Political Analysis
Circular Economy as a Strategic Asset in a Fragmenting World

Participants at a Competition for Circular Business Models in Lao PDR – the Ecothon in Lao PDR 2025

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In recent years, global crises have revealed how deeply economic stability depends on secure access to resources, functioning supply chains and geopolitical predictability. The circular economy (CE), long framed primarily as an environmental tool, is increasingly emerging as a strategic instrument for resilience and independence. Rather than focusing solely on waste reduction or climate protection, circularity must be understood as part of a broader geopolitical response to systemic vulnerabilities.

The article “How to Revitalize the Sustainable Development Goals: The Case for a Circular Economy,” published in the Global Perspectives Newsletter (December 2024), highlighted CE’s potential to advance the 2030 Agenda at a moment when progress toward the Sustainable Development Goals was becoming increasingly uncertain.[1] This analysis builds on that discussion by arguing that the circular economy should be viewed not only as an ecological necessity, but also as a strategic instrument for resilience, independence and long-term security. The emphasis on CE´s importance for sustainability underestimates its political significance. As global power relations shift and economic interdependencies increasingly become instruments of influence, circularity offers governments a pathway to reduce exposure to external shocks while strengthening domestic innovation and competitiveness.
 

[1] Siegner, M. (2024): How to revitalize the Sustainable Development Goals: The Case for a Circular Economy. https://europe.hss.de/en/news-global/how-to-revitalize-the-sustainable-development-goals-the-case-for-a-circular-economy-news12318/ [30.01.26]. 

From Environmental Concept to Strategic Imperative

At its core, the circular economy promotes the reuse, repair, refurbishment and recycling of products and materials to extend their lifecycle and minimize waste. This contrasts with the traditional linear model of “take–make–dispose,” which depends heavily on continuous extraction of raw materials and often encourages planned obsolescence.

While this environmental rationale remains valid, recent disruptions have revealed the political dimension of resource dependency. Supply chain interruptions, export restrictions and geopolitical tensions have demonstrated that access to materials is no longer purely an economic issue but increasingly a matter of national and regional security. Circularity therefore evolves from a sustainability agenda into a strategic policy field that supports resilience and autonomy.

Recognizing CE as a geopolitical asset allows policymakers to link ecological transformation with economic stability. By retaining materials, knowledge and production capacity within domestic or regional markets, circular systems reduce vulnerability to external shocks and strengthen long-term prosperity.

Delegates of HSF’s Regional Sustainable Startup Network in ASEAN at the ASEAN Circular Economy Forum 2025 in Kuala Lumpur, Malaysia

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Strengthening Supply Chain Resilience

The vulnerability of globally integrated supply chains became particularly visible during the COVID-19 pandemic. Europe’s limited domestic production of essential medical goods highlighted the risks of overdependence on external suppliers, while shortages of raw materials constrained attempts to shift production.

Subsequent disruptions reinforced this lesson. The blockage of the Suez Canal in 2021 and renewed tensions in the Red Sea region illustrated how quickly logistical bottlenecks can destabilize entire industries. These events demonstrated that crises are no longer exceptional but part of a broader pattern of systemic fragility.

Circular economy approaches directly address this challenge. By promoting localized recycling, remanufacturing and resource efficiency, CE reduces reliance on global extraction chains and helps maintain technological capabilities within regional economies. This flexibility enables quicker adaptation to disruptions while lowering strategic exposure.

European policymakers have begun embedding these insights into legislation. The EU’s Critical Raw Materials Act and the Circular Economy Action Plan aim to secure supply, diversify sourcing and increase recycling rates. These initiatives indicate a growing recognition that resilience must be built structurally rather than reactively.

Circularity and Strategic Autonomy

Resilience allows economies to withstand shocks, but strategic autonomy prevents vulnerabilities from arising in the first place. Europe’s heavy dependence on imported energy and critical raw materials has increasingly been framed as a geopolitical risk. Resources such as lithium, cobalt and rare earth elements are concentrated in a small number of supplier countries, creating structural dependencies that can influence political decision-making.

Russia’s invasion of Ukraine in 2022 illustrated how energy dependencies can quickly translate into geopolitical leverage. Emergency diversification efforts were necessary but costly, underlining the importance of proactive strategies that reduce structural exposure.

Circular economy principles contribute to long-term autonomy by lowering demand for primary raw materials, increasing energy efficiency and expanding recycling systems. Practices such as urban mining — recovering materials from existing infrastructure and electronic waste — can significantly reduce reliance on external suppliers. At the same time, circular innovation stimulates domestic industries, creates employment and strengthens competitiveness. The European Green Deal and related policy frameworks increasingly integrate these objectives, highlighting that sustainability and strategic autonomy are not competing priorities but mutually reinforcing goals.

Circular Economy as a Platform for International Cooperation

The strategic relevance of circular economy extends beyond Europe. Globally, circularity offers a framework for addressing shared challenges such as resource scarcity, climate change and economic vulnerability while fostering international collaboration.

Cooperation between the European Union and ASEAN demonstrates this potential. Both regions are seeking to reduce dependencies while balancing economic growth with sustainability commitments. Circular economy policies provide a shared language for reconciling these priorities.

Regional platforms and stakeholder dialogues increasingly serve as mechanisms for knowledge exchange and policy coordination. They enable governments, businesses and civil society actors to align standards, promote innovation and develop secondary raw material markets, thereby strengthening interregional trust and stability.

Finalists at the ClimateLaunchpad Vietnam 2025 – a sustainable entrepreneurship initiative by HSF together with the Center for Creativity and Sustainability and the Vietnam-German University in Ho Chi Minh City

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From Policy Dialogue to Practical Implementation: The Role of Start-Ups

Beyond intergovernmental cooperation, circular transformation increasingly depends on innovation ecosystems. Start-ups play a crucial role in developing scalable solutions for waste reduction, material recovery and sustainable production, but their impact depends on access to training, financing and political support. One example is the Ecothon initiative, an ASEAN-wide competition series promoting sustainable and circular business models. Since 2020, the program has provided mentoring and investor-readiness support, culminating in regional and global dialogues where selected start-ups present their innovations to policymakers and investors. The initiative is implemented through cooperation between the Hanns Seidel Foundation (HSF) and the ASEM SMEs Eco-Innovation Center (ASEIC), together with national partners across Southeast Asia.

By strengthening local innovation and resource efficiency, circular start-ups contribute to more resilient domestic value chains and reduce dependence on imported raw materials. Collaboration with European partners further supports technology exchange and diversification of supply sources, linking ASEAN’s sustainability efforts with Europe’s pursuit of strategic autonomy. Initiatives such as Ecothon therefore demonstrate how circular entrepreneurship can complement policy frameworks and translate geopolitical resilience into practical cooperation.

Conclusion: Circular Economy as a Pillar of Stability

Recent crises have shown that economic security, resource access and geopolitical stability are deeply interconnected. The circular economy addresses these challenges by reducing dependencies, strengthening resilience and fostering innovation. It is therefore no longer sufficient to treat circularity as an environmental policy alone.

By integrating sustainability with strategic considerations, governments can transform circular economy into a cornerstone of long-term prosperity and autonomy. Moreover, its cooperative dimension offers opportunities for trust-building and shared development across regions. In a fragmenting world, circular economy emerges not only as a pathway toward ecological transformation but as a pragmatic strategy for stability, competitiveness and international partnership.

About the Authors

Michael Siegner is the Resident Representative of Hanns Seidel Foundation in Indonesia and has led HSF’s regional engagement in ASEAN focusing on circular economy and sustainable startups. 

Ricarda Huber is an HSF scholarship holder and studies Political Science at the Catholic University of Eichstädt-Ingolstadt and Sciences Po Rennes. She interned at the HSF Office in Hanoi (Vietnam) in 2025.