The exuberant characterisations of the outcome of the visit of the European Union (EU) and the European Commission (EC) presidents on both sides signify a strengthening geopolitical trend in extreme global uncertainty presently in all its ramifications. The acknowledgement of India’s catalysing role as a stabiliser amongst the so-called Middle Powers caught in the maelstrom of great power contestation for commanding heights in global affairs in this knowledge era testifies to its economic dynamism and political stability. It is contextualised by the great power weaponisation of every lever of state power against each other and other ‘recalcitrants’ in ever growing numbers. Given the tightening interdependencies between countries, the firmness of this trend is contingent upon the twists and turns in geopolitics and geo-economics, especially the supply chains.
Prime Minister Narendra Modi with European Council President António Luís Santos da Costa and European Commission President Ursula von der Leyen, at Hyderabad House in New Delhi on Tuesday.(DPR PMO)
The India-EU FTA, several years in the making, is a resultant of the EU’s current economic and geopolitical circumstances prevailing today. There are serious concerns about its automobile sector due to Chinese competition especially electrical vehicles, anxieties about US tariff tactics including regarding wines and beverages, and manpower deficiencies. India has concerns about employment generation, especially in labour intensive sectors, regulated professional movement and employment overseas, upgradation of its technological base and looming non-WTO compliant EU carbon tax on steel and aluminium. Embracing wider ambit of strategic relationship, the FTA and other formalised summit documents meet their mutual concerns; the Indian stock market has reacted with cautious optimism.
The FTA and other formalised documents are framed by a significantly altered geopolitical and geo-economic context. The EC president declared at Davos that the world is “more fractured and more fractious than ever” and will remain so in future reflecting a fundamental rethink. The FTA was acknowledged by senior US officials as signifying a strategic shift by the EU away from the US. This outcome was accelerated by the Trump Administration’s grating criticism of Europeans in general and NATO/EU which even brought the two sides to the brink of a full-fledged trade war recently.
The buzzwords typifying this summit event as also at other Middle Powers’ interactions are trust and reliability especially in trade and larger economic relationships. Although the Global South is historically not unfamiliar with the practice, the second Trump Administration’s application of tariff pressures at globalised scale apart from the pre-existing one of sanctions against entities/individuals and secondary sanctions in pursuit of its priorities, shifting and spanning the widest spectrum of issues, communicated publicly in ambiguous terms heighten uncertainty globally and bilaterally; the Chinese government, given its economic and military power, does the same in its exports such as critical minerals, electronic magnets et cetera.
The unipolar global order born with the dissolution of the USSR (1991) has been fraying in the last several years with the 2008 global financial crisis aggravating it and causing a major shift in global power relationships. Fractures within various blocs and groups are resulting in a scrum for resources control in areas such as energy, commodities (rare earths) and more inward-looking financial policies. Geopolitics and geo-economics have now conflated with trade negotiations directed at shifting power equations; US share in global trade and services is now below 20%. Just preceding India, EC’s FTA with MERCOSUR (Argentina, Bolivia, Brazil, Paraguay and Uruguay) is part of a chain (signed or being negotiated) involving New Zealand and Andean and other Latin American countries (2024), Chile, Indonesia, Mexico and Switzerland (2025), and Thailand and Malaysia. India has concluded or is negotiating FTAs with UK and Oman (2025), EFTA (Iceland, Liechtenstein, Norway, and Switzerland, 2024), US and New Zealand. The Canadian prime minister has expressed interest in expediting FTA with India along with a planned visit not long after those by UK and German heads of government.
There have been some instances of the Middle Powers succeeding within the UN and outside in areas like nuclear weapons, international criminal justice system and green energy transition and in pushbacks against precipitate US action in global hotspots like Ukraine and Iran. There is scope for diversified cooperation over areas such as trade, the climate crisis, public health and disruptive technologies, but the putting this in a globalised institutional framework remains a serious challenge notwithstanding shared quest for reliability and certainty in international order. A mixed picture in regard to numerous groups like Quad, SCO, BRICS Plus or the hybrid ones like G 20 is also a reality check.
They remain a diverse group in variable geometry–acting as swing States/groups–and defy categorisation in either convergent or non-convergent interests and comprise countries experiencing their own internal fragilities being leveraged by the weaponising powers: extremely high global debt as a percentage of global GDP is a critical constraint on internal and external options. This paradigm dictates constant tactical compromises: France, Germany and the UK sought to pressure India over Ukraine on the eve of Russian president’s recent visit which did result in its more nuanced handling by India then.
Whilst every opportunity to stabilise global order and governance is to be seized given internal uncertainties in the two largest economies, namely, the US and China, greater efforts need to be directed at strengthening internal economic and political resilience in this scenario. It entails unremitting exercise in questioning one’s own operating presuppositions with greater intensity and granularity through strong institutional capabilities to navigate the global (dis)order such as it is.
This article is authored by Yogendra Kumar, former ambassador and author, New Delhi.