Geopolitical Realignment: Former Indian Adviser Calls for New International Frameworks Amid U.S. Withdrawal

The recent closure of the Strait of Hormuz following U.S.-Israeli strikes on Iran has exposed critical vulnerabilities in the existing international order, prompting calls for fundamental reform in global cooperation frameworks. Former Indian national security adviser Shivshankar Menon has declared that we are witnessing 'no global order' at present, as traditional mechanisms for international cooperation struggle to address rapidly shifting geopolitical realities.

The disruption to global oil flows following the February strikes sent shockwaves through Asian markets, with Brent crude prices spiking 27% within days of the conflict's outbreak. Countries with limited strategic reserves, particularly in South and Southeast Asia, face immediate economic pressure as energy costs surge. India, the world's third-largest oil importer, saw its trade deficit widen by an estimated $3.2 billion in the month following the Hormuz closure, according to preliminary data from the Ministry of Commerce.

"The current system was built for a unipolar moment that no longer exists," explained Menon, who served as India's ambassador to both China and Israel before his tenure as national security adviser from 2010-2014 under Prime Minister Manmohan Singh. "We need frameworks that reflect multipolar realities and address transnational challenges that respect no borders."

The U.S. strategic retreat from established international institutions has accelerated in recent years. The withdrawal from the Trans-Pacific Partnership in 2017, the Paris Agreement climate accord in 2020, and the more recent scaling back of commitments to multilateral security partnerships in Asia have created power vacuums that China has actively sought to fill. Beijing's Belt and Road Initiative, now encompassing over 140 countries with approximately $1 trillion in committed investments, represents China's alternative vision for international economic cooperation.

"The U.S. withdrawal has created a vacuum that multiple actors are attempting to fill," noted Dr. Rahul Roy-Chaudhuri, senior fellow for Asia studies at the International Institute for Strategic Studies. "The challenge is that there is no single replacement for the liberal international order, but rather a patchwork of competing initiatives and regional frameworks."

The economic implications of this realignment extend far beyond energy markets. Asian technology supply chains, particularly in semiconductor manufacturing and rare earth processing, are being reconfigured as countries reassess geopolitical risks. Taiwan, which produces over 60% of the world's semiconductors, has seen its export revenues decline by 15% in the first quarter of 2026 as companies diversify production to Southeast Asian facilities.

China's growing influence in both economic and security spheres is most evident in its expanding military footprint across the Indo-Pacific. The People's Liberation Navy now operates more warships than the U.S. Navy, with 355 active vessels compared to 297 according to the U.S. Department of Defense's 2025 China Military Power Report. This naval expansion, coupled with China's development of advanced anti-ship ballistic missiles, has fundamentally altered maritime security calculations in the region.

For Asian middle powers, the current moment presents both challenges and opportunities. Countries like India, Vietnam, and Indonesia are increasingly pursuing "hedging strategies"—maintaining strong economic ties with China while deepening security partnerships with the United States and its allies. India's defense budget for 2026-27 increased by 8.2% to $88 billion, reflecting its determination to develop indigenous defense capabilities while navigating complex geopolitical relationships.

The Association of Southeast Asian Nations (ASEAN) has responded to energy security concerns by announcing plans to create a shared fuel reserve capable of sustaining member states for 90 days in the event of supply disruptions. This regional cooperation mechanism, while modest in scale, represents a significant step toward building alternative frameworks for collective action.

"The future of international cooperation will likely be characterized by 'minilateralism'—smaller, more agile groups of like-minded nations addressing specific challenges," suggested Menon in a recent address at the Delhi Policy Group. "Rather than attempting to preserve outdated institutions, we should focus on building flexible networks that can evolve with changing circumstances."

As global markets continue to adjust to this new geopolitical reality, businesses and investors are increasingly factoring geopolitical risk into long-term planning strategies. The World Bank estimates that the current period of geopolitical realignment could reduce global GDP growth by 0.5-1.0 percentage points annually over the next five years, with the most severe impacts concentrated in emerging markets and developing economies.

The path forward requires not only new institutional frameworks but also a fundamental rethinking of how nations cooperate in an increasingly complex and contested global environment. As Menon's observations suggest, the absence of a coherent global order presents both risks and opportunities for reimagining international cooperation in the 21st century.