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Asset Allocation Research for UK Advisers

From a bipolar to unipolar to multipolar world

24/3/2025

 
Antique Compasses to Represent the Shift in Geopolitics from the Cold War
European security architecture has been dismantled and new one needs to take shape.

Exploring the Shift in Geopolitics from the Cold War

This essay explores the changing geopolitical landscape in Europe security

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See our March 2022 panel discussion with external experts Samuel Charap (RAND Corporation) and Laetitia Spetschinsky (EU-Russia Studies, Universite de Louvain)
​

See our December 2025 talk from Admiral Lord West on the Global Security Outlook

How did we get here

The risk of a breakdown in the transatlantic security alliance that has been in place since the end of World War II is highlighting the fragile – and fragmenting – old world order, and the emergence of a new world (dis)order.
​
We explore the three stage shift to a new multi-polar world.

A bi-polar world: 1945-1991

From the end of the second world war, Europe became polarised between two blocs, reflecting the extent of the respective Allied Forces’ advances across Europe to Germany.

Western Europe included the countries of western Europe, including the Federal Republic of German (West Germany) which was under US, British and French occupation.  This Western bloc of “first world” countries was a capitalist economy, democratic political system and had collective defence via NATO: the West’s military bloc.

Eastern Europe included the countries of eastern Europe that had been liberated (and then occupied) by Soviet troops including the German Democratic Republic (GDR, East Germany) which was under Soviet occupation.  This Eastern bloc of “second world” countries were a command economy, authoritarian communist political system with collective defence via the Warsaw Pact: the East’s military bloc.

As the Cold War progressed, hot proxy wars were fought in the rest of the world (in Korea, Vietnam, Yemen, Angola, Iraq/Iran, for example) including in developing “third world” as countries were pressured to align with one bloc or the other.

Non-aligned countries such as most African nations, India, and Yugoslavia managed to achieving a balancing act between the two blocs focusing instead on their own national interests.
​
During this period the UK was spending an average of 5% of GDP on defence to support its hard power in the form of a substantial tri-service military in the UK, Germany and overseas bases as well as a nuclear deterrent and extensive civil defence infrastructure.

A unipolar world

With the economic and political collapse of the Soviet Union and the Easten bloc in 1989-1991, the world experienced a unipolar “moment.”  There were no longer two superpowers – but just one: the US.  And whilst US foreign policy in Europe was enacted primarily through NATO, the bulk of the personnel, equipment, logistics, and firepower was and remains American.  When NATO demurred, the US acted with a “Coalition of the Willing,” as it was always important that US and Western interests were visibly aligned.  Challenges to this appeared in Iraq in 2003 where France and Germany opposed the US/UK-led invasion.  The tightest security bond from an intelligence sharing perspective are the “Five Eyes” nations: US, UK, Canada, Australia and New Zealand. 
​
The ”peace dividend” of the end of the Cold War meant that there was a wave of optimism and opportunity as Governments could divert spending away from defence in favour of sectors with greater social benefit.  In the UK and Europe defence spending dropped to below 2% of GDP during this period.  In the former Soviet bloc, “Swords to Ploughshares” programmes helped reconfigure parts of their military industrial complex to peaceful means.  In economic terms, the combination of cheap gas grom Russia, cheap labour from Eastern Europe and cheap goods from China heralded and ear of peace, prosperity and low inflation for the post Cold War period.  The UK could pride itself on its “soft power,” promoting influence, trade and prosperity via its membership of the UN Permanent Security Council, the EU/EEA, and the Commonwealth.

Unfinished business

When the Soviet Union collapsed, beset with economic problems, societal division, demoralised leadership and an alcoholic President Yeltsin, Russia was too weak to protest against the gradual absorption of its former satellites into NATO.  Its weakness meant its complaints on this could be ignored by the Cold War victors.  A Final Treaty was agreed on the withdrawal of occupying forces from Germany in 1994, paving the way for the reunification of Germany.  Crucially, however, there was no final treaty that put into writing the verbal and written personal assurances that Russia received as regards NATO expansion.   Archival records from the US National Security Archive chronicle what was said and what was heard between the major leaders of NATO and Soviet leaders.  It became ambiguous as to whether NATO leaders’ verbal and written assurances not to no expand eastward applied just to the territory of the GDR or all of Eastern Europe. 

NATO-Russia cooperation peaked in 2001 in the Post-9/11 world, where Russia allowed US/NATO use of its military bases in Central Asia, its rail networks for NATO supplies and its curated militia the “Northern Alliance” to support the US/NATO invasion and stabilisation of Afghanistan. 
​
However from a Russian perspective, the political and security elite felt increasingly under attack: the tensions around NATO’s rapid expansion to Russia’s borders from 1994; the bombing of Russia’s ally Serbia in 1999; the West’s recognition of Kosovan self-determination and independence;  the positioning of dual-use (defensive/offensive) Aegis Ashore missile systems in Romania and Poland under the pretext of an Iranian ballistic threat.  All these issues contributed to growing distrust and tension and are some of the “root causes” of Russia-US/NATO tensions.

In 2007, at the Munich Security Conference, Putin explicitly cautioned that Georgian and Ukrainian membership NATO were contrary to Russia’s national security interests and represented “red lines”.  The West’s perspective was unchanged: Russia has no right to say who can or can’t join NATO and besides some argued that – with an economy the size of Belgium and an unreformed military that had been mired down in Chechnya that Russia’s security concerns and complaints had no validity and could be ignored.
​
Following the Maidan led change of leadership in 2014 which ousted the Russia-leaning President Yanukovich that was about to sign Ukraine up to the Eurasian Economic Union (a trade bloc of former Soviet blocs anchored by Russia), the new Government enshrined the aspiration of NATO membership into its constitution, which previously since its 1991 sovereignty and independence[1] had enshrined neutrality.  The new regime’s lurch to NATO enraged the Russian political and security elite.  In December 2021, Russia put forward a draft Treaty with the US and with NATO outlining (some 30 years too late) the principles that was discussed but not formalised at the end of the Cold War.  The draft treaty also aimed to put back in place some of the dismantled security architecture from the Cold War.  The key points being:
  • No further NATO enlargement
  • No forward deployment of NATO troops and equipment in Eastern Europe
  • Neutrality for Ukraine
  • A reinstatement of limits on US/Russia intermediate missiles in Europe (previously covered by INF)
  • Limitations on large scale exercises (previously covered by CFE)

​This draft treaty was dismissed by the West as Russia has no right to claim “spheres of interest” or dictate countries’ choices.  From the West’s perspective, US counterproposals were not accepted with policymakers arguing that the draft treaty was “set up to fail.”  From a Russian narrative, the rejection of this draft treaty was the ultimatum and “causus belli” pretext for invasion and regime change.

This same draft Treaty was then starting point for the aborted Russia-Ukraine peace negotiations in Istanbul in 2022, and will likely be Russia’s starting point for US-Russia-Ukraine negotiations with the Trump administration.  These are the “root causes” that the Russians refer too.

Dismantling the security architecture

Against a backdrop of distrust, the carefully negotiated security architecture between Russia and the US that reduced risk of escalation and concluded the Cold War has been dismantled.  This makes the world a more dangerous place, in the event of any military or political stand off or indeed error.

The Anti Ballistic Missile Treaty limiting limitation anti-ballistic missile (ABM) systems used in defending areas against ballistic missile-delivered nuclear weapons was signed in 1972 and abandoned in 2002.
The Strategic Arms Reduction Treaty I (START I) reducing the number warheads, ICBMs and bombers was signed in 1991, replaced by New START in 2010, which expires in February 2026.

The Strategic Arms Reduction Treaty II (START II) limiting the number of Intercontinental Ballistic Missiles was signed in 1993 and abandoned in 2002.

The Intermediate Range Nuclear Forces Treaty (INF) limiting the use of nuclear and conventional ground-launched ballistic missiles, cruise missiles, and missile launchers with ranges of 500km–5,500 km that had been in place since 1987 was abandoned in 2019.

The Conventional Forces in Europe Treaty signed in 1990 limiting troop and equipment numbers was abandoned in 2023.
​
In short, the security architecture that reduced risks of conflict escalating (or from accidents happening) during the “cold war” stand off between NATO and the Warsaw Pact, no longer exists in the “hot war” stand off between NATO and Russia.

Where next?

America and Europe


​The Trump administration has blindsided Europe by commencing preliminary discussions with Russia on how to explore resolving the conflict over the head of the Ukrainians and behind the UK/Europeans’ back.
Whilst the US has been clear that Ukraine should participate in future discussions, the US does not necessarily see a role for the Europe in reaching an agreement with Russia.
​
In this respect, Trump is knowingly or unknowingly supporting Putin’s goal of dividing the transatlantic alliance.

Role Reversal


​At the start of the war, America and the UK had to encourage European governments to take a firmer stand.  Now it’s the other way round.  With US support for Ukraine waning, Europe is having to step up.  But without American security support (satellites, intelligence, aircover), the UK, France and European allies will not be able to place a planned “reassurance force” in Ukraine.  Indeed Trump’s envoy has dismissed Starmer’s plan as a “posture and a pose.”  Furthermore, Russia has categorically rejected the presence of NATO force in Ukraine as part of any ceasefire and would likely seek a UN force from non-aligned countries (such as China, or India) instead.  These points will form part of future negotiations.
​
With the security architecture dismantled, a new one will have to take shape and that will only happen once there is a ceasefire or a freezing of the  Ukraine conflict

America First


​​Trump’s America First policy means that he wants 1) end the fighting; 2) to recoup US grant money to Ukraine (European aid was structured as loans not grants) via a lien on Ukraine’s extractive industries; and 3) transfer the cost of Ukrainian reconstruction to Europe.  This will enable the US to focus on its primary security challenges: the Mexican border and the “pivot” to Asia.

A fragmented world

The Trump era will define increasingly fragmented world of competing national interest.

The UK and Europe have underinvested in their own defence (a criticism of President Kennedy’s in 1963 and of Trump in 2018 and again now).  The US is now categorically asking that they step up.  They will have to do so.
​
It’s at time like this that middle power states such as the UK can and should show leadership.  Let’s hope it makes a difference.

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