In the new age of geo-economics, some countries and regional blocs will do well, and some will suffer. The US dominates on several fronts, but other players exert considerable influence in their respective niches. We have identified seven archetypal forms of power in the world of geo-economics, a new G7.

The financial superpower: The US

The US remains the world’s sole superpower and can still project military might with greater ease than any other country. But recently it has been using the role of the dollar as the world’s reserve currency to develop a new type of instrument for projecting power. After 9/11, when the president declared a global “War on Terror”, officials in the US Treasury started exploring how Washington could leverage the ubiquity of the dollar and US dominance of the international financial system to target the financing of terrorism. What started as a war against al-Qaeda grew to encompass measures against North Korea, Iran, Sudan, and even Russia. The enormous fines imposed on banks accused of breaking the sanctions – such as France’s BNP Paribas – sent shockwaves through global financial markets and acted as a powerful deterrent to future deals. In the words of the then-CIA director Michael Hayden, “this was a twenty-first-century precision-guided munition.”[8]

The regulatory superpower: The EU.

Because the EU has the world’s largest single market, most multinational companies depend on access to the region – which means complying with EU standards. The Union has used this power at various times over the years in the economic realm – blocking the merger of General Electric and Honeywell, forcing Microsoft to unbundle its Explorer browser, and challenging US agri-business in Africa and other global markets over the use of genetically modified organisms. This export of regulations has extended into the political sphere on issues such as climate change – and most dramatically through the EU’s accession process and neighbourhood policy.

These policies make access to EU markets and membership conditional on other countries adopting EU legislation and EU standards. To join the Union, candidates need to integrate over 80,000 pages of law – governing everything from gay rights and the death penalty to lawnmower sound emissions and food safety – into domestic legislation. What is more, regulatory power is less costly, more durable, more deployable and less easily undermined by competitors than more traditional foreign policy tools.

The construction superpower: China

China today is using economic statecraft more frequently, more assertively, and in more diverse fashion than ever before. Even though China’s trade and economic power is growing, its most innovative geo-economic tool is infrastructure – both physical and institutional. Stretching from Hungary to Indonesia, Beijing’s budget for the AIIB is $100 billion – as much as the Marshall Plan spent in Europe, in inflation-adjusted dollars – which mostly goes to finance roads, railways, pipelines, and other infrastructure across Eurasia, smoothing China’s westward projection. Chinese sources claim it will add a $2.5 trillion to China’s trade in the next decade, more than the value of its exports in 2013, when it was the world’s top exporter.

In addition, while Beijing remains an active player within existing international institutions, it is also promoting and financing parallel structures such as the AIIB and the Shanghai Cooperation Organization. The overall goal of these efforts is greater autonomy, primarily from the US, and an expansion of the Chinese sphere of influence in Asia and beyond.

China’s ambitions go beyond the physical to the virtual world where it is pushing a cyber-sovereignty agenda, challenging the multi-stakeholder, open model for internet governance defended by the US, to allow national governments to control data flows and control the internet within their jurisdiction. And the Chinese leadership is increasingly strengthening its control over the internet and technology suppliers. With the largest community of netizens (Nearly 700 million Chinese citizens now use the internet regularly, some 600 million of them through mobile devices), China has weight.

The migration superpower: Turkey

In an age of mass migration, the ability to control flows of people is a source of power. The Turkish authorities used the threat of people flows to change the balance of power between them and the European Union – demanding the lifting of visa restrictions, financial aid to mitigate the burden of hosting more than two million Syrians, and the reinvigoration of their EU membership bid.

The spoiler superpower: Russia

As its empire receded after the end of the Cold War, Russia turned itself into a pioneer of disruption. Its foreign policy of the last few years has successfully shaped the behaviour of its neighbours and other powers through tactics including gas cut-offs, sanctions, expelling workers, cyber-attacks, disinformation and propaganda campaigns, and attempts to gridlock Western-led international organisations from the UN to the OSCE. In parallel, it has worked to establish new organisations to extend its power, such as the BRICS, the Shanghai Cooperation Organization and the Eurasian Economic Union. But because Russia has not done enough to strengthen and diversify its economy – which relies overwhelmingly on hydrocarbon exports – its share of the global economy has been on a downward trajectory. This will limit its ability to act as a spoiler over time.

The energy superpower: Saudi Arabia

Saudi Arabia’s geo-economic power rests on the 10 million barrels of oil it extracts every day, and it is now responsible for a fifth of the global oil trade. For decades it has converted its hydrocarbons into economic and geopolitical power, fostering the Organization of the Petroleum Exporting Countries (OPEC) as the primary instrument for translating market power into broader international economic leverage. It has used its willingness to take short-term hits to shape global markets to its advantage (and to the disadvantage of rivals such as the Iran or US shale companies). What’s more it has been willing to invest billions of petro-dollars in support of its foreign policy goals – supporting counter-revolutionary regimes during the Arab uprisings as well as waging a regional proxy war against Iran.

The People’s Power

The connected economy and society is much more vulnerable to disruptions from below – whether incited by hostile governments, terrorist groups or teen-agers in their bed-rooms. And the ability of people to cluster on the web – in imagined majorities – makes both democratic and autocratic politics more volatile and prone to campaigns against particular courses of action (Francis Fukuyama has talked about the birth of a vetocracy as skittish leaders bend to public pressure). Hacking, public boycotts and disinvestment campaigns – whether autonomous or staged by governments – are becoming more common, more effective, and take less time and less resources to stand up.

“European Council on Foreign Relations”