The Geoeconomic Calculus

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Theme: Economic thinking must evolve to account for a shift in how nations pursue security, growth, and influence as geoeconomics becomes more prevalent.
Context: Governments increasingly use tariffs, sanctions, and export controls to advance national security goals, blurring the line between economic and national security policy.
Read time and metadata from source: Less than a minute(0 words) Read; GITA BHATT, F&D editor-in-chief; June 2026.

Geoeconomics is not new; for many countries—“from Brazil to India to Türkiye”—it has been the traditional mode of international business.
Recent change: “the world’s largest economy is joining in,” expanding the reach and consequences of geoeconomic tools.

Choke points: Control of financial infrastructure, technology, or critical commodities can confer immense power.
Dynamic noted by authors Christopher Clayton, Matteo Maggiori, and Jesse Schreger:
- Overuse of geoeconomic power is self-defeating: it drives other nations to seek alternatives and erodes the very leverage being wielded.
- Recommendation: policy tools should enable limited intervention to enhance economic security while preserving the benefits of globalization.

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; tools include tariffs, sanctions, and industrial strategies in response to nonmarket actions by adversaries.
Common thread: resilience matters—but so does restraint; excessive dependence is a vulnerability while excessive fragmentation jeopardizes gains from cooperation.

Sub-Saharan Africa:
- Gedion Timothewos (Ethiopia’s foreign minister) highlights declining aid and a crumbling multilateral peace architecture.
- He identifies opportunities for leverage in the global race for Africa’s critical minerals.
Middle powers:
- 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.

Aaditya Mattoo, Michele Ruta, and Robert Staiger:
- Geopolitical competition need not end trade cooperation but requires rethinking the rules.
- The multilateral system must accommodate geopolitical rivalry while avoiding disruptive trade wars and protecting neutral countries.
Policy tension: balance diversifying and cooperating where possible, and preserving institutions that make power predictable rather than arbitrary.

Strike a balance between:
- Diversification to reduce vulnerabilities, and
- Cooperation and preservation of institutions to maintain the economic benefits of globalization.
Use limited, targeted interventions to enhance economic security without wholesale fragmentation.
Encourage issue-based coalitions among middle powers to shape order and protect the interests of neutral countries.
Reassess trade and multilateral rules to reflect geopolitical rivalry while minimizing disruptive spillovers.

Geoeconomics likely describes a lasting shift in how nations pursue security, growth, and influence; economic thinking must adapt to these forces.
Editorial personal note: the editor was “deeply saddened to learn of Robert Skidelsky’s passing.” Robert submitted an article to F&D shortly before his death in April, aged 86, and the magazine is honored to publish it.

F&D Magazine — The Geoeconomic Calculus; GITA BHATT; June 2026.

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