Geopolitics and geostrategic competition in 2023

Unfortunately, this is now a thing we need to think about regularly.

Three or four years ago, if you were an economics pundit like me, geopolitics was something you could write about if you felt like it. Once in a while I did. But it was optional; things like Trump’s trade war and restrictions on Chinese investment created economic risks and opportunities, but geopolitics wasn’t really one of the core drivers of the economy.

That changed in 2022, for two reasons. First, obviously, the Ukraine War, which committed the U.S. and Europe to an open-ended Cold War style confrontation with Putin’s Russia. Second, tensions with China that had been building for a while finally resulted in an economically meaningful regime of export controls and other measures aimed at forcing economic decoupling, at the exact same time that Xi Jinping’s various economic missteps started making decoupling more realistic.

So here we are. Great powers are on the move again, strategic industries matter, trade is an arm of geostrategy, and we all have to think about geopolitics and conflict. Here are my takes on what I see as the main storylines of the year to come.

Russia isn’t winning, but it isn’t yet losing either