## World Rethinks Geoeconomic Calculus in a More Contested Era

_IMF Blog, June 2, 2026_

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## Bibliographic details
- Authors: Gita Bhatt
- Published: June 2, 2026

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### Overview
- Publication: Finance & Development blog entry by Gita Bhatt, dated June 2, 2026.
- Central thesis: Economic thinking must evolve to account for a shift in how nations pursue security, growth, and influence as geoeconomics—use of tariffs, sanctions, and export controls for national security—becomes more prevalent.
- Key observation: The line between economic and national security policy is blurring, ushering in a new era of geoeconomics.

### Historical context and perspective
- Geoeconomics is not new: For many countries—from Brazil to India to Türkiye—it has long been the norm (noted by Josh Lipsky).
- Recent change: The world’s largest economy is increasingly employing geoeconomic tools, amplifying global consequences.

### Analytical framework and mechanisms of geoeconomic power
- Authors and contributions cited:
  - Christopher Clayton, Matteo Maggiori, and Jesse Schreger: provide a new analytical framework.
- Core findings:
  - Control of choke points—such as financial infrastructure, technology, or critical commodities—can confer immense power.
  - Overuse of geoeconomic power is self-defeating: it drives other nations to seek alternatives and erodes the leverage being wielded.
- Policy implication from framework:
  - Need for policy tools that allow limited intervention to enhance economic security while preserving benefits of globalization.

### Costs, benefits, and trade-offs
- Jeffry Frieden: economic coercion imposes costs on efficiency, innovation, credibility, and domestic cohesion.
- Kim Ruhl: enhancing geoeconomic resilience is essential even if it reduces efficiency; the US must adopt tariffs, sanctions, and industrial strategies to respond to nonmarket actions by adversaries.
- Common theme: Resilience matters—but so does restraint.
  - Excessive dependence = vulnerability.
  - Excessive fragmentation = jeopardizes economic benefits from cooperation.
- Challenge articulated: Strike a balance—diversify and cooperate where possible, preserve institutions that make power predictable rather than arbitrary.

### Implications for middle powers and regions
- Gedion Timothewos (Ethiopia’s foreign minister): Sub-Saharan African countries face declining aid and a crumbling multilateral peace architecture, but can find leverage in the global race for Africa’s critical minerals.
- N. K. Singh: Middle powers such as India can shape the emerging order by building issue-based coalitions.
- Beatrice Weder di Mauro: Europe should stop thinking of itself as a middle power and start acting like a great power in proportion to its economic heft.
- Multilateral system challenge:
  - Aaditya Mattoo, Michele Ruta, and Robert Staiger: Geopolitical competition need not end trade cooperation, but requires rethinking the rules to avoid disruptive trade wars and protect neutral countries.

### Policy recommendations and strategic guidance
- Adopt limited, targeted interventions to enhance economic security while preserving globalization’s benefits.
- Build resilience through diversification and cooperation, avoiding both excessive dependence and fragmentation.
- Middle powers should form issue-based coalitions to increase influence.
- Major economies should exercise restraint to prevent overuse of leverage that prompts countermeasures and fragmentation.
- Multilateral institutions must adapt rules to accommodate geopolitical rivalry while protecting trade cooperation and neutral states.

### Conclusion and outlook
- Geoeconomics likely represents a durable shift in how nations pursue security, growth, and influence.
- Economic thinking and policy must evolve with real-world experience to navigate an increasingly volatile world.
- Editorial note: The author was saddened by the passing of Robert Skidelsky, who submitted an article to F&D shortly before his death in April, aged 86.

*Source: Gita Bhatt, "World Rethinks Geoeconomic Calculus in a More Contested Era", June 2, 2026 — https://www.imf.org/en/blogs/articles/2026/06/03/the-geoeconomic-calculus*

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## References

- [This issue of Finance & Development](https://www.imf.org/en/publications/fandd)
- [Josh Lipsky](https://www.imf.org/en/publications/fandd/issues/2026/06/geoeconomics-rediscovered-josh-lipsky)
- [Christopher Clayton, Matteo Maggiori, and Jesse Schreger](https://www.imf.org/en/publications/fandd/issues/2026/06/understanding-geoeconomics-in-a-volatile-world-matteo-maggiori)
- [Jeffry Frieden](https://www.imf.org/en/publications/fandd/issues/2026/06/the-cost-of-geoeconomic-coercion-jeffry-frieden)
- [Kim Ruhl](https://www.imf.org/en/publications/fandd/issues/2026/06/point-of-view-rethinking-free-trade-kim-ruhl)
- [Gedion Timothewos](https://www.imf.org/en/publications/fandd/issues/2026/06/point-of-view-africa-in-a-fractured-world-gedion-timothewos)
- [N. K. Singh](https://www.imf.org/en/publications/fandd/issues/2026/06/point-of-view-the-middle-power-moment-n-k-singh)
- [Beatrice Weder di Mauro](https://www.imf.org/en/publications/fandd/issues/2026/06/point-of-view-europes-power-paradox-beatrice-weder-di-mauro)
- [Aaditya Mattoo, Michele Ruta, and Robert Staiger](https://www.imf.org/en/publications/fandd/issues/2026/06/trade-cooperation-in-an-age-of-geopolitics-aaditya-mattoo)
- [Robert Skidelsky](https://www.imf.org/en/publications/fandd/issues/2026/06/keynes-for-our-times-robert-skidelsky)

_Source: https://www.imf.org/en/blogs/articles/2026/06/03/the-geoeconomic-calculus_