Goldman Sachs and IMF Warn of Cold War-Level Geopolitical Risks and Global Fragmentation

The warning has attracted attention because it does not describe one crisis. Ukraine, Taiwan, the Middle East and the Arctic are separate theatres. So are the disputes over critical minerals, advanced technology, energy supplies and supply chains. Yet they are increasingly connected by the same underlying struggle: states and alliances are trying to reduce their dependence on one another while competing for control over the resources and technologies that will define economic and military power.

That is a more profound change than a rise in the number of conflicts.

A different kind of Cold War

The comparison with the 1980s is useful, but only up to a point.

The Cold War was built around a relatively clear confrontation between two superpowers and their allies. The central danger was military escalation between the United States and the Soviet Union, above all the possibility of a nuclear confrontation. The system was deeply hostile, but its structure was relatively easy to understand.

The world of 2026 is more complicated and, in some ways, harder to contain.

The principal rivalry between the United States and China exists alongside Russia's war against Ukraine, tensions around Taiwan, conflicts in the Middle East and competition in the Arctic. Countries that do not belong fully to one camp can move between them, bargain with both sides and exploit their rivalry. Regional powers are not simply following the instructions of larger blocs. They are becoming actors in their own right.

The result is not a return to the old bipolar order. It is a much more fragmented system in which several crises can develop simultaneously and affect one another without being directly connected.

A conflict in one region can change energy prices. Energy insecurity can alter industrial policy. Industrial policy can affect the demand for critical minerals. Access to those minerals can become a bargaining tool in the technology race. Technology restrictions can then reshape trade and investment decisions far beyond the original dispute.

The danger is not simply that there are more crises. It is that the boundaries between them are becoming increasingly difficult to draw.

The real shift is happening beneath the battlefield

The most important change is the erosion of the assumptions that supported the previous era of globalisation.

For decades, the dominant economic logic was straightforward: production could be distributed across borders, companies could search for the cheapest suppliers, and international trade would create mutual dependence strong enough to discourage major confrontation. The system was never free of conflict, but economic interdependence was treated as a stabilising force.

That assumption has weakened.

Governments now increasingly ask whether a supplier can be trusted in a crisis, whether a technology can be controlled by a rival power and whether a vital component can still reach the country if political relations deteriorate. Efficiency is no longer the only priority. Security has moved to the centre of economic decision-making.

This is why reshoring and the duplication of supply chains have become strategic issues rather than simply corporate decisions. A company may once have considered it wasteful to maintain alternative production capacity. In a fragmented world, redundancy can become insurance.

The cost is paid somewhere.

It appears in higher production expenses, more complicated logistics, new compliance requirements and greater pressure on prices. Consumers may never see the geopolitical dispute that caused a particular disruption, but they can still feel its effects through energy bills, technology prices or the availability of goods.

The global economy is becoming more resilient in some areas by becoming less efficient in others.

Technology has become a strategic territory

During the Cold War, influence was measured through military alliances, nuclear arsenals and control over strategic geography. Today, those elements remain important, but the competition has expanded into areas that were once treated as commercial or technological matters.

Artificial intelligence is one of them.

The race between the United States and China is not simply about which companies will produce the most advanced systems. It involves access to semiconductors, computing capacity, energy and the infrastructure required to operate increasingly powerful AI systems. Data centres themselves are becoming part of the geopolitical equation because they require enormous amounts of electricity and increasingly raise questions about energy security.

A technology that can influence military capabilities, industrial productivity and intelligence operations cannot easily be separated from national security.

The same logic applies to critical minerals. Rare earth elements and other strategic resources are essential to advanced technologies and the energy transition. Countries that control access to them gain leverage that extends far beyond the value of the raw materials themselves.

This is where the new competition differs sharply from the old one. The battlefield is no longer only a geographical space. It can be a semiconductor supply chain, a port, an energy contract, a mineral deposit or a set of export controls.

Economic pressure has become a form of strategic power.

Why several local crises can become one global problem

The world does not need a single global war to experience a global security crisis.

That is perhaps the most important point in the current forecasts.

A conflict in Ukraine, tensions over Taiwan and instability in the Middle East do not have to merge into one military confrontation to create a systemic shock. Their consequences can travel through markets, alliances and supply chains. One crisis can consume diplomatic attention and military resources. Another can exploit the distraction. A third can intensify pressure on energy or trade.

The result is cumulative.

This is why the present situation is difficult to compare with a single historical crisis. The problem is not one dramatic confrontation that can be resolved through a single agreement. It is a series of overlapping pressures that keep the international system under stress.

The theoretical language used to describe this shift is familiar to international relations scholars. Neorealism would see it as a struggle for a new balance of power after the relative dominance of a single system. Constructivist approaches would place more emphasis on the weakening of shared rules and expectations.

Both perspectives capture part of what is happening.

The international order is changing not only because states are competing for power. They increasingly disagree about which rules should govern that competition in the first place.

The institutions built for the old system are under pressure

The problem for international institutions is that many of them were designed for a world in which the major powers still had a stronger interest in preserving a common framework.

The United Nations, the World Trade Organization and other international structures have not disappeared. But their ability to force powerful states to accept common rules is more limited when those states increasingly view the international system as a battlefield of competing interests.

Rules that were once treated as broadly legitimate can become bargaining chips.

Sanctions, export restrictions, trade barriers and control over investment are no longer exceptional tools used only during major crises. They are increasingly part of normal statecraft.

That makes the fragmentation difficult to reverse. Every new restriction creates incentives for the targeted country to build alternative suppliers. Every new supply chain increases the cost of reconnecting markets. Every new technology barrier encourages competing technological ecosystems.

The system gradually hardens around its divisions.

There will be winners

The emerging order will not affect every country in the same way.

States that can move between competing blocs may gain room to manoeuvre. They can offer access to resources, transport routes, markets or political influence to several sides at once. The same fragmentation that creates instability can create opportunities for governments capable of bargaining between larger powers.

Countries with critical minerals also gain strategic importance.

The defence industry, cybersecurity companies and developers of technologies considered essential to national security are likely to benefit from governments spending more on protection, autonomy and military capacity. In a world where dependence is increasingly viewed as a vulnerability, strategic industries acquire a value that goes beyond their commercial performance.

The losers are more predictable.

Small and medium-sized open economies are particularly exposed because their prosperity depends heavily on stable trade and predictable international rules. Global corporations built around highly optimised international supply chains face rising costs as they duplicate infrastructure, redesign logistics and comply with competing sanctions regimes.

The institutions responsible for maintaining a common system also lose influence when the system itself becomes less common.

The most likely future is not one spectacular war

The current trajectory does not necessarily point to a single, all-encompassing global conflict.

The more likely scenario described in the material is less dramatic in any individual moment and potentially more exhausting over time: permanent turbulence.

A regional war here. A blockade or supply disruption there. New sanctions. A technology restriction. An energy dispute. A confrontation around critical resources. A fresh crisis that begins before the previous one has been resolved.

For businesses, this means the geopolitical risk premium is no longer something added to a forecast during exceptional periods. It becomes part of the forecast itself.

For governments, it means that economic security, industrial policy, defence and foreign policy are increasingly difficult to separate.

For ordinary people, the consequences may arrive in less obvious forms: more expensive goods, unstable energy markets, delayed deliveries and technologies that are available in one part of the world but restricted in another.

The world that is emerging is not simply more dangerous than the one that came before. It is organised differently.

The old system assumed that competition could exist within a sufficiently stable global framework. The new one is increasingly built around the expectation that stability itself will be contested.

Sources: Goldman Sachs.pdf)