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How Small Countries Can Make Sense of a World in Flux: Strategy, Restraint, and the Craft of Living Well in a Multipolar Age

How Small Countries Can Make Sense of a World in Flux: Strategy, Restraint, and the Craft of Living Well in a Multipolar Age

Author: Zion Zhao Real Estate｜็‹ฎๅฎถ็คพๅฐ่ตต

Author's Note: This essay is based on ZSEM fireside chat with George Yeo and Dean Mato Njavro (Aula Magna, Zagreb School of Economics and Management, 17 September 2025).

Small states rarely get to choose their weather; we can, however, choose our clothing, our routes, and our company. That is the central discipline of small-state statecraft in today’s global realignment of power. In our conversation at ZSEM, we explored how countries like Croatia, Singapore, and New Zealand can navigate a more volatile, more multipolar order without losing their agency—or their cool.

I will first offer a mental map of the transition to multipolarity; then outline operating principles for small states; and finally test these principles against hard cases—from Europe’s war and China-U.S. rivalry to supply-chain stress, tariff shocks, and the perennial question of how to keep the peace at home. 










I. Reading the Climate: From Hegemony to Multipolarity

The Cold War’s long “ice sheet” has been cracking for three decades. The end state is not a tidy bipolarity but a looser, lumpy multipolarity—more like shifting ice floes than a single slab. The United States remains the largest pole in aggregate power and alliance networks, but China, Europe, India, and others have greater gravitational pull than at any time since 1945. ASEAN has codified a practical vocabulary for operating in this climate—openness, inclusivity, rules-based cooperation, and ASEAN centrality—in its Outlook on the Indo-Pacific (ASEAN, 2019). That vocabulary captures how a region of mostly small and middle powers tries to remain a venue—not a battleground—for the big ones. Vision of Humanity

Three structural realities shape this era:

  1. Interdependence is sticky—but not sacred. Decades of trade have created dense production networks; yet firm-level and macro evidence shows that spikes in trade policy uncertainty (TPU) and tariffs depress investment, raise costs, and reorder supply chains (Caldara et al., 2020; Richmond Fed, 2025; Chicago Fed, 2025; HKS, 2025). In other words, economics still matters, but politics now prices risk daily. Harvard Kennedy School+3matteoiacoviello.com+3Federal Reserve+3

  2. Security dilemmas are sharper at short range. The U.S. Indo-Pacific Command’s headquarters sits at Camp H. M. Smith outside Honolulu, a reminder that any U.S.–China crisis would implicate U.S. forces across the Pacific (USINDOPACOM, n.d.). China has fielded longer-range anti-ship and intermediate-range missiles (e.g., DF-26), complicating carrier operations far from its shores (CSIS Missile Threat, 2025). These dynamics make miscalculation costlier for both sides. PACOM+1

  3. Debt and distribution tensions are back. Global debt reached record highs in 2025, raising rollover and interest-burden risks (IIF/Reuters, 2025). Meanwhile, wealth and income are concentrated at historic levels (World Inequality Report, 2022; Oxfam/Washington Post, 2025). Economic stress fuels political volatility—the soil in which protectionism and grievance politics thrive. Reuters+2fpr.se+2

II. A Playbook for Small States: Venice, Ragusa, and Strategic Discipline

Two Adriatic city-states offer a useful parable. Venice projected power through a navy so formidable that its Arsenal famously could turn out ships at a pace that astonished contemporaries (Tracy, 2003). Dubrovnik/Ragusa chose a different weapon: guileful neutrality backed by treaties and tribute with the Ottomans to keep a buffer from Venice—a bargain that even helped create Bosnia and Herzegovina’s narrow outlet to the Adriatic at Neum, a corridor formalized after the 1699 Treaty of Karlowitz (Britannica; Wikipedia/Neum). United Nations+1

From these archetypes and ASEAN practice, four principles for small states follow:

  1. Never be alone in a closed room with a giant. Prefer open venues where several big players are present. Institutionalize this preference: cultivate multiple deep ties so that pressure from one pole is balanced by the presence of others. (ASEAN’s “centrality” and open architecture are precisely this tactic.) Vision of Humanity

  2. Be predictably neutral—and use it. Neutrality is not passivity; it is an asset to host, convene, and mediate. Ragusa paid tribute to secure autonomy; modern small states pay via rules, transparency, and reliability. Wikipedia

  3. Diversify everything. Trade routes, technology stacks, talent pipelines, and capital sources. TPU research shows why: uncertainty taxes investment; diversification lowers the effective tax (Caldara et al., 2020). matteoiacoviello.com

  4. Make peace a reflex. In a region dotted with friction points—from maritime disputes to border incidents—small states must be instinctive temperature-reducers. The alternative is to import other people’s wars. (ASEAN’s documents emphasize this repeatedly.) Vision of Humanity

III. Testing the Playbook Against Hard Cases

1) War and memory in Europe

Europe’s most immediate challenge is ending the killing in Ukraine while preserving a just peace. The historical record reminds us that escalatory spirals and accident risks are real. During NATO’s 1999 campaign over Yugoslavia, a U.S. strike hit the Chinese Embassy in Belgrade, killing three journalists; Washington called it a tragic accident and publicly explained how targeting errors occurred (U.S. State Department, 1999; CIA, 1999). The episode still shapes Chinese threat perceptions. Kosovo’s later declaration of independence in 2008—and the ICJ’s advisory opinion that such a declaration was not prohibited by international law—illustrate how contested sovereignty questions can be managed with law and diplomacy, even as political disputes persist (Britannica; ASIL/ICJ). asil.org+3State.gov+3CIA+3

Implication for small states: keep legal process, humanitarian norms, and de-escalation channels alive—even when politics runs hot. The goal is not maximalist victory but durable arrangements that future generations can live with.

2) U.S.–China rivalry and the Taiwan flashpoint

Much commentary assumes war over Taiwan is imminent. Wargaming by the Center for Strategic and International Studies (CSIS)—24 runs of a Taiwan invasion scenario—found that while a Chinese amphibious invasion could often be defeated, the costs would be devastating for all sides, and Taiwan’s economy would be shattered (CSIS, 2023). The report underscores two takeaways relevant to our discussion: (i) neither side has a clean, low-cost path to victory; (ii) escalation ladders (e.g., blockade or strikes on logistics) are varied and dangerous (CSIS, 2023; 2025). As a matter of basing reality, USINDOPACOM’s headquarters at Camp H. M. Smith testifies to how directly Hawaii and Guam could be implicated; China’s DF-26 class missiles (range ~4,000 km) are explicitly framed in open sources as threatening U.S. bases and ships across that theater (USINDOPACOM; CSIS Missile Threat). Missile Threat+4CSIS+4csis-website-prod.s3.amazonaws.com+4

Implication for small states: caution and clarity. Avoid steps that can be read as support for either unilateral change to the status quo or for “using” Southeast Europe or Southeast Asia as chessboards. Host dialogue; lower risk; keep commerce flowing legally; and avoid being an accessory to adventurism by anyone.

3) Tariff shock, supply chains, and the cost of doing business

When major economies weaponize tariffs, the economic weather worsens. Evidence from the Federal Reserve system and peer-reviewed research shows that tariffs and trade policy uncertainty depress investment, raise producer prices, and can lower real incomes (Caldara et al., 2020; Richmond Fed, 2025; SF Fed, 2025). In 2025, analyses estimated large effective tariff increases in the United States, with pass-through to prices likely (Yale Budget Lab; HKS, 2025). For small economies that live by trade finance, this translates into higher working-capital costs and greater price volatility. Harvard Kennedy School+4matteoiacoviello.com+4richmondfed.org+4

Implication for small states: double down on regional liberalization to offset external shocks. The Regional Comprehensive Economic Partnership (RCEP)—covering ASEAN, China, Japan, South Korea, Australia, and New Zealand—gradually eliminates tariffs on up to 90% of goods over 20 years and harmonizes rules of origin, creating a single certificate that can be used across members (ASEAN, 2022; 2024). For Southeast Asia, that’s a pragmatic umbrella when global rain sets in. Encyclopedia Britannica+1

4) Europe’s China debate: Competition without caricature

European industry faces real competitive pressure in EVs, batteries, and green tech. But caricaturing China as an across-the-board enemy risks policy overreach. China is ASEAN’s largest trading partner, and decoupling at scale would be self-harming for much of the Global South and parts of Europe (ASEANstats, 2025). Smarter is what trade negotiators call “learn-and-compete”: condition market access on local investment and joint ventures in targeted areas—while accelerating Europe’s own technology diffusion and scale-up. John W Bills

Implication for small states: maximize optionality. Welcome both U.S. and Chinese capital and expertise where consistent with security and competition rules; insist on transparency and reciprocity; and invest in your own absorptive capacity so that technology transfers stick.

IV. Policies That Make Neutrality Credible

1) Build convening capacity. Being a trusted host for talks, standards workshops, and dispute-avoidance exercises is a power multiplier for small countries. ASEAN’s habit of “inclusive convening” is a proven model (ASEAN, 2019). Vision of Humanity

2) Harden economic resilience. Diversify suppliers; insist on multi-country manufacturing footprints; use regional pacts (RCEP) to cut red tape; expand trade finance backstops to smooth tariff shocks (ASEAN, 2022; 2024; Caldara et al., 2020). Encyclopedia Britannica+2Wikipedia+2

3) Keep social contracts strong. Homeownership is one reason Singapore’s society is cohesive under stress: about 77–80% of resident households live in public HDB flats, and homeownership exceeds 90%—unusually high for a global city (HDB, 2024; SingStat, 2024–2025). Public housing is not a panacea, but it is a shock absorber—spreading asset ownership and lowering inequality of life chances. HDB+1

4) Invest in moral leadership. Peace is not just institutions; it is the habits of seeing each other as human. In 2019, Pope Francis and the Grand Imam of al-Azhar signed the Document on Human Fraternity, and in 2020 the UN designated February 4 as the International Day of Human Fraternity—a practical lodestar for inter-faith diplomacy (Holy See; UN General Assembly, 2020). In a season of identity politics, such “moral infrastructure” matters. CSIS+1

V. From Theory to Tactics: A Small-State Checklist

  1. Map your exposure. Quantify dependence on the top five markets and technologies; run TPU scenarios (Caldara et al., 2020). matteoiacoviello.com

  2. Broaden the room. Whenever a major negotiation looms, bring other majors into view—through EU, ASEAN, or minilateral formats. (ASEAN, 2019). Vision of Humanity

  3. Codify neutrality. Publish transparent principles for participation in security and technology initiatives; align with international law (ICJ/ASIL on Kosovo). asil.org

  4. Regionalize where global frays. Use RCEP-style tools for tariff relief and rules-of-origin efficiency. Wikipedia

  5. Social ballast. Protect shared assets—housing, education, public health—to keep politics from fragmenting under external pressure (HDB; SingStat). HDB+1

Conclusion: Cunning and Conscience

A Vatican official once quipped that a good pope must be “cunning”; later he added, more importantly, “holy.” Leaders in small states need a measure of both. Cunning to keep multiple doors open, to read the weather before others do, and to avoid being trapped on the wrong ice floe. Conscience to default to peace, to guard social fairness at home, and to remember that every “gain” achieved by humiliating a neighbor seeds the next crisis.

We cannot command the climate. But with strategic discipline, diversified bets, and moral clarity, small countries can still choose their clothing, their routes, and their company—and arrive intact at the other side of this transition.



Your Strategic Partner in a Multipolar World—For Singapore Property and Beyond

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ๅœจๅคšๆžๅŒ–ๆ—ถไปฃ，็”จๅฎ่ง‚่ง†่ง’ๅšๆ–ฐๅŠ ๅก่ต„ไบง้…็ฝฎ。

ๆˆ‘ๆ˜ฏไธ€ๅๆ–ฐๅŠ ๅกๆˆฟๅœฐไบง้กพ้—ฎ，ๅŒๆ—ถ็ฒพ้€šๅฎ่ง‚็ปๆตŽ、ๅ›ฝ้™…ๅœฐ็ผ˜ๆ”ฟๆฒปไธŽๅคš่ต„ไบงๆŠ•่ต„。ๆˆ‘ๆฏๆ—ฅๆŠ•ๅ…ฅๅคง้‡ๆ—ถ้—ด็ ”็ฉถไธŽๅ†™ไฝœ，ๆŠŠๅคๆ‚ๅ˜ๅŒ–่ฝฌๅŒ–ไธบๅฏๆ‰ง่กŒ็š„ๆŠ•่ต„ๅŠจไฝœ，ไธบๅ›ฝ้™…/ไธญๅ›ฝๅŽไบบ/ไธœๅ—ไบš/ๆ–ฐๅŠ ๅกๆœฌๅœฐๅฎขๆˆท（ๅซ่ถ…้ซ˜ๅ‡€ๅ€ผ、ๅฎถๅŠž、ๆœบๆž„、้™ช่ฏปๅฎถ้•ฟ、็•™ๅญฆๅฎถๅบญ）ๆไพ›ๆœๅŠก。

ๆ ธๅฟƒไผ˜ๅŠฟ：

  • ไธๆญข็œ‹ๆฅผๅธ‚，ๆ›ด็œ‹ๅ…จ็ƒๅ‘จๆœŸ。 ไปฅๅˆฉ็Ž‡、ๆตๅŠจๆ€ง、ไบงไธšไธŽๆ”ฟ็ญ–ไธบๆก†ๆžถ，้ฟๅ…้€†ๅŠฟๅ†ณ็ญ–。

  • ็ป„ๅˆ่ง†่ง’้…็ฝฎ。 ๅฐ†ๆ–ฐๅŠ ๅกๆˆฟๅœฐไบง็บณๅ…ฅ่ต„ไบง็ป„ๅˆ，ๆณขๅŠจๆ›ดไฝŽ、็งŸ้‡‘ๅฆ‚่‚กๆฏ、้•ฟๆœŸๅ…ทๅค‡ๅขžๅ€ผๆฝœๅŠ›。

  • ๆณ•ๅพ‹ไธŽๅˆ่ง„ๆŠŠๅ…ณ。 ๆ–ฐๅŠ ๅกๅœŸๅœฐไธŽๅ•†ๆณ•ไธ“ไธš่ƒŒๆ™ฏ，ๅฎŒๅ–„ๆกๆฌพไธŽ้ฃŽ้™ฉๆŽงๅˆถ。

  • ๅ†›ไบบไฝœ้ฃŽ，็จณๅฅๆ‰ง่กŒ。 ไฝœไธบๆ–ฐๅŠ ๅกๆญฆ่ฃ…้ƒจ้˜ŸไธŠๅฐ‰（่ฟž้•ฟ），ๅผบ่ฐƒ็บชๅพ‹、่ฏšไฟกไธŽๆต็จ‹ๅŒ–็ฎก็†。

็Žฐๅœจๅฐฑ่”็ณปๆˆ‘（ไธญ่‹ฑๆ–‡็š†ๅฏ），ไธบๆ‚จๅˆถๅฎš็จณๅฅๆ”ถ็›Š + ้•ฟๆœŸๅขžๅ€ผ็š„่ต„ไบง้…็ฝฎๆ–นๆกˆ，่ฎฉไธ็กฎๅฎš็š„ไธ–็•Œ，ไนŸ่ƒฝไธบๆ‚จๆŒ็ปญๅˆ›้€ ็กฎๅฎš็š„็Žฐ้‡‘ๆตไธŽๅ›žๆŠฅ。




In-text citations (APA style)

  • ASEAN. (2019). ASEAN Outlook on the Indo-Pacific. ASEAN Secretariat. Vision of Humanity

  • ASEAN. (2022; 2024). RCEP factsheets and overview. ASEAN Secretariat. Encyclopedia Britannica+1

  • Caldara, D., Iacoviello, M., Molligo, P., Prestipino, A., & Raffo, A. (2020). The economic effects of trade policy uncertainty. Journal of Monetary Economics. (See Fed/IFDP and policy uncertainty site). Federal Reserve+2matteoiacoviello.com+2

  • Chicago Fed. (2025). What can we learn about the costs and benefits of tariffs? Federal Reserve Bank of Chicago

  • CSIS. (2023). The First Battle of the Next War: Wargaming a Chinese Invasion of Taiwan; (2025). Lights Out? Wargaming a Chinese Blockade of Taiwan. csis-website-prod.s3.amazonaws.com+2CSIS+2

  • CSIS Missile Threat. (2025). DF-26 profile. Missile Threat

  • HDB (Singapore). (2024). Sustainability Report FY2023; Key Statistics FY2023. HDB+1

  • HKS (Harvard Kennedy School). (2025). Explainer: How do tariffs work? Harvard Kennedy School

  • IIF via Reuters. (2025). Global debt hits record over $324 trillion. Reuters

  • UNGA. (2020). International Day of Human Fraternity (Resolution establishing 4 February). PACOM

  • USINDOPACOM. (n.d.). About USINDOPACOM. PACOM

  • Washington Post/Oxfam. (2025). World’s richest 1% wealth gains since 2015. The Washington Post

  • World Inequality Lab. (2022). World Inequality Report 2022. (summary PDF). fpr.se

  • Kosovo and 1999 context: U.S. State Dept. (1999) briefing; CIA (1999) statement; Britannica (Kosovo independence); ASIL (ICJ advisory opinion). asil.org+3State.gov+3CIA+3

  • Ragusa/Neum: Wikipedia (Neum entry summarizing Karlowitz boundary) and scholarly/encyclopedic material on Ragusa’s Ottoman suzerainty. Wikipedia+1

References (APA)

ASEAN. (2019). ASEAN outlook on the Indo-Pacific. ASEAN Secretariat. https://asean.org/ (see document page) Vision of Humanity

ASEAN. (2022). RCEP at a glance. ASEAN Secretariat. Encyclopedia Britannica

ASEAN. (2024). RCEP rules of origin and tariff commitments overview. ASEAN Secretariat. Wikipedia

Caldara, D., Iacoviello, M., Molligo, P., Prestipino, A., & Raffo, A. (2020). The economic effects of trade policy uncertainty. Journal of Monetary Economics, 109, 38–59. (See Federal Reserve IFDP 1256; Policy Uncertainty resource.) Federal Reserve+2matteoiacoviello.com+2

Chicago Fed. (2025). What can we learn about the costs and benefits of tariffs? Federal Reserve Bank of Chicago, Chicago Fed Letter No. 512. Federal Reserve Bank of Chicago

CSIS (Center for Strategic and International Studies). (2023). The first battle of the next war: Wargaming a Chinese invasion of Taiwan. Washington, DC: CSIS. csis-website-prod.s3.amazonaws.com

CSIS. (2025). Lights out? Wargaming a Chinese blockade of Taiwan. Washington, DC: CSIS. csis-website-prod.s3.amazonaws.com

CSIS Missile Threat. (2025). DF-26 (Dong Feng-26). https://missilethreat.csis.org/ Missile Threat

HDB (Housing & Development Board). (2024). Sustainability report FY2023. Singapore: HDB. HDB

HDB. (2024). Key statistics FY2023. Singapore: HDB. HDB

Harvard Kennedy School. (2025). Explainer: How do tariffs work and how will they impact the economy? Cambridge, MA. Harvard Kennedy School

Institute of International Finance. (2025, May 6). Global debt hits record over $324 trillion (coverage by Reuters). Reuters

United Nations General Assembly. (2020). International Day of Human Fraternity (Resolution establishing 4 February). UN. PACOM

United States Indo-Pacific Command. (n.d.). About USINDOPACOM. https://www.pacom.mil/ PACOM

U.S. Department of State. (1999, June 17). Accidental bombing of the P.R.C. Embassy in Belgrade (briefing). State.gov

U.S. Central Intelligence Agency. (1999). DCI statement on the Belgrade Chinese Embassy bombing. CIA

Washington Post. (2025, June 26). World’s richest 1% increased wealth by $33.9 trillion since 2015, Oxfam says. The Washington Post

World Inequality Lab. (2022). World inequality report 2022 (summary). Paris: WIL. fpr.se

Europe/Western Balkans history references

Britannica. (Updated 2025). Kosovo: Self-declared independence. Encyclopedia Britannica

Neum (entry). (Updated 2025). In Wikipedia. (Background on Karlowitz corridor separating Ragusa from Venice.) Wikipedia

Republic of Ragusa (entry). (Updated 2025). In Wikipedia. (On Ottoman suzerainty and tribute.) Wikipedia

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