## The Geoeconomic Calculus

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**Canonical URL:** [The Geoeconomic Calculus](https://www.imf.org/en/publications/fandd/issues/2026/06/editor-letter-the-geoeconomic-calculus)

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- [Markdown version](/en/publications/fandd/issues/2026/06/editor-letter-the-geoeconomic-calculus/index.md)
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## Bibliographic details
- Authors: GITA BHATT
- Published: May 19, 2026

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### Overview
- 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.

### Historical perspective and framing
- 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.

### Analytical framework and mechanisms of power
- 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.

### Costs, trade-offs, and resilience
- 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.

### Middle powers, regions, and strategic positioning
- 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.

### Rivalry, cooperation, and multilateral rules
- 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.

### Policy implications and recommended approaches
- 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.

### Closing reflections and personal note
- 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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## Content in this bundle

- **Editor's letter**
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_Source: https://www.imf.org/en/publications/fandd/issues/2026/06/editor-letter-the-geoeconomic-calculus_