The foundations of the global trading system on which prosperity depends are under attack. In an era of military conflict, disrupted shipping routes, and tariffs misused as instruments of coercive power, Lübeck’s June 1226 Reichsfreiheitsbrief, which helped to pave the way for the city’s rise at the centre of the Hanseatic trading world, is more than a historical document of local significance. It is a stern warning to policymakers around the globe that, by weakening the rules on which global trade depends, they are actively undermining the conditions for economic growth, price stability, employment, and—ultimately—socio-political stability.
Senior officials representing the member countries of the Bretton Woods institutions will convene in Washington for the Spring Meetings from 13 to 18 April 2026. They do so at a moment when, as the heads of the International Monetary Fund, the World Bank Group, and the World Food Programme warned on 8 April, the ‘Middle East war is upending lives and livelihoods in the region and beyond’. The fighting had already triggered one of the largest disruptions to global energy markets in modern history. Sharp increases in oil, gas, and fertiliser prices, together with transport bottlenecks, would inevitably lead to rising food prices and food insecurity. Corresponding policy responses will now have to be found at a time when the multilateral development architecture itself is under growing political pressure, while global co-ordination on decelerating growth, intensifying geopolitical rivalry, rising public debt, increasing trade fragmentation, mounting reconstruction needs, and the broader threat of climate change is visibly faltering. Some priorities, such as the green transition, have slipped down the agenda, while others, especially tariffs and trade, are increasingly being drawn into the maelstrom of geopolitics.
Nowhere is this wider multilateral drift more visible than in trade and global institutional leadership. Since 2019, the World Trade Organisation’s dispute-settlement system has been de facto paralysed after the US blocked appointments to the Appellate Body. The WTO’s 14th Ministerial Conference in Yaoundé, Cameroon, ended on 29 March 2026 without agreement on a final package of outcomes, including meaningful institutional reform and the extension of the moratorium that has kept digital trade free from customs duties. More broadly, multilateral leadership itself is under strain. New ad hoc initiatives, such as US President Trump’s ‘Board of Peace’, presented as a vehicle for rebuilding Gaza and managing conflicts beyond established United Nations frameworks, risk further diluting established standards of multilateral governance in internationally co-ordinated reconstruction efforts. At the same time, the search for the next UN Secretary-General, which depends on the non-objection of all permanent members of the UN Security Council, risks becoming another test of institutional credibility at a moment when effective multilateral leadership is already in especially short supply.
Losing sight of principles
This is not just another phase of geopolitically driven trade tension, nor merely a further escalation of it. It is something more serious: the rejection of the principles and institutions that once helped to govern the global economy. Since the 44-nation United Nations Monetary and Financial Conference at Bretton Woods, New Hampshire, in July 1944, the multilateral economic order has rested on the idea that international co-operation, however imperfect, could help to sustain ‘high levels of employment and real income’ (IMF, 1944) and assist in the ‘reconstruction and development … of economies destroyed or disrupted by war’ (World Bank, 1944). Yet the central promise of the rules-based trading order—that disputes would be contained within agreed institutions, procedures, and obligations recognised by all major participants—is now visibly fraying. Chokepoints can be threatened unilaterally, tariffs revived outside meaningful constraint, and trade policy folded into a wider vocabulary of coercion, strategic rivalry, and political intimidation. The question is no longer simply whether trade will remain open, but whether it will remain governed.
That is why the 800th anniversary of Lübeck’s Reichsfreiheit matters. The Imperial Charter of Freedom granted to Lübeck by Emperor Frederick II in June 1226 confirmed its heightened degree of political autonomy, secured important trading privileges, and strengthened earlier customs exemptions granted by Emperor Frederick I Barbarossa in 1188. More importantly, it helped to establish the legal and political conditions under which commerce could be protected against arbitrary interference from rival powers. Lübeck’s rise was not the result of power escaping constraint, but of power being disciplined through recognised rights, legal status, and a more secure framework for exchange. The Reichsfreiheitsbrief stipulated that merchants loyal to the city who came by land or sea for business were to be granted safe entry and departure, provided they paid the dues legally required of them. That legal assurance, combined with Lübeck’s strategic location at the meeting point of key trade routes, helped to enable the city to negotiate privileges more independently, expand its network, and pave the way for its later prominence within the Hanseatic world.
This institutional context matters because prosperous trade has never depended on openness alone. In the Middle Ages no less than today, commerce relies on legal and commercial predictability. Merchants invest, ships sail, ports expand, and networks deepen when the conditions of exchange are durable enough to command trust. That is why Lübeck’s Reichsfreiheitsbrief, and the more than four centuries of Hanseatic commercial success that followed, remain relevant as a key element of a much longer history. They point to a lesson that is both old and newly urgent: trade flourishes where authority is legible, rights are recognised, and political interference is limited by law.
From today’s vantage point, that is the striking continuity. Long before ‘rules-based trade’ became part of the modern diplomatic lexicon, northern Europe had already grasped a fundamental truth about economic life: maritime trade flourishes not simply because goods can be transported, but because rules make that movement beneficial to all parties. Ships need more than water; they need confidence that obligations will be honoured, tolls constrained, rights protected, and disputes settled without military violence, arbitrary seizure, or political extortion. Lübeck’s anniversary is therefore not just a local or regional remembrance. At a time when vital maritime chokepoints such as the Strait of Hormuz and the Bab al-Mandab are threatened by conflict and coercion, it is an invitation to reflect on the preconditions of prosperity itself.
Gambling with future prosperity
Adam Smith gave classic expression to an insight that trading societies such as the Hanse had long been learning in practice. Published 250 years ago, The Wealth of Nations articulated a response that had taken shape against feudal constraint and mercantilist restriction. It did so with unusual clarity, giving voice to a lesson already visible in the history of commercial development: prosperity tends to grow when exchange is widened and restrictions reduced. Smith’s aim was not to abolish economic order, but to imagine one beyond feudal privilege and mercantilist restriction, grounded in the productive force of functioning markets. At the same time, he did not envisage a world without institutions. He envisaged one in which institutions ceased to suffocate the gains from exchange and instead provided the framework within which they could flourish. Later trade theorists, from David Ricardo to Eli Heckscher and Bertil Ohlin, refined and formalised this insight. But the core argument remained the same: freer exchange, when embedded in a stable legal and institutional order, is not a threat to prosperity, but one of its preconditions.
That distinction matters because much contemporary debate still gets it wrong in both directions. Free trade is too often praised as though its benefits were automatic and fairly shared, as though markets were capable of regulating themselves. Its critics, meanwhile, have often denounced commercial liberalisation as an ideological façade favouring the strong. The deeper historical lesson is more demanding. Markets do not become truly freer when rules recede; they become more vulnerable to domination by those who are already strongest. Prosperity has tended to expand where exchange was opened within frameworks of law, reciprocity, and institutional confidence. Lübeck’s charter, the Hanseatic trading world, and Smith’s critique of mercantilist restriction all point, in different ways, to the same conclusion.
If that was the long arc of commercial modernity, the decisive rupture occurred exactly a decade ago. The Brexit referendum in June 2016 and Trump’s first election victory in November of that year marked a profound break, including in the political imagination of trade. In Britain, economic interdependence was recast as national vulnerability and shared rules as democratic loss. In the US, tariffs re-emerged, despite the cautionary legacy of Smoot-Hawley in 1930, not merely as bargaining devices but as expressions of sovereign will and symbols of presidential power. In both cases, the underlying message was strikingly similar: that shared prosperity had become suspect, institutions intrusive, and openness less a source of national strength than a concession to others.
A decade later, that rupture looks less like a passing mood than like the beginning of a new, likely less prosperous, and more unequal era. Brexit was not simply a British anomaly; it was an early democratic endorsement of fragmentation. Trump’s first victory was not merely an electoral accident; it signalled the return of an American politics that was coercive in trade relations, contemptuous of multilateral discipline, and sceptical of the very institutions the US had once championed. More recent debates about economic nationalism, alliance commitments, institutional withdrawal, and the instrumental use of tariffs only reinforce that impression. Taken together, the shocks of 2016 did not by themselves destroy the rules-based trading order, but they did accelerate its delegitimation at its political core.
Confronting challenges from within
The neo-mercantilist ‘America First’ approach to economic policymaking has become a major stressor on the global trading order, the multilateral architecture, and the effectiveness of international financial institutions. In turning against the role it once played as chief architect of the liberal international order (itself a response to fascism, war, and economic collapse), the US has become the most serious threat to the rules-based trading system. Anchored in economic nationalism, the current US administration has not merely failed to defend multilateral trade governance. It has actively helped to weaken it by paralysing the adjudicative machinery on which credible enforcement depends, by normalising tariff coercion, and by increasingly treating trade not as a framework of mutually binding law but as an arena of power projection. The damage is, in part, institutional. More serious still, it erodes confidence in the very possibility that rules can bind the strong as well as the weak.
To this end, Washington has worked to weaken globally co-ordinated efforts in other domains as well. Under the Paris Climate Agreement, the green energy transition is under increasing pressure, as fossil fuels are being politically promoted and American business interests prioritised. In development policy, the retreat has been equally stark. The US has sharply reduced its engagement, subordinating USAID to the State Department while stripping it of resources, staff, and operational autonomy. In parallel, it has withdrawn from 66 international organisations working on global public goods across climate, health, education, and human rights. At the WTO’s 14th Ministerial Conference, US Trade Representative Jamieson Greer openly dismissed the organisation as a non-serious forum, stressing that Washington would continue to chart its own course on trade policy—regionally, bilaterally, and, where necessary, unilaterally. That posture has only reinforced the impression of a system unable to renew itself at the speed required by geopolitical reality.
At the same time, the continued reliance on the Multi-Party Interim Appeal Arbitration Arrangement is a sign both of resilience and of decay: resilience because some members still wish to preserve legal review and binding procedure; decay because they must do so through an interim mechanism while the universal system remains blocked. Taken together, this is not, at least not yet, a story only of collapse. As multilateralism has weakened, it has also produced a counter-movement, driven by the EU and like-minded partners to preserve openness through regional and plurilateral agreements and, in doing so, to call America’s bluff. The European Commission states that negotiations with India were successfully concluded in January 2026 and with Australia in March 2026, while the Mercosur agreement, politically agreed in December 2024, was formally endorsed by EU countries in January 2026. Canada, too, has made trade diversification central to its economic strategy. These are not perfect substitutes for a fully functioning multilateral order. But in present conditions, they are far more than technocratic side deals. They are attempts to keep the principle of rules-based commerce alive while its universal form remains under direct strain.
Seen from Lübeck’s historical vantage point, this should not be difficult to understand. Regional commercial order has often preceded wider universal frameworks. The Hanse itself was not global, but confined to Northern Europe. Its achievement was not that it solved all conflict, but that it created enough predictability, reciprocity, and institutional continuity to let trade deepen across borders and across time. If the universal order is faltering now, then the defence of open commerce may once again depend on coalitions willing to build rule-governed spaces in a fractured world.
That places a particular responsibility on Europe. The EU is often criticised for over-regulation, procedural excess, and diplomatic caution, if not outright timidity and lack of vision. Much of that criticism is not wholly wrong. But on trade, Europe’s present instinct is historically sounder than that of the new economic nationalists. After its own, at times catastrophic, experiences with nationalism and authoritarian ideologies, the old continent has drawn certain lessons: prosperity cannot be defended through political pressure, permanent improvisation, bilateral intimidation, or tariff theatre. Europe has understood that law is not the enemy of trade, but one of its preconditions. And it has begun, however imperfectly, to act on that understanding by pursuing broader agreements with major partners at a time when the United States seems determined to hollow out the very order it once led.
Setting priorities
In times of war and geopolitical crises, the IMF’s focus on macro-fiscal resilience and the World Bank’s overarching jobs agenda demand real political courage. Both institutions face considerable challenges in meeting the high expectations surrounding this week’s Spring Meetings in Washington. They cannot repair the WTO by fiat, nor can they dissolve the strategic antagonisms now pushing trade back towards coercion. But they can state clearly what too many governments prefer to treat as secondary, or do not dare to say explicitly. They can help to elevate the erosion of the rules-based trading order above the narrow confines of trade ministries. The IMF and the World Bank are uniquely placed to argue that global trade is a development and stability issue, affecting everything from energy prices and inflation to food insecurity, poverty, and wider asymmetries of power. For poorer and more vulnerable economies in particular, the weakening of predictable trade rules means greater insecurity, higher costs, weaker investment, reduced policy space, and increased exposure to coercion by the strong.
The message to those gathering in Washington should therefore be simple. Defending open trade today requires more than invoking multilateralism as a ritual ideal. Consistent with their respective Articles of Agreement, both institutions must treat enforceable rules as a practical necessity of sustainable development, macro-fiscal stability, and meaningful poverty reduction. This requires renewed support for binding dispute settlement, serious backing for agreements that widen and stabilise commerce, and a willingness to recognise that, in an age of obstruction, regional and plurilateral arrangements may be the last workable line of defence for an open world economy. Eight hundred years after Lübeck’s Reichsfreiheitsbrief, the lesson remains as clear as it is uncomfortable. Trade does not become freer when rules recede. It becomes more exposed to force. And when force returns to trade, prosperity retreats.
Jan-Peter Olters
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