Apostolos Thomadakis / Jul 2025
Image: Shutterstock
For decades, globalisation was the default setting of economic policymaking. Open markets, free capital flows and integrated supply chains were not merely instruments of policy – they were articles of faith. From Washington to Brussels to Beijing, the conviction held that economic integration would deliver prosperity, secure peace and ultimately bring political convergence. That consensus has collapsed. What we are witnessing is not a tactical reorientation of trade policy, but a rupture in the political economy of globalisation itself.
The warning signs were always there. The 2008 financial crisis exposed the fragility of cross-border finance and the risks of deregulated markets. But rather than rebalancing, the response was retrenchment. Fiscal austerity, regressive tax systems and wage stagnation left broad segments of the population disillusioned. Financialisation accelerated. Inequality soared. Labour’s bargaining power eroded. And the gains of globalisation increasingly accrued to capital, not to citizens.
This discontent found political expression. Populist movements, once dismissed as fringe, became dominant electoral forces across advanced economies. They rejected the liberal economic consensus not only in tone, but in substance. From Brexit to America First, these were not aberrations. They were symptoms of a deeper legitimacy crisis. Citizens no longer believed that free trade, open borders and investment treaties were delivering for them.
That breakdown in trust has paved the way for a more transactional and fragmented global economy. Strategic autonomy has replaced comparative advantage. Governments are no longer optimising supply chains; they are securing them. The US is decoupling from China with targeted export bans and industrial policy. Europe is scrambling to reduce dependency on authoritarian regimes through its ‘de-risking’ agenda. India, Brazil and others are leaning into protectionism. Multinational firms are reconfiguring global value chains. Globalisation is not ending, but it is becoming more conditional, club-based and politicised.
This is not a temporary detour. The Covid-19 pandemic and Russia’s invasion of Ukraine did not start this process, they accelerated it. Global supply chains buckled under pressure. Economic interdependence, once assumed to be a source of peace, was weaponised. Energy, semiconductors, raw materials: all became levers of geopolitical power. The post-Cold War illusion of seamless global flows gave way to the harsh realities of zero-sum competition.
But the real rupture is ideological. The West’s grand bargain (i.e. that economic liberalisation would eventually lead to political liberalisation) no longer holds. China’s rise has demonstrated that it is entirely possible to integrate into global markets without converging politically. Its model of state-led capitalism, managed currency and expansive industrial policy has outperformed expectations. The Belt and Road Initiative, digital infrastructure investments and South-South alliances offer countries an alternative to the West.
This fragmentation comes at a cost. Investment uncertainty has risen. Cross-border capital is becoming more cautious. Divergent regulatory regimes are increasing compliance burdens. Technological bifurcation is accelerating, particularly in AI, data governance and digital infrastructure. Companies now operate in a world where geopolitical risk is no longer an abstraction, but a strategic variable.
More worryingly, fragmentation is eroding our capacity to address global challenges. Climate change, pandemic preparedness and digital governance all require collective action. Yet cooperation is paralysed by distrust. Climate finance remains contentious. Vaccine equity unresolved. AI regulation is diverging across. Global coordination mechanisms are either weakening or being bypassed.
The policy response must begin with intellectual honesty. We cannot return to the globalisation model of the 1990s. That architecture – based on frictionless trade, deregulated capital and just-in-time production – is unfit for today’s realities. Resilience, redundancy and strategic clarity must be the new watchwords.
This does not imply autarky or isolation. But we need a rebalanced globalisation, grounded in fairness, reciprocity and legitimacy. Trade agreements must include enforceable labour and environmental standards. Investment policy must shift from short-term arbitrage towards long-term productive capacity. And multilateral institutions must be updated to reflect today’s geopolitical landscape – not that of Bretton Woods.
Domestically, social cohesion is non-negotiable. Globalisation without redistribution was always politically unsustainable. Public investment in education, infrastructure, healthcare and labour market resilience is no longer a matter of ideology, but a survival.
Europe has a unique opportunity – and responsibility – to shape this agenda. As a polity built on law, democratic values and market integration, it can offer a model for a fairer globalisation. But that requires policy coherence. You cannot call for strategic autonomy while relying on Russian gas or Taiwanese chips. You cannot preach climate leadership while importing carbon-intensive goods. You cannot demand reshoring while clinging to fiscal rules that stifle public investment. You cannot promise simplification while hollowing out core sustainability commitments.
The age of global consensus is over. That is no reason for paralysis. But pretending we can return to the past only erodes credibility. The task ahead is clear: build a new globalisation – strategic, democratic and resilient. Anything less invites chaos. And chaos is not a strategy.
