Danny Quah - Academic

The word "strategic" does a lot of work. If it didn't appear in the title this discussion with Piti Disyatat, Selena Ling, and Albert Park, expertly moderated by Pierre-Olivier Gourinchas, would have taken a completely different arc.

This recording https://www.youtube.com/watch?v=MluB6dYloNk&t=4s has what we all said.

My key points --- fleshed out with real-world detail in the event --- concerned how even as the global economy is ruptured by ever more disturbances and policymakers focus more on building resilience for economic security, what is key is that the nature of shocks has changed.

Geopolitics is not just more shocks. It is shocks that bear intentionality.

Economic security is the capacity of the economy to sustain societal well-being and prosperity against shocks. We need to improve it by acknowledging that natural-event shocks (pandemics, crop failures, floods, tsunamis) take a different set of tools to address than geoeconomic shocks: tariffs, sanctions, supply-chain disruptions, and export controls come with intentionality from adversarial nations.

Natural-event shocks put the policymaker in a single-agent optimisation problem, for which pure strategies are best responses. On the other hand, we know from game theory that best responses against intentional shocks can call for mixed strategies, not least to lower our predicability for our adversary.

Small states need to expand their strategy space in a world of geoeconomics and strategic interdependence. Alignment, acquiescence, and adaptation and mitigation would look very different in just an interdependent world, rather than a strategically interdependent one.

Quah, Danny. 2026. "Southeast Asia's Crossfire Shock: From Multilateralism to Geoeconomics and Strategic Interdependence", Lee Kuan Yew School of Public Policy Working Paper (Jun)
https://www.DannyQuah.com/Storage/1780213627-Danny.Quah-SEA-Crossfire-Shock-Multilateralism-Strategic-Interdependence.pdf

When you run into Nobel Laureate fellow journalist, fellow Princeton alumni, fellow ASEAN in the airport lounge, of course you go Asian and take the wefie.

When we're with our own, i.e., the 80% "rest of us" who live in neither the US nor China, and we are both idealist and realist enough to want to seek our own destiny (not be just a wannabe hanger-on) we get to conjecture and debate:

Our CN-US table, just for fun:

While in other developments:

1. America has a long history of economic nationalism---from over two centuries ago in Alexander Hamilton's mercantilism, from 150 years ago in Abraham Lincoln's protectionist tariffs, from the 1860 Republic Party platform insisting that industrial policy and protectionism were the bulwark of America's economic strength, and not least from Roosevelt's hesitation on going to war alongside Britain against N**i Germany because of America's strong isolationist sentiment.
2. This history of American leadership sits not uneasily with the current Administration's actions. And it far outweighs the brief 80-year period since WW2 that saw America come out to build a rules-based multilateral order that (mostly) worked for it and for the rest of the world. What single event changed America's mind on how it needed to deal with the rest of the world?

(My own candidate for now focuses on the circle of developments surrounding two things: the Nuremberg Trials and America's Cold War against the Soviets. Both these drove America to no longer stand apart in isolation from others. In the run-up to Nuremberg, America's young men had to fully stare evil in the face when they entered the N**i Concentration Camps at Auschwitz and Treblinka. For them Germany could no longer be viewed as just an economically successful hyper-militarized Great Power. Those young American men went back to the US, entered higher education through the GI Bill, and transformed America's politics. And, just to be clear on the dates, America did not come into the war because they were going to rescue the people targeted by these atrocities. The first significant Allied mention of N**i extermination programs occurred only in Dec 1942, a full year after Pearl Harbour. America's primary reason for going to war against Germany, for coming out in the world, was not to combat Hitler's atrocities on human rights.

Even as each time we all step into a river no longer the same, Wright's Bar remains.

What special charcteristics of Asia might help it better navigate the new international economics of strategic interdependence?

Quah, Danny. 2026. "Asia's Evolving Development Landscape: The International Economics of Strategic Interdependence" (June)
https://www.DannyQuah.com/working-papers/2026-06-Danny.Quah-Asia-Evolving-Landscape-IESI/

Abstract: Asia's remarkable developmental success has been founded on, among other things, mutually gainful cross-border exchange of goods and services. But today's geostrategic competition and rupturing multilateralism mean novel structural constraints. The new international economics of strategic interdependence upends traditional thinking on trade openness, economic efficiency, and the benefits of price-taking and norm-abiding. New strategies are needed, where Asia's small states reassess previous strategies of parametric acceptance of prices and norms. The new order small states build can be a flexible topology of pathfinder, incentive-compatible, G-minus, multilateral-enough coalitions, held together by inadvertent cooperation, rather than sweeping treaties or grand institutional re-design.

Working paper, so comments welcomed

We're Asian. If we're gonna be in London for a while, of course I'm going to fill up on carrot cake and dimsum and spring rolls ahead of time.

Dear DeepSeek - you are much better than you give yourself credit for.

(You see, I managed to read your thought process and the draft answer you were providing, before you suddenly deleted everything.)

Some days it's like the rule is, practically everyone I see I must have already known for decades.

Is US dollar-dominance in the International Monetary System a red herring?

At Asia Monetary Policy Forum 2026, I was, along with Barry Eichengreen, discussant for Eswar Prasad's paper on Features and Fragilities of the International Monetary System. Eswar's paper holds many rich insights, as does Barry's discussion.

I chose to focus on the paper's documenting how much the USD continues to dominate the IMS. In Prasad's view, however one judges USD-dominance resilience, it is certainly unsavory to have a fragmented currency system as the only other alternative. But that situation, in his analysis, is where the world is currently sits.

I took no issue with whether there is some other currency (RMB, BRICS, or otherwise) waiting in the wings to take over from the USD. I asked, instead, why in an era when so much agreement has gathered on the shift in world order away from US unipolarity, yet the USD-dominant IMS seems so resistant to change.

I argued three points: First, it might be irrelevant which country's currency is dominant: so the focus on USD dominance is a red herring. What matters is some currency is dominant, it doesn't matter whose. Second, world order is moving away from US dominance, but it is a fringe trope that that shift is towards fragmentation. Instead, most observers consider the move is, instead, towards multipolarity and diversification, including G-minus plurilateral leaderless coalitions of the willing. So if by multipolarity and diversification we mean greater balance, less inequality, and increased resilience in world order, such a move is not at all unsavory. Finally, I argued that the real bottleneck in shifting the IMS is not the currency, but the pipes through which that currency flows, i.e., the network of messaging systems (including SWIFT) and conduits. But, unobserved to us when we simply count up USD shares of different cross-border transactions, the conduits now include alternative multilateral (BIS-incubated) platforms such as mBridge and Nexus, in addition to the China-built CIPS. ...

The world just needs to be multilateral-enough

Small states are traditionally viewed as norm-takers in the international system, the same way that in economics, consumers and firms are price-takers. However, while in economics there is a theorem that says price-taking in markets leads to systemic efficiency, the study of world order admits no analogous proposition.

So, whether at central banks roundtables or neighbourhood coffeeshop conversations, even as discussions range widely and organically, when I discuss small states navigating the new world disorder, I seek to communicate three points consistently:

1. Accept the new world disorder. The old world order was rules-based and multilateral but also imperfect. Now and then, it allowed Great Powers to do things they should have asked permission for beforehand or at least forgiveness for afterwards. But for all its faults, the old world order pointed everyone in the direction of three valuable traits of rules-based multilateralism: (1) a level playing field; (2) commitment to peaceful dispute resolution; and (3) cooperation in the face of common challenges. The new world disorder gives up on all three. If for us those properties matter, we do not have to ask to bring back the old world order. Instead, we need only to ask how we get the world multilateral-enough.
2. World order is now well past US-China-rivalrymaxxing. Conventional geostrategic competition is no more the apex disruptor of the international system. Continuing to fetishize that only holds back progress. During the US-Soviet Cold War, political and economic ideologies were in such opposition that ordinary people everywhere understood how their entire way of life and system of government would change if the other side won. Today, between China and the US there do not exist any such separating hyperplanes: now the trope is fringe, not mainstream, that one side represents democracy and freedom, while the other, totalitarianism and tyranny. Instead, more relevant, world order is hit by an interlinked, correlated set of three significant shocks....