Cold War II

26 July 2023

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In this paper we discuss:

  1. The three legs of Cold War 2 between US and China;
  2. The 6 battlefield of the Tech War between US and China;
  3. The lack of global governance and its implications;
  4. The upcoming proxy wars;
  5. The re-shaping of the global economy and the role that technology will play in it; and
  6. The role that the EU can play in the global dispute between US and China.


The world is experiencing a geopolitical recession, characterised by a phenomenon of gradual de-globalisation and balkanisation of global supply chains. The framework in which this geopolitical recession is taking place is what we call Cold War 2. It is between waged between the United States and China, and has several dimensions which we will explore in this article.

This geopolitical recession may become a depression, if the conflict between the two global superpowers intensifies further. In this respect, the war between Russia and Ukraine represents a very concerning signal, since it has fundamentally altered the geopolitical equilibria that had been reached at the end of World War 2. We interpret this conflict as the first proxy war between the US and China.

The war in Ukraine has further accelerated the polarisation of the world, into two sphere of influence: one around the US and their allies, and one around China and its allies. Very few countries, chiefly India and a few in the Global South, will be able to remain “non-aligned” with either of the two superpowers. In this environment, the international fora for global governance have become ineffective.

In this context, we explore the possible role for Europe, and its technological advancement, followed by the necessary regulatory adaptation to accommodate these inroads.

This paper is organised as follows: Chapter One explores the context of Cold War 2, which is the scenery against which all macroeconomic, geopolitical and technological developments are happening. Chapter Two explores the possibility of proxy wars in those countries and regions that have not fallen directly into either sphere of influence. Chapter Three discusses the technological advancements made by Europe in the context of a re-shaped global economy.

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