The post-Cold War rules-based system has fractured. Coercive power politics has taken over. That’s the dominant geopolitical narrative.
It’s ironic then that we have just watched two middle-ranked nations – Ukraine and Iran – successfully fend off the aggressive ambitions of two military superpowers.
Ukraine and Iran have achieved unlikely stalemates against Russia and the US, one by leveraging the financial firepower of the West, the other by weaponising energy and shipping.
If we’re living in a new Darwinian age, where big powers are openly using their economic and military strength to dominate smaller ones, they’re not having it all their own way.
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Three days into Russia’s invasion of Ukraine in February 2022, a 15km line of armoured vehicles was picked up by satellite heading towards the Ukrainian capital Kyiv.
The country looked destined to fall within a matter of days.
But the vastly outnumbered Ukrainian army held out, inflicting mass casualties on the aggressor while keeping Russia’s advance to 75,000sq km in the east.
Ukraine’s success on the battlefield is a direct result of its strategic alignment with the West, which has supplied it with over $150 billion (€128 billion) in military aid. Another €90 billion in loans from the EU is on the way.
Repeated Kremlin claims that Russian forces are about to break through and overrun fortified cities in the Donetsk oblast region are now debased.
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If anything, Ukraine is making advances, using advanced drone technology to compensate for the asymmetry in traditional soldiery.
Vladimir Putin’s “special military operation” in Ukraine has been a military disaster and his unsustainable military spending now constitutes an economic time bomb for the country.
Russia’s military spending – an estimated 16 trillion roubles (€181 billion) in 2025 (nearly half the country’s budget) – keeps defence factories busy, raises wages in military-linked industries and adds to headline GDP. But this spending relies on high oil prices and quickly evaporates on the battleground, adding little to long-term prosperity.
When US-Israeli forces killed Iran’s former supreme leader Ayatollah Khamenei on day one of the attacks, there was an expectation that the regime would fall imminently and that the US would score a quick win similar to what it achieved in Venezuela.
However by closing the Strait of Hormuz and attacking neighbouring Gulf states, Tehran has weaponised the global energy market, inflicting economic pain on its attackers while giving it unexpected leverage in the fight.
The war that was meant to last three weeks entered its third month this week.
[ US denies Iran war is a ‘quagmire’ as costs to hit $25bnOpens in new window ]
With inflation creeping up and Americans now paying over $4 a gallon for petrol, up from $2.98 pre-war, US president Donald Trump’s standoff with Iran similarly constitutes a time bomb for the US economy and the Trump administration.
Trump faces an ugly choice: either escalate with the possibility of deploying ground troops, a venture that appears to garner little support even among his Maga faithful, or concede to a climbdown to reopen the Strait.
That climbdown will probably look something like the original Joint Comprehensive Plan of Action, otherwise known as the Iran nuclear deal, brokered by former US president Barack Obama back in 2015, making Trump’s military enterprise entirely pointless.
Ukraine’s alignment with the West has been existential, providing critical military and logistical support that has prevented a total battlefield collapse.
Iran’s ability to jam the globalised energy market has equally frustrated Trump’s regime change/nuclear disarmament objectives.
Military might has been thwarted by economics and globalisation, a force that we’re told is in abeyance.
Economics might also keep China off Taiwan’s back.
The self-governing island is the dominant player in the global chip industry, producing over 90 per cent of the most advanced chips, which are used in smartphones, artificial intelligence and advanced military technologies.
Nvidia’s chief executive Jesen Huang describes the island as the “centre of the world’s computer ecosystem”.
If China gained control of that ecosystem it would give Beijing enormous leverage over the global economy.
Compared to his predecessors, Trump has been more evasive about whether the US would defend Taiwan in the event of an invasion, leading to speculation that he might sell Taipei down the river as part of mega trade deal with China.
Before he came into office for a second term, he repeatedly claimed Taiwan “stole” the US chip business, which resonated uneasily in Taipei and his administration has halted the flow of some weapons to Taiwan.
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Such ambiguity might be part of Trump’s strategy to keep Beijing guessing. His secretary of state, Marco Rubio, says no one in the administration is contemplating the idea of Taiwan being used as a bargaining chip in US-China relations.
Taiwan is key to Washington’s Indo-Pacific strategy and that is unlikely to change under Trump.
Many leaders in the West made what now looks like a colossal error of judgment in believing greater trading ties – globalisation – would cement a more rules-based order and nudge countries such as Russia in a more liberal direction.
That has proved wrong. Yet for smaller nations, the spider web of global trade is turning out to be a vital source of support.
