The Horizon: Geoeconomic Realignment
Signals: week ending 21 February 2026: Great expectations and awakening in Munich, India's AI ambition, and the Trump tariffs setback.
Top Signal: Munich Security Conference 2026: Transatlantic Expectations and Europe’s Strategic Awakening
There was a lot of realism (and some optimism) on display this week, at the 62nd Munich Security Conference in Germany, particularly regarding the transatlantic relationship and the European security environment.
The US Secretary of State, Marco Rubio, signalled on what terms the US is seeking to renew the transatlantic relationship, in a speech imbued with political realism and appeals to common culture, faith, sovereignty, economic resilience, and history. He outlined a vision for the future that prioritises the national interest rather than the rules-based global order, which he said was:
“a foolish idea that ignored both human nature and it ignored the lessons of over 5,000 years of recorded human history.”
In outlining the American vision of renewal, he called for renewal of international institutions such as the UN and for strong allies, saying that:
“we do not want our allies to be weak, because that makes us weaker.”
Meanwhile, on the European side, the EU Commission President, Ursula von der Leyen, was in many respects aligned with the American vision, particularly on defence, telling the Munich audience in her speech that there is no other choice but for Europe to become more independent, in every dimension that affects its security and prosperity.
Referring to Secretary Rubio’s speech, she said:
“An independent Europe is a strong Europe. And a strong Europe makes for a stronger transatlantic alliance.”
She hailed Europe’s true awakening, where defence spending in 2025 in Europe was up close to 80% since before the war in Ukraine, with the EU mobilising up to EUR800 billion. By 2028, it is projected that defence investment in Europe could exceed the amount the US spent on equipment last year.
This week, the EU Commission President also called for the EU’s own obligatory mutual defence clause to be brought to life, the need for a new European security strategy, and raised the possibility of relying on the result of a qualified majority rather than unanimity within the EU to make faster decisions.
Within the EU, France is the sole nuclear power and a permanent member of the UN Security Council. The French president, Emmanuel Macron, projected an optimistic realism, calling for reform where:
“Europe has to become a geopolitical power”
He signalled that in the coming weeks, he will provide more details on the strategic dialogue with the German Chancellor, Friedrich Merz, and a few other European leaders about a re-articulation of nuclear deterrence.
The German Chancellor, the leader of the EU’s largest member state, in his address in Munich, also struck a realist tone, acknowledging that the old international order, which was based on rights and rules, effectively no longer exists.
The Chancellor said he agrees with the sentiment that Europe:
“has just returned from a long vacation from world history”
to what is now a world that is characterised by great power politics. He signalled that Germany is committed to making the Bundeswehr the strongest conventional army in Europe as soon as possible. Moreover, he signalled the need to forge resilient supply chains and reduce unilateral dependencies on raw materials, key products and technologies. He also linked European security to competitiveness and freedom, calling for the European defence industry to organise around standardisation, scaling, and simplification of arms systems.
Meanwhile, the continent’s only other nuclear power and permanent security council member, the United Kingdom, signalled a post-Brexit pivot when the Prime Minister, Sir Keir Starmer, said that there is:
“no British security without Europe, and no European security without Britain”
and also called for:
“a more European NATO, underpinned by deeper links between the UK and the EU, across defence, industry, tech, politics, and the wider economy”
He also said that Britain was enhancing its nuclear cooperation with France so that adversaries could be confronted by their combined strength. US State Department EU Commission Èlyseé German Federal Chancellery 10 Downing Street
India Positions Itself as a Global AI Hub
This week in New Delhi, the India AI Impact Summit 2026 showcased India’s ambition to define a third path in AI governance, one grounded in access, inclusion, and sovereign capability. It follows similar summits previously held in London, Paris, and Seoul and was attended by world leaders, including those from France, Spain, and Brazil, and many key leaders from the AI industry, including OpenAI, Google, Anthropic, and Mistral.
This was the first time such a summit has been held by a Global South nation, a shift which India believes:
“signals a broader move toward a more inclusive global AI dialogue”
The priorities of the summit focused on areas such as AI safety, data governance, transparency, human-centred development, and accountability frameworks.
India’s Prime Minister, Narendra Modi, said that India believes that:
“Technology is not a medium of power, but a medium of service, not power. The direction of AI should also be such that it leads to the welfare of the entire humanity.”
In many respects, developments at this week’s summit signal India’s emergence as a node of AI production and a demand centre for digital infrastructure in Asia. During the week, India signalled plans to massively ramp up its AI compute capacity, saying that over 50,000 GPUs will be deployed within the next six months, which effectively doubles its current capacity.
GPU is short for Graphics Processing Units, which are a specialised computer chip designed to perform many calculations at the same time and have become the engine room of modern AI because they excel at the kind of parallel computation needed to train and run large models.
The announcement this week is part of the government’s plan to make high-quality computing power accessible for startups, researchers, and students. India is reportedly currently ranked as the world’s third-largest AI ecosystem, behind the US and China.
Meanwhile, hundreds of billions in private investment were committed by some of India’s biggest conglomerates, such as Reliance, Tata, and Adani, to build national AI infrastructure and reduce dependence on foreign compute. US tech firms also announced partnerships and investments. Indian Government Le Monde Al Jazeera Times of India The Economic Times RFI PM Modi
Supreme Court Strikes Down Trump’s Tariffs
In a major legal setback for US President Trump’s economic and foreign policy agenda, the US Supreme Court ruled Friday, in a 6-3 decision, that his administration had exceeded its authority when it imposed tariffs on many of the US’s trading partners. The decision centres on President Trump’s use of the International Emergency Economic Powers Act (IEEPA), which the court ruled does not authorise the president to impose tariffs.
The decision curtails presidential power in trade policy and means that the administration could now be forced to unwind trade agreements it had struck with many countries, and also signals the possibility of having to reimburse potentially hundreds of billions of dollars in tariff refunds to importers. That could become litigious. It could also result in a significant deficit in the US federal budget.
The Supreme Court decision is a function of the separation of powers in the US system and signals a legal check on efforts by the Trump administration to expand presidential power away from Congress.
Nevertheless, later that day, the president responded to the Supreme Court decision with a new 10% tariff, this time using a different law (Section 122 of the 1974 Trade Act), which is expected to take effect on Tuesday with some exceptions. Reporting suggests that this new authority caps tariffs up to a maximum of 15% for 150 days, after which approval of Congress is needed (not an easy task, even with the Republican majority). US stocks rose following the announcement by the Supreme Court on Friday. US Supreme Court NYT WP CNBC Axios
Strategy and Systems Insight
This week, the signals from both the Munich Security Conference and the India AI Summit illustrate a systemic shift in the international system, with world leaders increasingly acknowledging that the old global order is giving way to an emerging new order of semi-autonomous blocs, each prioritising