Berlin’s Harnack House hosted a two-day workshop (26–27 November 2025) on Geopolitical Conflict, Trade and Sanctions , organised by Kai A. Konrad from the MPI for Tax Law and Public Finance and Marcel Thum from TU Dresden. The workshop brought together leading economists and political scientists using innovative empirical and theoretical approaches to study key questions in geopolitics and geoeconomics.
From the U.S.–China trade war to Trump’s “Liberation Day” tariff announcements, recent events show how geopolitical competition increasingly shapes international trade. As part of the workshop Haishi (Harry) Li (University of Hong Kong) uncovered the hidden costs of industrial subsidies, showing how affirmative anti-dumping and countervailing rulings can offset their intended benefits. Gabriel Felbermayr (Austrian Institute of Economic Research - WIFO) used the gravity model to illustrate what constitutes a “fair” bilateral trade balance, revealing that most U.S. bilateral trade imbalances can be explained without asymmetric trade costs.
As geopolitical rivalry intensifies, sanctions have become one of the most prominent tools states use to gain leverage and defend norms. Gerald Schneider (University of Konstanz) showed how their effectiveness differs between norm-breaking and norm-strengthening measures and between allied and non-allied states. Afiq bin Oslan (MPI for Tax Law and Public Finance) modeled brinkmanship, demonstrating how uncertainty arises from leaders’ incomplete information about public preferences. Pei-Yu Wei (Dartmouth College) used a survey experiment to show how public opinions in third-party countries are affected by sanctions depending on state relations and perceived legitimacy. Marcel Thum analysed how sanctioning states can close enforcement loopholes by negotiating with multiple loophole countries and compares different sequential and simultaneous bargaining strategies. Dzhamilya Nigmatulina (University of Lausanne) provided comprehensive evidence on the substantial economic effects of post-2022 trade sanctions on Russia. A new dataset encoding all government-imposed restrictions from 1992 to 2024 was introduced by Timothy M. Peterson (Arizona State University).
Power struggles also unfold on battlefields and through critical infrastructure. Scott Gates (University of Oslo) presented a paper that traces the territorial decline of the Islamic State using geospatial data, showing how organizational structures and aerial bombardment shape patterns of control. Using the CableHist dataset that covers all international undersea cables from 1850 to 2025, Christoph Trebesch’s (Kiel University) presentation revealed how global rivalry triggers strategic investments and the vulnerabilities of today’s undersea cable system. Drawing on a comprehensive review of the economics of conflict, Stergios Skaperdas (University of California, Irvine) demonstrated how adversarial interactions impose substantial economic costs, reshape incentives, and invalidate traditional first-best model predictions.
The Keynote Lecture, delivered by Dan Smith, former Director of the Stockholm International Peace Research Institute (SIPRI), opened with two vivid examples of how instability can erupt from unexpected triggers—Bouazizi’s self-immolation in Tunisia and the mass protests sparked by Chile’s red tide crisis—illustrating how human, national, and ecological security interact. He called for taking a 360-degree view of security, urging policymakers to move beyond siloed approaches and recognise how different dimensions of security reinforce one another. In the open discussion session, participants turned to the highly debated topic of Europe’s strategic autonomy. Following an introduction by Martin Bader (ETH Zurich), emphasising the need for the EU to “waste money wisely” across areas of military spending, the discussion explored governance structures, energy and technological autonomy and nuclear deterrence.
Geopolitical competition unfolds through markets, sanctions regimes, territorial conflicts, and vulnerabilities in global infrastructure. The workshop not only deepened understanding of these interconnected dynamics but also highlighted—echoing Dan Smith’s keynote—the need to view human, national, and ecological security as integrated rather than separate spheres.
Image 1: Kai Konrad welcomes the participants (© Yixuan Shi)
Image 2: Gabriel Felbermayr presents ‘Unfair bilateral trade imbalances’ (© Yixuan Shi)
Image 3: Afiq bin Oslan gives his presentation ‘Brinkmanship in the public sphere’ (© Yixuan Shi)
December 2025