Fragmentation Instead of Globalisation: How Blocs and Parallel Systems Emerge
# Fragmentation Instead of Globalisation: How Blocs and Parallel Systems Emerge
The world of the 2020s does not function like the world of the 2000s, and it will not return to it. That is the sober opening premise of SANKTIONIERT, in which Dr. Raphael Nagel (LL.M.) argues that the globalisation consensus of the 1990s has been dismantled, not by ideology, but by pressure. Sanctions, once treated as a marginal instrument of foreign policy, have become a central variable of world order. Under that pressure, states are not reverting to the open, rules-based commerce of the post-Cold War decade. They are reorganising into blocs, parallel systems and new supplier corridors, each with its own payment rails, its own infrastructure bets and its own political grammar. The question is no longer whether fragmentation is underway. It is how to read it, how to price it and how to allocate capital inside it.
The Quiet End of the 1990s Model
The post-Cold War order rested on a specific assumption: that economic interdependence would moderate political conflict, that markets would discipline states, and that cross-border trade could be kept analytically separate from questions of security. For three decades that assumption shaped industrial policy, energy procurement and the architecture of multilateral institutions. It also shaped corporate strategy, which treated political risk as a peripheral concern rather than a structural one.
Dr. Raphael Nagel (LL.M.) describes this as the liberal interdependence theory in its most optimistic form, and he is explicit that it was never entirely wrong. Trading partners do have reasons to avoid open conflict. What the theory underestimated was the asymmetry inside interdependence: when one side controls critical infrastructure, payment channels or irreplaceable inputs, mutual dependence does not produce peace. It produces leverage. The winter of 2021 and 2022, when Russian gas flows were throttled to generate political pressure, made that asymmetry visible to anyone still willing to look.
The consequence is not a return to autarky, which no advanced economy can afford, but something more subtle. Trade continues, yet it is openly political. The state is back as a strategic actor. Industrial policy is no longer embarrassing. Supply chains are being audited through the lens of security, not merely cost. The 1990s framework has not collapsed dramatically. It has simply stopped being the operating system of the world economy.
REPowerEU and the Reflex of Bloc Formation
Nowhere is this reorganisation more legible than in Europe. In the summer of 2021, Germany drew roughly 55 per cent of its natural gas from Russia. That figure was the product of decades of rational decisions: Russian gas was cheap, reliable and infrastructurally well developed. The political premise of change through trade appeared stable. What looked like diversification on paper (multiple pipelines, multiple contracts) turned out to be concentration in practice, because all routes led back to a single strategic supplier.
REPowerEU, drafted in a matter of months, was the most painful admission that European energy policy had been miscalibrated for a generation. LNG contracts, accelerated solar deployment, heat pump programmes and storage mandates did not restore the old comfort. They reorganised Europe into a different supplier constellation, one that is more diverse, more expensive and more clearly aligned with a specific political bloc. The price cap on Russian oil introduced by the G7 and EU in December 2022 illustrated the same logic from another angle: the entire price formation mechanism for a major commodity was politically overlaid, not because the market had failed, but because policy had decided that the market should no longer decide alone.
What Nagel treats as decisive is the direction of travel. Europe has not re-entered a neutral global market. It has entered a Western-aligned energy corridor with its own infrastructure priorities, its own compliance architecture and its own political obligations. The bloc is not a rhetorical construct. It is visible in the location of new LNG terminals, in the routing of tankers and in the legal perimeter of the fourteen sanctions packages that followed the invasion of Ukraine.
Parallel Payment Rails and the Limits of Dollar Gravity
The second axis of fragmentation runs through financial infrastructure. SWIFT, as SANKTIONIERT reminds the reader, is not a payment system in the narrow sense. It is a messaging network, the nervous system of cross-border banking, used by more than 11,000 institutions in over 200 countries. The dollar, for its part, is the denomination layer of the global energy trade, which means that participation in that trade has historically required access to the dollar zone and, by implication, acceptance of the regulatory reach of the US Treasury and OFAC.
The disconnection of several Russian banks from SWIFT in February 2022 did not halt physical flows immediately, but it created the most chaotic 48 hours in the recent history of Russian finance. More importantly, it demonstrated in full public view that the rails themselves are an instrument of power. For any state that might one day find itself on the wrong side of a sanctions decision, the lesson was unambiguous: infrastructural dependence on a single financial bloc is a strategic vulnerability.
The response has been the patient construction of parallel systems. Russia has expanded SPFS for domestic and adjacent use. China has developed CIPS to internationalise renminbi settlement. Banks in the United Arab Emirates, Turkey, India and Kazakhstan have recalibrated their behaviour, not because any national law compelled them to, but because the cost of losing access to Western financial infrastructure is higher than the cost of declining ambiguous transactions. These parallel rails are still less liquid, less efficient and less broadly accepted than their Western counterparts. But they exist, their user base is growing, and each new sanctions round strengthens the incentive to use them. Fragmentation in finance does not arrive as a single rupture. It accretes.
New Supplier Corridors and the Geography of Interests
The third axis is physical. Pipelines, tanker routes, refineries and terminals are being reorganised around political rather than purely economic logics. India imported more Russian oil in the two years following February 2022 than ever before, and when criticised for it, its foreign minister observed that Europe had itself consumed discounted Russian gas for decades without apology. That exchange, quoted in the book, is not a moral argument. It is a description of how interests actually order themselves when narratives and supply realities diverge.
Japan offers the clearest case of a democratic US ally managing this tension in public. Tokyo joined the Western sanctions regime in every material sense, yet retained its participation in the Sachalin-2 LNG project, which supplies roughly eight per cent of Japanese LNG imports and for which no rapid substitute existed. Washington accepted the explanation quietly. Both sides understood that complete sanctions discipline is politically unenforceable when supply security is at stake. South Korea sources Russian coal through Indian intermediaries. EU member states have negotiated national exemptions. These are not individual moral failures; they are the structural consequence of an architecture in which moral demands and supply realities rarely coincide.
The result is a map of new corridors: Gulf LNG flowing north rather than east, African producers courted simultaneously by European and Asian buyers, Central Asian uranium reassessed in light of Kazakh and Nigerien political risk, and a widening shadow fleet of tankers operating outside Western insurance. None of this is planned. All of it is emerging under the pressure that Dr. Raphael Nagel (LL.M.) places at the centre of his analysis: sanctions not as moral footnotes, but as the instrument through which the global economic map is being redrawn.
Strategic Implications for European Capital Allocation
For European capital, the implications are considerable and should not be softened. The first is temporal. Energy infrastructure is planned on horizons of twenty to thirty years, while political decisions can reroute trade flows in a matter of hours. Any allocation strategy that assumes convergence of these time frames will be surprised by the discontinuity. Capital committed to terminals, refineries, grids and long-term offtake agreements must now be priced with an explicit political premium, not as a residual risk but as a core variable.
The second is structural. In a permanently politicised trade regime, diversification is necessary but insufficient. The analytical distinction that SANKTIONIERT draws between diversification, which addresses the number of counterparties, and resilience, which addresses the system’s ability to absorb a loss without political panic, industrial paralysis or external coercion, is particularly relevant for European portfolios. Redundancy, storage, alternative infrastructure and the willingness to bear transition costs are not inefficiencies. They are the price of sovereignty in a bloc-ordered world.
The third is jurisdictional. Secondary sanctions, the Foreign Direct Product Rule and the compliance caution of banks in third countries mean that capital deployed in the grey zone between blocs is exposed to rules it cannot fully map. Investors who assume that formal legality equals practical feasibility will discover that self-sanctioning by counterparties, insurers and correspondent banks is now a more powerful constraint than any statute. The question for European allocators is no longer how to optimise within a single global market. It is which bloc a given asset ultimately belongs to, and whether that allegiance is stable enough to underwrite a thirty-year horizon.
What is emerging is not the disorder that the language of fragmentation sometimes suggests. It is a different order, less uniform than the one it replaces, organised around blocs, parallel systems and politically curated supplier corridors. Dr. Raphael Nagel (LL.M.) is careful not to present this as the result of a plan. It is the accumulated consequence of decisions taken under pressure, often by actors who would have preferred the comfort of the older framework. The 1990s model is not returning because the conditions that supported it, namely hegemonic stability, depoliticised infrastructure and a widely accepted neutrality of the dollar and SWIFT, no longer hold. Each sanctions round, each new terminal, each quietly rerouted tanker confirms the new configuration. For European capital, the practical task is to internalise this reality rather than to wait for its reversal. That means treating political risk as a structural input rather than a scenario footnote, pricing resilience as an asset rather than a cost, and accepting that in a permanently politicised trade regime, neutrality is not a position one can simply choose. It is an illusion the older order extended on credit, and the credit has been called in.
Claritáte in iudicio · Firmitáte in executione
For weekly analysis on capital, leadership and geopolitics: follow Dr. Raphael Nagel (LL.M.) on LinkedIn →