## Geoeconomics, Rediscovered

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## Bibliographic details
- Authors: JOSH LIPSKY
- Published: June 2, 2026

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### Definition and core thesis
- Geoeconomics = "the combination of finance and national security." (author's formulation)
- For many countries, separating national security and economic policy "makes little sense" (examples: India, Türkiye, Brazil).
- Today's geoeconomics "lies at the intersection of finance, national security, and macroeconomics" and "is about how trade and capital flows are reshaped in real time by strategic rivalry."
- Atlantic Council's three pillars of geoeconomics:
  - The future of capitalism and trade.
  - The future of money (stablecoins, cryptocurrencies, central bank digital currencies, and payment systems).
  - Economic statecraft (sanctions, export controls, and tariffs).

### Historical precedents and institutional examples
- Coordinating Committee for Multilateral Export Controls (COCOM) launched in 1949; sister project CHINCOM launched in 1952 (stricter controls on advanced computing exports to China).
- Society for Worldwide Interbank Financial Telecommunication (SWIFT) development in the early 1970s as a cross-border messaging standard; headquartered in Belgium to avoid dominance by a single US institution.
- Bretton Woods conference in 1944 (held six weeks after D-Day) presented as a quintessential geoeconomic creation.

### Key contemporary drivers and statistics
- The US economy context:
  - Finance accounts for "about a quarter of corporate profits."
  - The US "roughly $30 trillion Treasury market anchors the global financial system."
- Manufacturing shares:
  - "China now produces roughly 30 percent of global manufacturing output, compared with about 16 percent for the US."
- Recent policymaking signals:
  - In 2020, a request by President Joe Biden’s national economic council director to deliver a speech on a "new industrial policy" marked an early signal of the shift in US policy.
  - A 2025 study for the European Parliament warned that "continued dependence on non-EU payment networks, particularly Visa and Mastercard, represents a structural vulnerability for both European banks and the Union’s financial sovereignty."
- Post-2022 developments:
  - "More than $300 billion in Russian central bank assets was immobilized" following the G7 decision in February 2022.
  - 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)" since the G7 sanctions response.

### The 2022 turning point
- G7 action in February 2022: coordinated blocking of access to a G20 country's sovereign assets (Russia) after the full-scale invasion of Ukraine.
- Characterized as "the single most important geoeconomic decision of the decade so far."
- Described as opening "a Pandora’s box" that demonstrated allies could "jointly weaponize payment systems at a moment’s notice" to advance national security goals.

### Risks, trade-offs, and potential harms
- Risks of invoking geoeconomics too broadly:
  - Loss of predictability for business and investment.
  - Shift toward crony capitalism; "Money is wasted. Jobs are lost."
  - Greater fragmentation and protectionism with a high price tag.
- Danger of expansive definitions: tension between "Economic security is national security." and the reframing "National security is whatever we say it is."

### Policy implications and recommendations
- The challenge is to "adapt [the existing system] no longer fit for purpose" rather than to build a wholly new system.
- Rediscovering geoeconomics "the right way" requires recognizing past progress and altering—but not abandoning—the rules that enabled trade, investment, and technology diffusion that produced major poverty reduction and rising living standards.
- Practical policy and institutional shifts suggested by the analysis:
  - Economists must understand "great-power rivalry."
  - Foreign policy professionals should train in macro- and microeconomics as a prerequisite for their jobs.
  - Policymakers need to balance strategic economic measures (industrial policy, export controls, sanctions) with preserving the rules-based system that supported recent decades of global gains.
- Implicit recommendation: design geoeconomic tools to minimize mass disruption at home and abroad while protecting national security objectives.

### Broader observations and context
- The post–Cold War exception: For much of the post–Cold War era—until the pandemic and Russia’s invasion of Ukraine—the US and Europe often separated economic policy from national security; that separation is now ending.
- Many emerging markets have for years prepared for geopolitical shocks by "building foreign exchange reserves, diversifying suppliers, and signing regional currency swap agreements."
- The present era is characterized as "more complicated and dangerous" than the Cold War due to the scale of China’s manufacturing and the interdependence of modern finance.

*Content summarized from "Geoeconomics, Rediscovered" by JOSH LIPSKY, F&D Magazine, June 2026.*

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_Source: https://www.imf.org/en/publications/fandd/issues/2026/06/geoeconomics-rediscovered-josh-lipsky_