In recent years, a structural rupture has emerged in the cohesion of the West, pointing towards a new geoeconomic world order. This is blog post 2 on the systemic shift, in which the United States is moving from the role of architect to that of actor. This transition is leading to institutional erosion, shifting the very foundations of the global order.
The world order since the Second World War was built on institutions and rules, and thus on predictability. The United States was both a central actor and guarantor, as this aligned with its own interests. The MAGA trajectory under Trump, however, assesses the net benefits differently. The model is therefore under dissolution as a result of a deliberate strategic realignment.
The result is an emerging multipolar structure without a shared normative architecture.
The contours of a new world order are outlined in six blog posts
This system shift towards a new geo-economic order is outlined across six blog posts:
- The system shift (from rules to power)
- The erosion of institutions (UN, IMF, etc.) – this post
- The US from system architect to system actor
- The two competing system models: China and the EU
- Middle powers and “value-based realism”
- Financial power and the risk of divergence
The first post described the systemic shift. This post focuses on the institutional consequences.
The old institutions are eroding
The institutions that have underpinned the global order since the Second World War have not collapsed. However, their governance value declines as the United States moves away from them. As the largest economies increasingly act outside or across established frameworks, the real significance of these institutions diminishes. This particularly affects the United Nations (political legitimacy), the IMF and the World Bank (financial stabilisation), and the WTO (the foundation for trade).
The developments vary, but the direction is consistent with the political thinking reflected, inter alia, in Project 2025, namely that the United States should only engage where it serves its interests in each specific instance (America First).
They have not ceased to exist, but are applied selectively
The institutions continue to function formally, but are increasingly applied selectively. Rules are primarily enforced when they support national interests. This politicisation reduces predictability and renders their legitimacy situational and gradually declining. As Mark Carney put it in Davos: “When integration becomes the source of your subordination, the multilateral institutions on which the middle powers have relied, the very architecture of collective problem solving, are under threat".
This is a central development, as these institutions were intended precisely to create shared values and predictability, thereby building trust across countries.
However, the previous order was largely based on Western norms regarding market economy, rule of law, and institutional transparency. These norms often run counter to the interests of other countries and are therefore no longer widely shared. As a result, institutions lose their universal legitimacy, while alternative models emerge in parallel, making cooperation increasingly reliant on bilateral solutions.
The outcome is not necessarily conflict, but at a minimum parallel system logics.
Financial institutions are gradually losing centrality …
The erosion is particularly evident in financial institutions. The IMF and the World Bank continue to play central roles, but their position is being challenged by the United States’ inclination to withdraw, or at least to reduce contributions to a fraction of previous levels. This has led to:
- alternative sources of financing, with both China and the UAE increasing their FDI and external lending (OOF), inter alia through the Belt and Road Initiative
- increased importance of regional development banks in Africa, within BRICS+, in Asia, and from the UAE, Qatar and Saudi Arabia
- growing use of financial flows outside systems such as SWIFT and without reliance on USD or EUR as pricing anchors . Although BRICS members fundamentally have divergent geopolitical interests that limit deep financial integration,the forum may nonetheless serve as a platform for increased integration among, for example, China, Russia and Iran, which over time could pressure countries within China’s Belt and Road Initiative to participate.
… and the same applies to the legacy trade institutions
A similar pattern is evident in the global trading system, where the WTO continues to exist as an institution, but functions increasingly less as a common reference point. Dispute resolution mechanisms operate only partially, and key actors increasingly rely on tariffs (particularly the United States), export restrictions (notably China and the United States), and industrial policy subsidies (particularly China) outside the original frameworks.
This implies that trade is increasingly politicised and linked to, for example, national security considerations. The erosion does not represent an absence of structure, but rather a shift in structure.
Networks replace hierarchy …
As the importance of institutions declines, the structure of global cooperation also changes. A more network-based order is emerging, characterised by more numerous but more flexible and less binding relationships. This increases optionality, but reduces stability. Countries therefore seek to reduce vulnerabilities through parallel structures.
The system is thus moving from hierarchical organisation to distributed coordination
This represents a fundamental shift in how global cooperation functions. New alliances are formed “bottom-up” to address specific supply risks, rather than on the basis of shared values.
… leading to an interim state without a new architecture
The key point is that this erosion is not accompanied by a coherent new institutional architecture. New institutional alternatives, regional solutions, and functional collaborations are emerging, but at different times and without forming a unified global structure of comparable breadth.
The system is therefore entering an interim state, in which the old order is weakening, while the new has yet to consolidate.
Institutional erosion is structural
Institutional erosion is a structural development that reduces predictability, enforcement capacity, and global coordination. At the same time, it increases the need for flexibility, redundancy, and strategic positioning.
For companies, this means that global frameworks become less stable and predictable. Relationships must therefore increasingly be managed on a regional and bilateral basis.
The future trajectory will depend on whether new institutional structures emerge, or whether the current fragmentation becomes the dominant state.
The next blog post examines the United States.