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Climate, Finance, and Geopolitics: Human Self-delusions and the Challenges for Europe

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The combination of geopolitical tensions, climate disruption, and the growing role of finance in the economy is taking us into uncharted territory. Until recently, each of these subjects was handled separately, but they are now inextricably linked by two shared characteristics: the gravity of the threat, and the fact that they all lay bare the scale of human self-delusions.

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© Wanan Wanan/Shutterstock.com
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There are also interactions between them: between climate and finance, since states have a tendency to pass this “hot potato” onto the private financial sector; and between geopolitics and finance, because money remains the “sinews of war” and debt is a vulnerability, especially for any actor wanting to exercise full sovereignty. These issues are particularly acute for the European Union (EU) that is still a work in progress.

Key Takeaways:

  • Finance, climate science and geopolitics were once separate subjects. Now linked, their commonality is that they reveal the illusions of those who, in the 20th century, thought they had mastered finance, tamed nature, and prevented war.
     
  • The financialization of the economy, climate change and the resurgence of armed conflict have exposed these illusions and call for a new awakening.
     
  • With planetary limits about to be reached, it will not be enough to rely on finance alone. Similarly, the rise in geopolitical risks calls for resources which, in a context of high indebtedness, are no longer available to governments.
     
  • For Europe, which is facing these challenges without being solidly constituted, the challenge is even greater, but across the globe it is high time to ask questions about exacerbated national sovereignty and the lack of respect by governments for the commitments they have made.

 

This Briefing is also available in French: Climat, finance, géopolitique. Les illusions des hommes, les défis de l’Europe.

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ISBN / ISSN

979-10-373-0794-1

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Climate, Finance, and Geopolitics: Human Self-delusions and the Challenges for Europe

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Author(s)
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digital globe
Geoeconomics and Geofinance Initiative
Accroche centre

To analyze the impact of power rivalries and tensions on globalization, this initiative combines economic and political expertise. In the face of growing geopolitical risk, the goal is to decipher the dynamics of reconfiguration: protectionist pressures, sanctions, restrictions, industrial policies, and economic security concerns are redefining the rules of international trade. These tensions are also transforming international financial relations by undermining the foundations of trust and reshaping the global monetary system. They raise questions about the role of several key players: sovereign wealth funds, central banks, digital platforms, multilateral institutions, and financial infrastructure operators. In a context of profound disruption, simply refining existing approaches is no longer sufficient. The initiative is designed as a flexible model, drawing on diverse expertise to offer both broad overviews and targeted analyses. It also provides a platform for stakeholders and experts from various backgrounds to debate these issues freely.

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Climate & Energy
Center for Energy & Climate
Accroche centre

Ifri's Energy and Climate Center carries out activities and research on the geopolitical and geoeconomic issues of energy transitions such as energy security, competitiveness, control of value chains, and acceptability. Specialized in the study of European energy/climate policies as well as energy markets in Europe and around the world, its work also focuses on the energy and climate strategies of major powers such as the United States, China or India. It offers recognized expertise, enriched by international collaborations and events, particularly in Paris and Brussels.

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Manufacturing Risk: Geopolitical Doxa and the Corporate World

Date de publication
02 April 2025
Accroche

The evolving power dynamics between the United States, China, and Russia are creating new geopolitical realities that businesses can no longer evade. Geopolitical risk has become unavoidable, yet many companies remain unprepared to navigate its complexities. Corporate leaders can no longer afford to overlook its implications.

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Trump's Trade War: What Answers for the European Union?

Date de publication
14 May 2025
Accroche

The announcement, on April 2, 2025, of “reciprocal tariffs” by the United States has opened a sequence of profound break with decades of established trade policy practices, where the administration behaviour has been marked by dogmatic blindness, amateurism, and self-serving interests. 

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How Geopolitical Tensions Reshape Trade Patterns: Geoeconomic Fragmentation, or China’s Big Manufacturing Push?

Date de publication
16 December 2024
Accroche

A data-based analysis shows that widespread geoeconomic fragmentation of world trade is not visible, at least so far. In contrast, the geopolitically-motivated challenges to international coordination are striking, notably in relation with China's surging surplus in manufactured goods trade.

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Multi-alignment and De-risking: The Global South Response to World Fragmentation

Date de publication
31 October 2024
Accroche

Turbulences and conflicts threaten the stability of the global order. What is the Global South’s response to these risks?

Hakim BEN HAMMOUDA
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Climate, Finance, and Geopolitics: Human Self-delusions and the Challenges for Europe