G7 sanctions response, Atlantic Council research shows “a 100 percent increase in the number of pilot cross-border payment system projects (nearly all designed outside the dollar and euro systems).”

### Structural changes in the global economy
- The US remains a dominant financial anchor: “finance accounts for about a quarter of corporate profits,” the US has a “roughly $30 trillion Treasury market,” and its central bank “has repeatedly stepped in to stabilize markets not just for Americans but for the world.”
- Shifts in manufacturing shares: China now produces “roughly 30 percent of global manufacturing output, compared with about 16 percent for the US.”
- Consequence: “For financial policymakers, that means worries about higher risk premiums and more volatile capital flows have to be front and center.”

### Risks and costs of geoeconomic policy
- Once governments invoke geoeconomics, it can be used to justify a wide range of policies: “National security is whatever we say it is.”
- Potential negative outcomes listed:
  - Loss of predictability needed for investment.
  - Corporations changing interactions with government and growth of crony capitalism.
  - Wasted money and lost jobs.
  - Fragmentation, protectionism, and conflict imposing a “high price tag.”
- The author warns against abandoning the rules-based system that “delivered the greatest poverty reduction in human history and a dramatic rise in living standards both in the US and abroad.”

### Observations on policy shifts and global reactions
- US rediscovery of industrial policy: reference to a 2020 request to speak on a “new industrial policy” as signaling a broader shift.
- Emerging market policymakers have reacted by strengthening resilience: building foreign exchange reserves, diversifying suppliers, and signing regional currency swap agreements.
- The new US approach to geoeconomics will not mirror the Cold War version because global production and economic relationships have changed.

### Policy implications and recommendations
- Adapt, rather than abandon, the existing system to manage geoeconomics without mass disruption at home and abroad.
- Encourage cross-disciplinary skill development:
  - Economists should understand concepts like great-power rivalry.
  - Foreign policy professionals should train in macro- and micro-economics as prerequisites for their jobs.
- Relearn that “Geoeconomics is simply how the world does business,” recognizing both past gains from open rules and the need for resilience against shocks.

*Josh Lipsky is chair of international economics and founding director of the GeoEconomics Center at the Atlantic Council. He is a former speechwriter for the IMF managing director and advisor at the US State Department.*

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_Source: https://www.imf.org/-/media/files/publications/fandd/article/2026/06/lipsky.pdf_