The Rules‑Based Order That Once Constrained Great‑Power Ambition Has Proved Illusory

By Stefan Koopman, senior macro strategist at Rabobank

If there is one lesson from this week, it is that the rules‑based order that once constrained great‑power ambition has proved illusory. In Davos, Canada’s Mark Carney captured this with clarity. The world, he argued, is experiencing a rupture rather than a transition. It has become a harsher place in which the strong test limits and the weak are expected to accommodate them. In such an environment, middle powers should stop “living within a lie” and make moves toward strategic autonomy and diversified dependencies.

The following 24 hours offered a textbook illustration of how this new world works, or fails to. President Donald Trump abruptly stepped back from his tariff barrage aimed at eight European allies. Talk of forcing the issue over Greenland was quickly shelved after a meeting with NATO secretary‑general Mark Rutte produced a “framework for a future deal”. Markets regained their footing on Thursday after losses earlier this week, following the familiar TACO pattern with a snapback in risk assets. US Treasuries just stabilized while the dollar weakened, leaving a residual Sell‑America tone.

Details remain scarce, but two strands are emerging:

• First, a NATO mission under US command appears likely, involving the alliance’s Arctic members (incl. Sweden and Finland, who can bring their unique expertise) and possibly others, to strengthen regional defense. This outcome was already very much possible under the 1951 US‑Denmark defence agreement, which grants Washington broad scope to deploy military assets on Greenland, without the diplomatic damage caused by the earlier escalation.  
• Second, the understanding also appears to reflect Washington’s longer‑term concern about Greenland’s political future. A fully independent Greenland could, in theory, seek closer economic or security ties with Russia or China. A revised or reinterpreted framework would aim to ensure that any future change in Greenland’s status did not lead to the withdrawal of permission for US military activities on the island. This is particularly relevant to US missile‑defence ambitions, including the proposed “Golden Dome”.

Of course this would require sign-off from Denmark and Greenland – not NATO – and how any of this would be implemented remains unclear. As such, tariff threats may return if the eventual proposal falls short of US demands.

Seen in that light, reading the episode as détente would be an error. The US’ pressure on “irrelevant” Denmark’s sovereignty is an assertion of primacy framed as pragmatism, with tariffs as the go‑to tool. The subsequent Trump‑Rutte arrangement does not at all mark a return to rules or procedures.

By now, the White House bargaining style is well-established and likely to recur in the not too distant future. The belittlement draws the international attention and the projection of pain functions as its leverage.

The beatings will continue until morale improves, but this abusive dynamic is unproductive: the stated US strategy of wanting a ‘stronger Europe’ to balance China sits awkwardly with tactics that erode mutual trust, seek to split European unity, and invite defensive hedging with other – not necessarily like-minded – parties. Moreover, it may cause Europe’s learned helplessness, its perennial reflex of waiting for Washington to set the terms, to be unlearned in practice. The defense build‑up (possibly including nukes), the internal‑market push and the widening of trade options, Mercosur included, indicate a structural adjustment. If one of the US’s key strengths since the end of the Second World War is having had strong alliances and soft power, it may underestimate the long-term consequences. Trump said the US will remember if the Danes don’t play ball; but so will Europe.

Indeed, on Mercosur, after the European Parliament failed to ratify this agreement on Wednesday, the Commission is now signalling that provisional application is the likely way forward, which is just another indication of the growing role of geopolitics in Europe’s trade strategy.