By Sasindi Fernando
When Belgium’s De Wever confirmed that the U.S. was an ally but had to ‘behave like an ally’ at the WEF in Davos earlier this year, he was not simply lamenting the fraying of a strategic partnership, but a structural divergence of priorities within the transatlantic bond. Europe was still reeling from the economic shocks perpetrated by the protectionist Trump Administration—ranging from weaponizing tariffs to straining global trade links—turning the WEF into an emergency summit to reassert the status quo in a drastically changing world order.
The current Liberal International Order (LIO) is declining, with U.S. foreign policy (notably during the second Trump Administration) retreating into isolationism and the dismantlement of former multilateral alliances to prioritize American strength to stabilize the free world. Trump’s unorthodox and provocative methods of securing America’s national interests on both foreign and domestic scales have sabotaged the broader democratic alliance and polarized its closest allies. Friction over tariffs, immigration, and global value chains has exposed the vulnerabilities of hyper-globalization.
Europe’s consequential ‘turn to the East’ is, therefore, not born of ideological enthusiasm but of strategic necessity. Perhaps this is the first step of a roll-back on globalization, prioritizing regionalization while also preventing economic collapse. However, can Europe adapt without abandoning its liberal values, especially when those very values are compromised by hollow tactical imitation by non-democratic regimes such as China?
The Aging Liberal International Order
Political scientist Ikenberry mapped the three phases of liberal internationalism historically, labeled as ‘Liberal International Order 1.0’, ‘2.0’, and ‘3.0’. The current Liberal International Order 2.0 (LIO) is a post-World War II construct, which has structured relations between states through the establishment of shared fundamental norms and rules of the international system. This shared agreement of ‘governance among states’ experienced fractures throughout the American hegemonic era following the collapse of the Soviet Union, becoming increasingly misaligned with contemporary power dynamics. The continued erosion of the LIO 2.0 was prompted by concerns over the depth of globalization, which exposed state vulnerabilities, and the emerging consensus that the very great power which spearheaded and institutionalized the LIO 2.0, the U.S., was no longer adequate in maintaining the framework.
The signs of the decay of the international order stem from the decoupling of trade links and the deglobalization trend after the Global Financial Crisis of 2008. Deglobalization works to decrease connectedness in the world, instrumentalizing stricter border controls and reclaiming sovereignty and local solutions. The recent growth of protectionism, technological rivalry between China and the U.S., geopolitical tensions, and weaknesses in global supply chains during the COVID-19 pandemic all demonstrate a web of interconnectedness that is far too complex to reverse.
Scholars dispute if the movement ‘from hyper-globalization to deglobalization’ is a marked trend. Protectionist strategies were witnessed in events such as Brexit, the US-China Trade War, and the withdrawal of the U.S. from the Trans-Pacific Partnership, which was proposed to be the world’s largest free trade deal, covering 40% of the global economy. However, these strategies only distinctly slowed trade in goods, while most states saw an increase in international integration—excluding China, which achieved self-reliance in goods trade.
It is uncertain what will replace the current declining international order, with divided opinion over the restructuring of global power geometric rules in favor of a unipolar system with China at the helm, or an alternative, multipolar international order where no single state is predominant. Liberal norms emphasize human rights, the rule of law, democracy, international cooperation, and free markets. These norms are losing coercive and persuasive power outside the West, where the rest of the world has proven to increasingly respond to power and incentives.
‘No longer a reliable ally’
Historically, the transatlantic alliance was the cornerstone of Western security, liberal democratic norms, and economic cooperation. The devastation Europe faced after World War II, coupled with the decline of Pax Britannica’s global dominance, left a power vacuum. The U.S. distributed aid to heavily reliant Western European states (the Marshall Plan) and Japan (the Dodge Line) to reconstruct their economies and curb communist sentiment spreading across Eastern Europe. The Marshall Plan was paradoxically both an invitation from Western Europe for greater American involvement and a form of economic coercion, resembling imperial control where the ‘invited’ power influenced domestic politics. Thus began the Americanization of Europe, catalyzing a transatlantic community built on economic growth and liberal democracy.
In addition to rebuilding Western Europe’s economies, the U.S. provided a security guarantee against the Soviet Union through NATO, where an attack on one member constitutes an attack on all. With its military strength, the U.S. stationed over four hundred thousand troops in Europe, alongside nuclear missiles capable of striking Moscow. After the dismantling of the Soviet Union and the Warsaw Pact, NATO remained active, expanding into Central and Eastern Europe and provoking Putin’s wrath at strategic encroachment.
Since the end of World War II, American presidents sought to cultivate close relationships with their European allies who shared like-minded views on democracy and world order. However, the first Trump Administration openly questioned the value of the U.S.-Europe partnership, condemning Europe for not contributing to the bulk of NATO expenses while considering withdrawing from the alliance altogether and finding common ground with Orbán and Putin’s strong nationalist approaches. Structurally, the U.S. has absorbed key lessons from failed military interventions in Iraq, Afghanistan, and Libya, gathering a consensus on prioritizing national resilience over openness.
Apart from strategic fatigue, the very institutions that underpinned American hegemony and endorsed Western liberal values are under threat: the UN is rendered meaningless as it is paralyzed by the veto powers of the Security Council, the foundational Bretton Woods institution was dismantled in the 1970s, and the authority of multilateral trade institutions has steadily eroded in the face of unilateral economic statecraft.
The U.S. shift towards an America First–style foreign policy reflects structural domestic, economic, and strategic constraints rather than the preferences of any single administration. Public disillusionment with the costs of global leadership—shaped by deindustrialization, uneven globalization, and prolonged foreign entanglements—has increasingly pushed American voters toward a preference for domestic, interest-driven policy choices. This translates into electoral incentives, institutionalizing trade restrictions, industrial policy, and conditional alliances, allowing subsequent administrations to inherit and amplify it, at times projecting it with intensity through presidential rhetoric.
It is increasingly clear that Europe must abandon its American crutch and forge new alliances in the East.
Pragmatism over Ideology
LIO 2.0 maintained relative democratic peace in the Global North after two deadly world wars, proliferated norms such as human rights and the rule of law, and facilitated the spread of democracy globally after decolonization. These successes can be attributed to its structure of ‘variable geometry’—where within a dense network of norms and regulations, countries were allowed to embrace certain principles or selectively join institutions (if their national interests harmonized). This allowed a wide range of states to integrate into the global economy, generating forms of dependence on globalization even in the absence of full ideological convergence.
Ideological rivals such as China adapted to the open market and benefited from free trade without abandoning communism or embracing democracy. Even core members of the LIO occasionally violated these liberal values, and as Carney admitted, ‘the strongest would exempt themselves when convenient’, for justice was conditioned by power and strategic interests. The corrosion of the LIO 2.0 may plunge the world into a system of unstable multipolarity (reminiscent of the post-World War I era); can liberal internationalism adapt to the new emerging powers without losing its distinctively liberal character?
Finnish President Alexander Stubb has a solution. Resting on the two pillars of values and realism, he coined the term ‘values-based realism’ to explain the compromises of values the West will be required to engage in with non-democratic states to solve major global crises. This will ensure that the fragmentation of the world order will not be total, and that the emerging world order will not tilt away from Europe entirely.
China has shattered the Western assumption that economic liberalization would inevitably produce political liberalization. It has operated within the liberal order through selective compliance with its rules, tactically mirroring norms because other states do so, rather than out of genuine internalization.
China’s construction of a parallel world order offers alternative norms and institutions to states seeking distance from the current LIO. The Shanghai Cooperation Organization (SCO), led by China and Russia, serves as a key platform, appealing to Asian states looking beyond Western-dominated bodies such as the UN. The SCO seeks to securitize Central Asia, promote regional stability through economic and political cooperation, and combat drug trafficking, terrorism, and separatism.
Linked to the Belt and Road Initiative, to which some EU members have subscribed, this framework constructs trade corridors across Asia, Europe, the Middle East, and Eastern Africa, reviving the logic of the Silk Road. China is steadily building an alternative order in which it, as hegemon, cannot be excluded.
Increasing European dependency on China for telecommunication equipment, rare earths and metals, apparel, and electronics prompted concern as China seemed to emancipate itself from European inputs. This asymmetric relationship is magnified by how Europe perceives China as a partner for economic cooperation, a trade competitor, and an ideological rival simultaneously. The EU commits to de-risking, not decoupling altogether from China, reducing critical dependencies in supply chains and diversifying where necessary. The question, therefore, is not whether Europe endorses China’s political model, but whether it can afford to exclude a central pillar of the global economy from its scope.
Pivot to Asia 2.0
Europe and Canada are pressured to balance values-based diplomacy with interest-based survival. The Canadian Prime Minister’s pivot to China in early 2026 signaled the search for a more ‘predictable’ trading partner than the U.S. Official visits by France’s Macron, Ireland’s Martin, Britain’s Starmer, and Germany’s Merz in Beijing largely focused on securing greater access to the restrictive Chinese market.
With the U.S. experiencing democratic backsliding, the pressure is on democratic countries in Europe to uphold Western liberal normative power, advocating for human rights, the rule of law, and democratic governance through trade and diplomacy. China’s values clash sharply with Europe’s self-image of championing democratic norms. However, the new world order is highly likely to be Asian-led and will require a synthesis of opposing value systems, characterized by complex patterns of interdependence and shifting geopolitical tensions. Europe thus finds itself attempting a delicate balancing act: sustaining values-based rhetoric while pursuing interest-driven partnerships with ideologically incompatible countries.
Twenty years in the making, a landmark trade deal between the EU and India created the world’s largest free trade zone by combining the world’s second and fourth largest economies. It is an attempt to diversify economic ties and options beyond China without Europe abandoning core values and principles, hedging against overdependence on China. Brussels has effectively avoided a binary trap of choosing between Washington or Beijing, cultivating a ‘new strategy’ of multipolar engagement, as von der Leyen remarked. India is a democracy with a large market, a rapidly growing economy, and an expanding industrial base, while also providing cost-effective labor for European markets.
The New Superpower Game
Currently, when the global order is increasingly shaped by the U.S.–China rivalry, the EU–India trade deal showcases Europe’s attempt to participate actively in shaping outcomes rather than standing on the sidelines. While Europe lacks the military might of the U.S. and the sheer market scale of China, its regulatory influence, institutional depth, and diplomacy give it structural leverage. The deal with India allows the EU to project economic influence, promote shared norms where feasible, and reinforce a more resilient, diversified engagement strategy in a world where strategic autonomy often requires forging multiple economic ties rather than relying on single anchors like China.
Sasindi Fernando is an undergraduate of Politics and International Relations at the Royal Institute of Colombo. Her research interests focus on geopolitics, international relations, sociology, modern history and comparative politics. She can be reached at sasindi2006@gmail.com
Factum is an Asia-Pacific-focused think tank on International Relations, Tech Cooperation, and Strategic Communications accessible via www.factum.lk.
The views expressed here are the author’s own and do not necessarily reflect the organization’s.
