Davos 2026, Part I: Power, Fragmentation, and the End of Easy Coordination

Introduction: Davos as a Signal, Not a Solution

Davos is often misunderstood. It is not where decisions are made. It is where directional signals appear before they are visible elsewhere. In 2026, the signal was clear: the global system is no longer built around shared assumptions about trade, security, or growth.

Instead, Davos reflected a world where:

• Cooperation is selective
• Trust is conditional
• Power is fragmented rather than centralized

This matters because geopolitics is no longer a background risk - it now shapes markets, capital flows, macro outcomes, and corporate strategy directly.

(This is Part I of a four-part series. Part II covers markets, Part III covers macro constraints, and Part IV covers corporate strategy.)

Davos Is No Longer Neutral Ground

One of the most noticeable changes in Davos 2026 was not what was said - but how the event itself felt. Rather than a single global conversation, Davos felt like multiple regional conversations with parallel agendas and carefully managed appearances.

Some delegations avoided public panels, others focused almost entirely on bilateral meetings. Security, energy, and industrial policy dominated private rooms.

The idea that Davos represents a shared global consensus now feels outdated indicating that global coordination will be harder and slower. Countries are also arriving with fixed positions, not open questions, and dialogue is about managing risk, not solving problems.

Davos did not cause this shift - it revealed it.

US–China: Strategic Rivalry, Practical Coexistence

The US–China relationship was present everywhere at Davos 2026 - even when it wasn’t discussed explicitly. Public messaging emphasized strategic competition, national security, and technology controls.
Off the record, the narrative proved more layered. Technological competition is intensifying, yet financial and commercial relationships remain substantial. Capital markets are outpacing policy adjustments.

The Numbers Behind the Narrative

Despite the rhetoric, US-China economic ties remain substantial:

The relationship is contracting - but slowly, selectively, and with significant commercial interests still intact.

The result is not full decoupling - but structured separation. This matters because markets and companies are now operating in a world where political tension is persistent, but economic interaction continues in narrower lanes.

Europe’s Uneasy Position

Europe arrived at Davos 2026 with a clear concern: it feels strategically exposed. European leaders spoke openly about Energy security, Defense spending, and Industrial competitiveness. Less openly discussed - but widely acknowledged - was anxiety about capital and talent leakage. Europe's dilemma is whether to remain open and risk dependency or protect strategically and accept higher costs.

At Davos, it became clear that Europe is choosing resilience over efficiency, even if it slows growth.

The Draghi Report on European competitiveness, released in late 2024, set the tone: Europe needs €800B in additional annual investment to close the gap with the US and China on technology, defense, and energy. The message at Davos was that this is no longer theoretical - it's urgent.

Strategic Shift Underway

Germany's €100B special defense fund, announced in 2022, is now largely deployed. France is pushing for a pan-European defense procurement strategy. Poland has emerged as one of NATO's largest defense spenders by GDP percentage.

Europe is no longer debating whether it needs strategic autonomy - only how much it is willing to pay for it.

The Rise of the “Swing States”

If Davos 2026 had quiet winners, they were not the traditional superpowers. Countries like India, Saudi Arabia, UAE, Brazil, and Indonesia used Davos not to align - but to negotiate from strength.

They matter more now because they control energy, manufacturing capacity, or labor. They are also not locked into a single bloc and benefit from competition between major powers.

The Numbers

These countries are not simply "emerging markets" anymore - they are swing states in a multipolar system.

In a fragmented world, being able to engage multiple sides is a form of power.

The Shadow Over Everything: Ukraine and Ongoing Conflict

One topic hovered over Davos without always being named directly: the ongoing war in Ukraine and its ripple effects.

Nearly three years in, the conflict has reshaped European energy infrastructure permanently, and accelerated defense spending across NATO. It has also demonstrated the limits of economic sanctions as a coercive tool and created a template for how great power conflict unfolds in a connected world.

At Davos, the question was no longer "when will this end?" but rather "what world are we building around it?"

The war has become a structural feature of the geopolitical landscape - not a crisis to be resolved, but a condition to be managed.

What This Means

Davos 2026 did not offer a vision of global unity, but offered something more realistic: a world learning to function without it.

Power is more fragmented.
Coordination is more expensive.
And stability depends less on rules - and more on leverage.

But perhaps the most important takeaway from Davos 2026 is this:

Geopolitics is no longer a tail risk. It is a core economic input.

This showed up in investment decisions, supply-chain planning, energy strategy, defense and infrastructure spending. This geopolitical backdrop explains:

• Why markets are cautious beneath the surface (Part II)
• Why macro constraints matter more than cycles (Part III)
• Why corporate strategy is shifting toward resilience (Part IV)

Davos did not predict the future.
It revealed the rules of the present.

And those rules are shaping everything that follows.