As the Cold War drew to a close in the 1990s, Francis Fukuyama famously declared it the ‘End of History’ — the definitive triumph of liberal democratic order over all ideological rivals. What he failed to anticipate was that the gravest challenges to that order would emerge not from competing ideologies, but from within its own ranks, and from a far more ancient battleground: The control of resources.
Donald Trump — himself a product of that same liberal democracy — has pursued a foreign policy that has systematically strained the multilateral frameworks undermining the post-Cold War order. His administration's actions against Iran have severely exposed the fragility of global governance. With the narrow 39 km Strait of Hormuz choking global supply chains, the world is scrambling to secure energy supplies. Demonstrable dependence on fossil fuels now poses a national security threat, prompting governments worldwide to deliberate on solutions.
This Hormuz crisis is not merely an energy disruption — it is the opening chapter of a new global arms race, fought not over weapons, but over energy security.
Nearly half the world's countries rely critically on crude oil, with nations like Japan, India, and South Korea importing up to 90% of their needs. This dependence, set against an increasingly fragile geopolitical landscape, have forced nations to wake up and smell the coffee, finally breaking the spell of their fossil fuel addiction and forcing them to look beyond a petroleum-centric future.
As tensions between the US and Iran persist, it is feared that the world may be entering another arms race — with energy as the weapon this time. The world has also witnessed Europe's acute strategic vulnerability during the Russia-Ukraine conflict, and China leveraging its dominance over rare-earth minerals as an instrument of economic coercion. These are not isolated incidents; they mark the beginning of a systemic trend. It is also feared that such strategic chokepoints for energy and trade might be weaponised in the future (such as Bab-El Mandab in the Red Sea).
{{/usCountry}}As tensions between the US and Iran persist, it is feared that the world may be entering another arms race — with energy as the weapon this time. The world has also witnessed Europe's acute strategic vulnerability during the Russia-Ukraine conflict, and China leveraging its dominance over rare-earth minerals as an instrument of economic coercion. These are not isolated incidents; they mark the beginning of a systemic trend. It is also feared that such strategic chokepoints for energy and trade might be weaponised in the future (such as Bab-El Mandab in the Red Sea).
{{/usCountry}}Such fears may prompt state actors and regional organisations to hastily move towards energy self-sufficiency, leading to the balkanisation of the energy market — the fragmentation of integrated power and gas systems into isolated regional silos, driven by protectionist policies and divergent regulations.
If this shift takes hold, it will prioritise local self-sufficiency over cross-border cooperation, leaving economically marginalised states to become energy vassals of the superpowers. Such trends could trigger a full-scale arms race to secure energy supplies, similar to the US-USSR competition in space technology and nuclear arsenals. In such contests, economic pragmatism is sacrificed for strategic advantage, and escalating mutual competition compels nations to prioritise deterrence over cooperation.
India is among the countries most acutely exposed to the Hormuz crisis. Before this conflict, the Indian economy was in a so-called Goldilocks moment — a period characterised by robust GDP growth and subdued inflation. That period is now effectively over, as India's high import dependence on energy has left it vulnerable to external shocks, as evidenced by the current LPG crisis. The consequence is a return to the familiar pressures of elevated inflation and slowing growth.
As a result, India has sought to mitigate the impact of energy price volatility in the short term — primarily through excise duty cuts, diversifying crude and LPG imports across at least 40 countries, and shielding households through unchanged retail fuel prices.
However, a quick fix for a long-standing problem only works for the short term. India needs to initiate another round of structural reforms to build long-term economic resilience against external shocks. Crucially, now is the time for India to seriously focus on energy diversification. This includes not only a structural shift toward clean energy — EVs and solar — and deeper investment in nuclear energy, but a determined push toward Atmanirbharta in the energy sector. What I mean by Atmanirbharta is a decisive reduction in import dependence.
For that, India must invest heavily in the exploration of its domestic crude reserves and other strategically vital resources, including rare-earth minerals and economically significant metals such as gold and silver — all of which can substantially bolster India's economic and strategic prospects. India should also prioritise transitioning to EVs and scaling renewable energy capacity, as such measures will be imperative in the long-run.
If India is to exert its regional influence and secure its place as a global power, it must aggressively scale these measures as the bedrock of its future economic sovereignty.
The world needs to evolve beyond the condition of running to stand still. It needs to answer some critical questions, ask some critical ones, and venture on to find solutions to ensure lasting global peace and economic stability.
(The views expressed are personal)
This article is authored by Shashwat Pandya, economic researcher.