Globalisation has increased economic interdependence and expanded the influence of international institutions, but it has not displaced the sovereign state. Governments continue to pursue the national interest, defend territorial claims and compete for influence. What has changed is the range of instruments available to them. Military force remains significant, but states also exploit trade, sanctions, diplomacy, alliances and international law. Recent disputes involving Argentina, Britain, Israel, Canada and the United States show that hard and soft power are rarely used in isolation.
Argentina’s renewed campaign over the Falkland Islands demonstrates the continuing importance of territorial sovereignty. President Javier Milei has threatened sanctions and criminal proceedings against companies extracting oil around the islands. The principal target is Navitas Petroleum, a Tel Aviv-listed company with a 65% stake in the Sea Lion project. The field contains an estimated 1.7 billion barrels of oil and is expected to begin production in 2028.
Argentina cannot realistically alter the islands’ status through military force. Britain retains control of the territory and has reaffirmed its commitment to the islanders’ security. Buenos Aires has therefore turned to economic and legal coercion, attempting to make oil extraction commercially risky. This remains hard power: Argentina is seeking to impose costs on companies that disregard its sovereignty claim, despite lacking the military capability to enforce that claim directly.
Material pressure is accompanied by a contest over legitimacy. Milei argues that the islands are Argentine “historically and legally”, prioritising territorial integrity. Britain has appealed instead to self-determination, citing the 2013 referendum in which 99.8% of participating islanders voted to remain a British Overseas Territory. British control ultimately rests upon material power, but both governments recognise that international support also depends on how the dispute is framed. Power involves establishing which political principle should apply, not simply possessing territory.
Argentina’s close relationships with Israel and the United States could potentially give Milei diplomatic leverage. Alliance-building allows states to amplify their influence and seek support from more powerful partners. Yet Navitas’s connection to Israel exposes the limits of this strategy. Action against an Israeli-listed company may bring Argentina’s Falklands policy into conflict with its interest in maintaining close relations with Israel. Alliances are not permanent guarantees of support: states cooperate where their national interests converge.
The US-Canada trade conflict offers a clearer example of asymmetrical economic power. Bilateral trade is worth nearly $900 billion, but the American economy is approximately thirteen times larger and most Canadian exports enter the US market. Washington has imposed tariffs on Canadian vehicles, steel, aluminium and lumber. Donald Trump has also threatened to halt American business with Bombardier, a major Canadian manufacturer of business aircraft, unless it transfers production to the United States.
These measures exploit interdependence rather than reject it. Canada’s reliance on the American market gives Washington leverage, allowing the US to turn an economic relationship into an instrument of hard power. Canada has responded with tariffs of up to 50% on almost C$28 billion of American products. This retaliation is intended to defend Canadian workers and demonstrate that Canada will protect its economic sovereignty rather than accept unilateral American demands.
Interdependence nevertheless creates vulnerability on both sides. Around 41,000 Canadian jobs were lost in August as tariffs intensified and negotiations collapsed. American firms and consumers also face higher costs, while industries whose supply chains cross the border have pressured both governments to grant exemptions. This reflects complex interdependence: states may possess unequal capabilities, but dense economic connections make coercion costly even for the stronger actor. The United States enjoys greater relative power, yet it cannot damage Canada without also generating domestic consequences.
Britain’s sanctions against Israeli settlements in the occupied West Bank show how economic coercion can be combined with multilateralism and appeals to legal legitimacy. The measures restrict settlement goods and target firms and individuals involved in settlement expansion. Britain has justified its policy through international law, the 2024 advisory opinion of the International Court of Justice and its support for a “two-state solution.” It has also coordinated its position with France and Canada and issued a joint statement with eleven other states.
Collective action gives sanctions greater diplomatic weight and allows Britain to present its position as a defence of international norms rather than a narrowly national intervention. Nevertheless, Israel’s response illustrates the limits of this approach. Its government announced the closure of the British consulate in East Jerusalem, banned several British MPs and restricted British participation in Palestinian security programmes. American officials also warned of possible consequences for British businesses. Israel’s military capabilities and its alliance with the United States reduce its vulnerability to pressure. Sanctions may weaken the perceived legitimacy of settlement expansion without forcing an immediate policy change.
These cases challenge the claim that globalisation has made state power irrelevant. Markets, alliances and international institutions constrain governments, but they also provide instruments through which power can be exercised. Economic links can be weaponised, while international law can be used to legitimise territorial claims or collective sanctions. Hard power can impose immediate costs but may provoke retaliation; soft power can generate consent but depends upon credibility. Effective statecraft therefore combines coercion, persuasion and alliance-building according to the interests and capabilities of the state concerned.