Separation between economics & strategy that was taken for granted has collapsed in 21stCentury

A CUTS International webinar under its "Global Strategies in the Age of Geoeconomics" (G-SAGE) series highlighted how global economics and geopolitics have b...

What Happened

A CUTS International webinar under its "Global Strategies in the Age of Geoeconomics" (G-SAGE) series highlighted how global economics and geopolitics have become deeply intertwined in the 21st century — a trend that has accelerated dramatically since 2018.
Experts at the webinar argued that economic instruments — tariffs, export controls, sanctions, energy deals, semiconductor production, and critical mineral access — have become primary instruments of state power, replacing or supplementing conventional military means.
The core thesis: the separation between economic policy and foreign/security policy that characterised the post-Cold War "Washington Consensus" era (1990s–2010s) has collapsed. Countries now explicitly weaponise economic interdependence.
Key examples cited: US tariffs on Chinese goods (2018, 2025), semiconductor export controls on China, energy as a geopolitical weapon (Russia–Europe gas), rare earth mineral dominance (China controls ~60% of global refining), and the weaponisation of the US dollar-based SWIFT financial system through sanctions.
India's approach was discussed as navigating a middle path — seeking to benefit from economic relationships with both the US-led and China-led blocs without fully aligning with either, while building domestic resilience through industrial policy (PLI schemes, semiconductor mission, critical minerals mission).

Static Topic Bridges

Geoeconomics — Definition and Historical Context

Geoeconomics is the study of how economic power is deployed for geopolitical objectives, and how geopolitical competition shapes economic decisions. The term was coined by Edward Luttwak in 1990 in his essay "From Geopolitics to Geoeconomics," predicting that economic competition would replace military confrontation as the dominant form of state rivalry in the post-Cold War era.

Classical geopolitics (Mackinder, Mahan, Spykman): Focused on territorial control, sea lanes, and military power as determinants of state power.
Geoeconomics (post-Cold War): Focuses on trade flows, financial systems, technology, supply chains, and economic statecraft (tariffs, sanctions, investment controls) as instruments of power.
Bretton Woods System (1944): Established the post-WWII economic order — IMF (monetary stability), World Bank (development), GATT/WTO (free trade). Built on the premise that economic interdependence reduces conflict incentives ("commercial peace theory").
Washington Consensus (1989): John Williamson's set of economic policy prescriptions (fiscal discipline, trade liberalisation, privatisation, deregulation) — became the dominant development paradigm promoted by the IMF and World Bank, premised on separating economics from politics.
Collapse of the divide: The assumption that economic globalisation would produce geopolitical convergence — that interdependence would make conflict too costly — has been falsified by the 21st century trajectory. Russia used energy as a weapon despite deep European interdependence. China's economic rise has intensified rather than ameliorated geopolitical competition.

Connection to this news: The CUTS International webinar's core argument — that the economics-strategy separation "taken for granted" has collapsed — is a precise description of the shift from Washington Consensus liberalism to what analysts now call "geo-economic statecraft" or "weaponised interdependence."

Weaponisation of Economic Interdependence

Henry Farrell and Abraham Newman's 2019 framework of "weaponised interdependence" describes how states exploit asymmetric positions in global networks (financial, trade, technological) to coerce rivals. States that are central nodes in global networks can deny access (the "Panopticon effect" — surveillance) or threaten to cut off rivals (the "chokepoint effect").

SWIFT as a financial weapon: SWIFT (Society for Worldwide Interbank Financial Telecommunication) is the global interbank messaging system. Exclusion from SWIFT effectively cuts a country off from global dollar-denominated financial transactions. Russia was partially excluded from SWIFT in 2022; Iran was excluded in 2012 and again in 2018.
Semiconductor export controls: The US (Commerce Department's Bureau of Industry and Security) restricted exports of advanced chips and chipmaking equipment to China from 2022–25, targeting NVIDIA A100/H100 series GPUs and ASML lithography machines. Semiconductors are now explicitly a national security instrument.
Tariffs as geopolitical tools: The US imposed tariffs of 25% on Chinese goods (Section 232 and Section 301 authorities) from 2018, extended and expanded in 2025; retaliatory tariffs followed. Tariffs are being used not just for trade balance but to decouple supply chains.
Energy as a weapon: Russia's Gazprom cut gas supplies to Europe via Nord Stream in 2022 following sanctions over Ukraine. "Energy security" has become a top national security priority for the EU, driving massive investments in LNG terminals and renewable energy.
Critical minerals: China dominates global supply chains for rare earth elements (REEs), lithium, cobalt, and other critical minerals essential for electric vehicles, batteries, and defence systems. China has imposed export restrictions on gallium, germanium, and graphite in retaliation for Western semiconductor controls.

Connection to this news: The CUTS G-SAGE series is mapping exactly this transformation — from a world where economics and security were analytically and institutionally separate to one where every major trade, investment, or technology decision carries strategic implications.

India's Geoeconomic Strategy — Strategic Autonomy and Resilience

India has developed a distinctive approach to the new geoeconomic environment — often described as "strategic autonomy" — maintaining independent relationships with competing blocs rather than full alignment.

Multi-alignment vs. Non-alignment: India's traditional "non-alignment" (1950s–1990s) has evolved into "multi-alignment" — actively participating in multiple competing groupings simultaneously. India is a Quad member (with US, Japan, Australia), but also a SCO member (with Russia, China), BRICS member, and maintains bilateral ties with Russia (defence, energy).
Supply Chain Diversification: India's "China Plus One" beneficiary status — as global companies seek to diversify supply chains away from China, India has attracted FDI in electronics (Apple's iPhone production), semiconductors (Micron chip plant in Gujarat), and pharmaceuticals.
PLI Schemes (Production Linked Incentive): Introduced 2020, now covering 14 sectors with approximately INR 2 lakh crore (~USD 24 billion) in incentives. Designed to build domestic manufacturing capacity and reduce import dependence — directly a response to the weaponisation of supply chains.
India Semiconductor Mission (2021): INR 76,000 crore (~USD 10 billion) incentive package for semiconductor fabrication, display manufacturing, and chip design in India. Tata Electronics (with PSMC, Taiwan) and CG Power (with Renesas, Japan) are establishing chip plants.
Critical Minerals Mission: India has identified 30 critical minerals (including lithium, cobalt, nickel, graphite, REEs) as strategically important. India joined the Minerals Security Partnership (MSP, US-led) in 2023.

Connection to this news: The geoeconomics framework directly informs India's industrial and foreign economic policy. The PLI schemes, semiconductor mission, and critical minerals strategy are precisely the "economic instruments as state power" tools that the CUTS webinar highlighted — India is building its own geoeconomic toolkit rather than remaining a passive object of others' geoeconomic strategies.

CUTS International — Role of Think Tanks in Policy Discourse

CUTS International (Consumer Unity and Trust Society) is an Indian civil society organisation headquartered in Jaipur, founded in 1983. It engages in research, advocacy, and capacity building on consumer protection, trade, competition, and regulatory policy in developing countries.

CUTS International operates across multiple developing regions — South Asia, Africa, Southeast Asia — and engages with WTO, UNCTAD, UNDP, and World Bank processes.
Its Geoeconomic Monograph Series and G-SAGE webinar series represent efforts to build developing-country policy capacity on the emerging geoeconomics discourse, which has historically been dominated by Western think tanks (Brookings, CFR, Chatham House, ECFR).
Think tanks play an important role in UPSC's Governance paper — understanding how civil society organisations shape policy discourse is part of the GS2 syllabus on "Role of Civil Services in a Democracy" and "Important Aspects of Governance."
India's policy ecosystem includes think tanks like ORF (Observer Research Foundation), IDSA (Institute for Defence Studies and Analyses), ICRIER (Indian Council for Research on International Economic Relations), and CUTS International — each with distinct focus areas.

Connection to this news: The CUTS G-SAGE series is an example of Indian civil society attempting to build domestic intellectual capacity on geoeconomics — translating global academic discourse into actionable policy frameworks for developing countries navigating the new global order.

Key Facts & Data

Term "geoeconomics" coined by: Edward Luttwak, 1990 essay "From Geopolitics to Geoeconomics."
Bretton Woods institutions established: 1944 (Bretton Woods Conference); IMF and World Bank operational 1945; GATT 1947; WTO replaced GATT in 1995.
Washington Consensus: coined by John Williamson, 1989; 10 policy prescriptions for market-oriented development.
SWIFT: established 1973, headquartered Belgium; connects 11,000+ financial institutions in 200+ countries; Russia partially excluded 2022.
US Section 301 tariffs on China: initiated 2018; 25% tariffs on USD 360 billion of Chinese goods.
US semiconductor export controls on China: October 2022, expanded 2023, 2024; covers advanced GPUs and chipmaking equipment.
China's share of global rare earth production: approximately 60–70%; refining: approximately 85–90%.
China's export restrictions (2023–24): gallium, germanium, graphite — materials critical for semiconductor and battery supply chains.
India's PLI schemes: 14 sectors, ~INR 2 lakh crore (~USD 24 billion) in approved incentives.
India Semiconductor Mission: INR 76,000 crore (~USD 10 billion); Tata Electronics (Gujarat), CG Power plants under construction.
India's Critical Minerals Mission: 30 identified critical minerals; member of Minerals Security Partnership (MSP) since 2023.
CUTS International: founded 1983, Jaipur; engages with WTO, UNCTAD, World Bank on trade and competition policy.
India's multi-alignment: simultaneous member of Quad, SCO, BRICS, Non-Aligned Movement — reflects strategic autonomy approach.
India–Russia oil trade: India became Russia's second-largest crude oil customer (after China) following 2022 sanctions, sourcing discounted Urals crude — an example of India navigating geoeconomic pressures independently.