Middle Power Countries May Shape the Next Global Order

The Defining Tension of the 2030s

For much of the post-Cold War era, global politics revolved around a deceptively simple question: Who would dominate the twenty-first century? That question is now giving way to one that is less dramatic, but more consequential: What happens when the world’s principal powers all face constraints that limit their ability—or willingness—to sustain the international order they helped build?

The United States still has unmatched financial, technological, military and institutional influence. But it also faces fiscal pressures, political polarization and persistent questions about the resilience of its domestic institutions.

China remains one of history’s great economic success stories. Yet it is now dealing with slower productivity growth, demographic decline, high debt burdens and the difficult shift from investment-led expansion to growth powered more by innovation and consumption.

Russia continues to project military and strategic power, but it must do so while managing demographic contraction, economic constraints and a growing dependence on a narrower set of strategic partners.

None of this necessarily points to absolute national decline. It points instead to relative constraint: a world in which the great powers remain formidable, but find it harder to turn their strength into broadly accepted international leadership. That tension may define the geopolitics of the 2030s.

Tufts University political scientist Michael Beckley has warned that major powers become especially dangerous when they believe their relative position is peaking. The concern is not merely slower economic growth. Leaders who think their window of opportunity is closing may move more aggressively to secure supply chains, use economic pressure, intensify geopolitical competition or accept greater military risk before their position worsens.

A world in which several major powers believe tomorrow may be less favorable than today is more volatile than one in which each expects continued expansion. One visible result is the renewed appeal of mercantilism: the old habit of treating trade, industry, resources and commercial relationships as instruments of national power.

Today’s economies are far more sophisticated and interconnected, but echoes of mercantilist thinking have returned. The United States and China approach from very different political and economic systems, yet both now intervene more actively in markets to protect strategic industries, secure technology and reduce vulnerabilities. Tariffs, industrial subsidies, export controls, domestic-content rules, critical-mineral policies and restrictions on strategic technologies increasingly reflect the belief that economic security is national security.

As a result, strategic competition now extends far beyond military power. Semiconductors, artificial intelligence, energy, critical minerals, digital infrastructure, financial systems and supply chains loom large as instruments of national strategy.

Beckley’s warning points to a darker possibility: great powers turning further inward, seeking security through protected technologies, red-lined spheres of influence, and coercive control over strategic economic chokepoints.

Fortunately, that volatile future is not inevitable.

Carney and the Agency of the Middle Powers

“Middle powers must act together, because if we’re not at the table, we’re on the menu.”

— Canadian Prime Minister Mark Carney, World Economic Forum, Davos, January 2026

If Professor Beckley describes the danger, Canadian Prime Minister Mark Carney points to a possible answer.

Carney’s January 2026 address at Davos offers an important insight. Great powers have the market size, military capacity and economic leverage to negotiate on their own. Middle powers generally do not. When a smaller country negotiates alone with a hegemon, Carney argued, it risks entering the room already at a disadvantage. His answer was not old-fashioned bloc politics, but flexible coalition-building: countries working together, issue by issue, wherever their interests overlap enough to create bargaining power.

That is why his warning lands with such force. It is not merely a call for busier diplomacy. It is a reminder that the international order need not be written only by the fears, ambitions and limitations of its largest powers.

Carney’s deeper point is that diversification is not only an economic strategy. It reduces vulnerability to retaliation, gives countries more room to make independent choices and allows them to exercise agency

by forming coalitions, strengthening institutions, widening economic relationships and helping shape international rules.

That call rests on a change in how global influence is exercised. Countries no longer need to rival the United States or China across every dimension of power to matter. They can exert leverage through the capabilities, resources, markets or relationships they bring to the system.

This is why describing the emerging order simply as “multipolar” can mislead. Power will be distributed not only by geography, but by function: finance, technology, manufacturing, regulation, capital, energy, resources and logistics.

The European Union offers the clearest example. It is not a conventional military superpower or unified nation-state, yet it has helped shape how global business operates.

Its main instrument is regulation: privacy, competition, consumer protection, sustainability, artificial intelligence, corporate governance, product safety, carbon rules and responsible supply chains.

Because the European market is so large, its rules often shape corporate behavior far beyond Europe’s borders. Many multinationals find it easier to apply demanding European requirements globally than to maintain separate systems for different markets. This is the so-called “Brussels Effect,” and it has made the EU one of the world’s most consequential standard setters.

From European Standards to Strategic Partnerships

For much of the past two decades, the EU exported its standards as a condition for access to its market. Countries that wanted deeper economic integration with Europe were expected to comply with European requirements on sustainability, labor protections, environmental governance, competition policy and consumer protection.

But Europe increasingly recognizes that strategic partners will not simply accept standards; they expect investment, technology transfer and opportunities to participate in higher-value industries. The emerging model is more collaborative, where the standards become the foundation for industrial cooperation rather than merely conditions for market access.

The provisional EU-Mercosur agreement reflects this shift. Sustainability commitments remain central, but they are increasingly paired with financing, industrial investment and support for local value creation in strategically important sectors.

The standards become the anchor; investment becomes the incentive.

The emerging Brazil-Germany industrial partnership on rare earths provides one of the first practical demonstrations of this new approach.

Rare earth elements are essential to high-performance magnets used in electric vehicles, wind turbines, industrial robots, aerospace systems, advanced electronics and defense technologies.

Historically, countries rich in rare earths exported raw minerals while most of the processing and manufacturing occurred elsewhere. China eventually came to dominate much of that value chain.

German and Brazilian companies are developing an ecosystem to develop processing capability, manufacturing know-how and research collaboration alongside mining investment within Brazil. Brazil gains industrial upgrading and technology transfer; Germany gains a diversified and trusted supply chain for strategically important materials.

At their April 2026 intergovernmental consultations in Hannover, Germany and Brazil welcomed EU-Mercosur as a framework for closer economic relations and launched deeper cooperation on critical minerals. Together, the initiatives point toward more resilient supply chains, technology cooperation and greater value creation within Brazil.

These developments show the practical response that Carney envisions to the return of great-power mercantilism. The EU is now offering a package that speaks directly to what many middle powers need: market access, standards, investment, technology, local value creation and strategic diversification.

For middle powers, this creates alternatives without requiring disengagement from either China or the United States. For Europe, it creates more resilient supply chains without requiring economic autarchy.

This creates one of the central paradoxes of the emerging order: the more mercantilist the great powers become, the more they may accelerate the polycentric economic relationships that limit their ability to dominate the system.

An International Order That Is Increasingly Co-Authored

A system needs a story people are willing to believe.

That was the United States’ greatest strategic achievement after the Second World War. It made participation in American-led institutions feel like a path to a better future and a sense of shared possibility.

The American story linked democracy, entrepreneurship, technological innovation, higher education, open markets and individual opportunity into a vision of progress compelling enough for governments, businesses, researchers and families across the world to join.

Soft power, in that sense, is not just culture, branding or admiration from afar. It is the ability to create shared meaning—to persuade other societies that their own future is better served by participating in a system than by remaining outside it.

Europe’s emerging standards-based partnerships should be understood in similar terms. Regulation becomes more powerful when other societies do not merely comply with it, but help shape it, implement it and, over time, legitimize it. That is the transition from regulatory power to legitimating power.

The defining feature of the coming decades may not be the collapse of the post-war international order but its gradual rewriting. Much of the architecture will remain American in origin, many of its regulatory ambitions will remain European, and important industrial networks will continue to depend on China.

But legitimacy, adaptation and day-to-day implementation will increasingly depend on the middle powers.

Countries such as India, Indonesia, Brazil, Japan, South Korea, Australia, Saudi Arabia, Singapore and others will help connect competing economic systems, broker political compromise and translate global principles into regional arrangements.

Their influence will come through a stronger voice inside existing institutions, practical interpretations of international norms, flexible issue-specific coalitions and new partnerships that complement, rather than replace, the old architecture. In short, the resulting economic order will be increasingly co-authored.

The Philippines: Leading the ASEAN in Agency Through Diversification

The Philippines appears to be making a similar transition. For years, its economic relationship with Europe was expressed partly through the EU’s GSP+ arrangement, which linked preferential market access to Philippine compliance with international conventions on human rights, labor rights, environmental protection and good governance.

The relationship is now becoming more reciprocal. Negotiations for a comprehensive EU-Philippines Free Trade Agreement resumed in 2024. The prospective agreement places sustainability alongside trade and investment, digital commerce, energy, raw materials, government procurement and wider economic integration.

In July 2026, Philippine Foreign Affairs Secretary Ma. Theresa P. Lazaro and EU High Representative and European Commission Vice-President Kaja Kallas signed a Joint Statement elevating EU-Philippines relations to an Enhanced Partnership covering foreign and security policy, governance, rule of law, climate and green transition, digital connectivity and people-to-people ties.

That European relationship is developing alongside another strategic initiative: In April 2026, the Philippines joined the U.S.-led Pax Silica initiative, a coalition designed to strengthen secure and resilient supply chains across critical minerals, advanced manufacturing, semiconductors, artificial intelligence, energy and technology infrastructure.

Plans under the much-debated Pax Silica include an AI-native industrial acceleration hub in New Clark City within the Luzon Economic Corridor intended to connect the Philippines more deeply to advanced manufacturing, semiconductor and AI supply chains.

Taken together, these initiatives point to the country’s strategic direction. Through Pax Silica, the Philippines is embedding itself in U.S.-led technology and economic-security networks. Through the EU Enhanced Partnership and FTA, it is building another channel for market access, regulatory cooperation, green investment and digital connectivity, while maintaining extensive economic ties with China.

The objective is agency through optionality: keeping more doors open, more partners engaged and more routes to growth available. The Philippines becomes more valuable when external partners compete not only for its alignment, but for the opportunity to invest, transfer technology, build infrastructure and join its long-term development.

The Philippine chairship of ASEAN is therefore timely against the backdrop of escalating U.S.-China competition. The opportunity is not to turn ASEAN overnight into a unified geopolitical actor, but to strengthen its role as a platform for strategic diversification.

Rather than merely becoming the destination to which multinationals relocate production because of great-power tensions, ASEAN can seek a greater say in what investment arrives, what technology accompanies it, where value is created and which standards govern the resulting industries.

Given its proximity to China, ASEAN is uniquely situated to serve as a connector among competing systems. Its scale, geography, manufacturing base, natural resources, digital economy and relationships with major powers give it considerable latent bargaining power. ASEAN needs to shift from neutrality towards converting that latent power into active middle power agency.

Conclusion

The strategic question of the 2030s is not simply whether the United States or China proves more powerful. It is whether the international system can remain open and cooperative even as its principal powers become more constrained and defensive. The defining story may yet be how middle powers—working through institutions, standards, investment, coalitions and shared purpose—helped keep that order open during one of the most consequential geopolitical transitions of the modern era.