Overexposed: The Illusion of a Rapid Peace Dividend in Ukraine
The headlines: The discussion around Ukraine has recently shifted from “a war without end” to “a deal in the making.” In market terms, this almost automatically triggers a familiar set of assumptions: if a ceasefire emerges, European risk premia fall, energy prices decline, and European equities rally. The temptation is strong to think of geopolitics as a light switch—peace talks on, relief rally on.
The facts: There is indeed a U.S.-led push for peace, with circulating (and evolving) draft texts, timelines, and EU-related components, including proposals to accelerate Ukraine’s path toward the EU via a “membership-lite” model explicitly linked to a U.S.-backed peace framework. At the same time, the conflict is anything but winding down. Russian attacks on Ukrainian infrastructure continue unabated, leaving large parts of the population literally exposed to extreme cold.
Market-implied probabilities underscore the gap between narrative and reality. On Polymarket, the likelihood of an official ceasefire before January 31 stands at around 3%, and roughly 12% before March 31.
The weighting: A common assumption is that “peace” implies a return to 2019. In reality, even a ceasefire is far more likely to mark a transition into a new security and investment regime than a reset to the old one.
The key transmission channels to markets run through three persistent frictions:
- Fiscal and defense overhang: Europe is not buying peace, but time and deterrence. That implies structurally higher defense and security spending, putting upward pressure on long-term interest rates.
- Sanctions and rearmament path: A deal does not automatically reverse sanctions, normalize trade, or restore trust. Many costs have already been locked in through defense spending, energy transition investments, and the restructuring of production and supply chains.
- Institutional fault lines: The EU debate over a two-tier membership structure illustrates how an end to fighting does not automatically bring political calm. A rapid political settlement around Ukraine could spark new tensions between member states willing to integrate further and those unwilling or unable to do so. Prolonged disputes over rights, obligations, financing, and governance could resurface—creating renewed uncertainty for policy, budgets, and markets.
Underexposed: The Electrostate Divergence - China as a Green Superpower, the U.S. as a Fossil Swing State
The headlines: While attention focuses on Greenland, attacks on the Fed, and tariffs, a far less discussed structural divide is taking shape in the background: the divide between energy systems. The world is increasingly splitting into electrostates and petrostates. China is rapidly building an energy and industrial complex centered on cheap, scalable electricity from renewables, while the United States continues to derive much of its geopolitical and economic leverage from fossil dominance via oil and LNG. This divergence represents a gradual but powerful re-pricing of geopolitical, economic, and market balances.
The facts: What is unfolding in China is the construction of a new industrial power system. China now operates roughly 1.4 terawatts of wind and solar capacity—around 44% of global capacity, more than the EU, the U.S., and India combined. This scale is the result of deliberate policy choices, not market forces alone.
On the other side of the divergence stands the United States. The U.S. remains a fossil superpower: crude oil production reached a record of roughly 13.6 million barrels per day in 2025 and is expected by the EIA to decline only marginally in 2026, with a more pronounced downturn coming later in the decade. Oil and LNG thus function not just as economic output, but as explicit geopolitical leverage vis-à-vis Europe and Asia.
Europe—and to a lesser extent the UK—sits between these two models. Policy is geared toward rapid electrification, but execution remains deeply dependent on Chinese supply chains. Europe’s clean-energy supply chains are vulnerable, and China holds a dominant position in the refining of critical minerals and other inputs, reaching 80–90% in some segments.
The weighting: The electrostate divergence translates only gradually into changing cost structures, trade flows, and risk premia. Precisely because the process is slow and not tied to a single crisis, its market impact is widely underestimated. Transmission occurs through four interlinked channels:
- Cost of capital and industrial competitiveness: The ability to deliver cheap, stable, and scalable electricity attracts industry, data centers, and AI-related capex.
- FX and trade balances: Electrostates import less fossil energy but more critical minerals, components, and capital goods, increasing demand for the currencies of countries that can process and export these inputs.
- Commodity hierarchy: In a petrostate world, oil anchors the macro system. In an electrostate world, that role shifts toward copper, lithium, uranium, nickel, and rare earths.
- Geopolitical leverage: Fossil dominance remains a powerful tool, but electrification creates new choke points—grid capacity, storage, refining, and component manufacturing. Control over these nodes translates into growing geopolitical influence.
Spot-on: The Shifting World Order
Headlines: The international order is shifting through a series of visible and less visible fractures. What was once presented as a rules-based international order—in which rules, institutions, and procedures helped channel conflict—is increasingly giving way to a system in which hard power and control over strategic nodes take center stage. The cases of Venezuela and Greenland illustrate a broader trend: major powers are becoming ever more explicit in claiming administrative and strategic influence over resources, routes, and territory.
Facts: In Venezuela, this shift has become unusually explicit. The United States has openly spoken about long-term American oversight over the country, particularly over the oil sector, including influence over production, exports, and cash flows.
Greenland reflects the same logic in a very different context. Renewed U.S. interest—extending even to statements that military options are not ruled out—centers on access to the Arctic, force projection, critical resources, and emerging shipping routes.
These cases are not isolated. They fit into a broader pattern in which major powers increasingly seek control over strategic control points such as energy, logistics hubs, technology, and payment systems. Global trade continues to function, but increasingly under explicit political conditions. Rules that serve the interests of the dominant powers remain in place; where they constrain those interests, they are bypassed, renegotiated, or ignored. This was always true to some extent, but it is happening more frequently—and increasingly out in the open. The result is not chaos, but a fundamentally different and less predictable international order.
Weighting: The world order is not shifting from rules to arbitrariness, but from a universal rules framework to a hybrid system in which rules and power increasingly collide. That makes the impact significant, though often very different from the apocalyptic scenarios frequently invoked.
For geopolitics, this means sovereignty is becoming less absolute. States remain formally independent, but in practice grow more dependent on access to markets, infrastructure, and revenue streams managed by others.
For the global economy, this does not amount to deglobalization so much as a more expensive form of globalization. Trade, investment, and capital flows persist, but with greater friction: more buffers, more legal and political risk premia, and higher transaction costs. Efficiency gives way to robustness—economically suboptimal, but politically rational.
For financial markets, this shift rarely translates into a single dramatic shock. Its effects are felt mainly through risk premia: upward pressure on long-term interest rates, greater emphasis on legal and institutional stability in currency markets, wider dispersion in equities, and a persistent role for assets with low counterparty risk.
The key question for investors and policymakers is therefore not whether the rules-based order is over, but where rules still apply and where raw power takes over. Venezuela and Greenland make clear that this boundary is increasingly shifting into domains with direct economic relevance. In such a world, certainty becomes scarcer—and therefore more valuable.
Take a look at my latest Global Political Analysis: The dangerous link between Venezuela, Greenland, and Iran
