Arguably, Europe – a grouping of small, open economies – profited most from the end of the Cold War and the peace dividend which went with it. Since the Russian attack on Ukraine, background conditions have changed substantially. The conflictual relationship between the U.S. and China, long in coming, also contributes to changing fundamentals. Multilateralism and the promises of doux commerce are out. Geopolitics reign supreme.
In his most recent book Global Discord: Values and Power in a Fractured World Order (Princeton University Press, 2022), Sir Paul Tucker writes that international monetary affairs, trade, and geopolitics have always been intertwined. But the changing balance of power raises new questions. Trade, while mutually beneficial to nations, inevitably spells interdependence which in turn creates threat points. This new environment is particularly challenging for Europe.
