Shifts in the world economic order, sanctions, minerals, and multilateral institutions

Erosion of the Post-WWII Rules-Based Trade System and the Competition for Resources in 2026

As the world enters 2026, the foundational pillars of the post-World War II rules-based trade system are visibly fraying. Leading multilateral institutions like the IMF and the European Central Bank (ECB) have issued stark warnings about the erosion of global economic norms, signaling a shift toward a more fragmented and multipolar order. This decline in multilateral cooperation is compounded by the increasing use of sanctions as tools of geopolitical hegemony, further destabilizing international trade and diplomacy.

Erosion of the Global Rules-Based Trade System

Historically, the multilateral trading framework was built on principles of fair competition, transparency, and mutual benefit, primarily among comparable market economies. However, recent developments suggest a departure from this consensus:

• ECB and IMF Warnings: Both institutions have cautioned that the weakening of global trade rules could lead to costly and unpredictable trade conflicts. ECB President Christine Lagarde emphasized that the erosion of international frameworks risks undermining economic stability, while the IMF highlighted how unilateral actions, such as sanctions, are increasingly being used to project power rather than promote mutual prosperity.

• Sanctions as Tools of Hegemony: The use of sanctions has shifted from targeted economic measures to instruments of geopolitical dominance. The U.S. and its allies frequently deploy sanctions to isolate adversaries, but these actions often have ripple effects, disrupting global supply chains and creating new economic fault lines.

• Debates on Multipolarity: As China, Russia, India, and other emerging economies assert greater influence, the traditional G7 and Western-led institutions find their roles diminished. The BRICS alliance has expanded to include nations like Argentina, Egypt, and Indonesia, signaling a move toward a more multipolar world where power is distributed across several centers rather than concentrated in the West.

• UN and Global Governance: The United Nations faces increasing challenges in maintaining global stability amid rising geopolitical tensions and competing interests. The quest for reform and relevance reflects a broader shift away from universal rule-setting toward regional and bilateral arrangements.

Competition Over Resources and Value Chains

Simultaneously, the race for critical resources—fossil fuels, minerals, and rare earth elements—has intensified, reshaping markets and strategic calculations for middle-power nations:

• Fossil Fuels and Market Stabilization: Despite the push for green energy, geopolitics continues to influence oil markets. Asian demand, for instance, has kept crude oil prices bullish, with negotiations between the U.S. and Iran playing a pivotal role in determining future supply dynamics (see "Geopolitics saves Crude Oil").

• Critical Minerals and Strategic Autonomy: The transition to green energy and advanced technologies has made control over rare earth elements, lithium, cobalt, and other vital minerals a top priority. The U.S. has launched initiatives like Project Vault, investing $12 billion to develop domestic mineral reserves and reduce reliance on foreign sources, particularly China’s dominant processing infrastructure.

• Reshaping Global Value Chains: Countries are increasingly focusing on recycling and regional processing hubs to safeguard supply chains. For example, efforts to establish mineral processing centers in North America and Europe aim to diminish vulnerabilities exposed by geopolitical tensions.

• Private Sector Dynamics: Major investments by firms like Thrive Capital into mineral extraction and AI ventures reflect the blurring lines between state interests and corporate strategies. These private initiatives influence resource access and technological sovereignty, reinforcing the geopolitical importance of resource control.

The AI Race and Technological Competition

Artificial Intelligence remains a core domain of strategic rivalry in 2026, characterized by rapid technological advancements, ethical debates, and geopolitical espionage:

• Intellectual Property and Espionage: Chinese AI labs have been accused of engaging in large-scale “distillation campaigns,” illicitly extracting capabilities from advanced language models like Claude through proxy services. Reports from Anthropic detail efforts to steal proprietary models, raising concerns over the integrity of the global AI ecosystem.

• Corporate Ethical Dilemmas: Leading firms like Google and Anthropic face internal resistance over military AI applications. CEO Dario Amodei publicly stated that Anthropic cannot in good conscience comply with Pentagon demands, reflecting growing internal debates about the ethical boundaries of AI deployment in defense.

• Hardware Dominance: Nvidia’s record-breaking earnings—surging 73% to $68 billion in Q4—highlight the critical role of semiconductors in maintaining AI leadership. The US government has also considered easing export controls on advanced chips, signaling a shift in strategic policy to bolster competitiveness amid fears of falling behind China and other rivals.

• Policy Shifts: The Biden administration’s potential loosening of restrictions could facilitate broader access to cutting-edge AI hardware, but also risk exacerbating geopolitical tensions and disrupting supply chains.

Broader Diplomatic and Strategic Shifts

Recent diplomatic moves underscore a complex reordering of global alliances:

• Europe’s Engagement with China: The meeting between German CDU leader Friedrich Merz and Xi Jinping, marked by an Airbus order, signals Europe’s interest in balancing relations with China despite overarching tensions. This suggests a recalibration of European economic and geopolitical priorities.

• Alliance Fractures and Regional Resilience: The EU’s joint opposition with Canada against US tariffs demonstrates a move toward regional cooperation and resilience, challenging American trade dominance. Such shifts are emblematic of a broader fragmentation of the previous global consensus.

• Role of Multilateral Institutions: The United Nations and other multilateral bodies are increasingly sidelined as regional and bilateral arrangements take precedence. The push for reforms and the rise of regional alliances like BRICS reflect a world where power is dispersed and governance is more fragmented.

Conclusion

The year 2026 marks a pivotal juncture in the evolution of the global economic and strategic landscape. The erosion of the post-WWII rules-based system, compounded by intense competition over critical resources and technological supremacy, signals a transition toward a more multipolar and contested order. As nations navigate this complex terrain—balancing cooperation, rivalry, and strategic autonomy—the decisions made in this decade will shape international stability, economic resilience, and governance for generations to come.