Shanker Singham is CEO of Competere. He is a former adviser to Liam Fox when he was Secretary of State for International Trade, and to the Office of the United States Trade Representative.

It is understandable that policymakers are responding to the immediate aftermath of Russia’s invasion of Ukraine in tactical ways. However, the forces that gave rise to these events have been brewing for some time, and we urgently need a strategy to correct the mistakes we have made in ignoring these forces in the past.

That strategy should, first of all, recognise what we have missed. The fascistic cronyism that prevails in authoritarian states like Russia, China, and Iran has not been arrived at random.

Cronyism is the method by which dictators like Vladimir Putin ensure that they have the resources to act in nationalist ways that defy economic rationality. It is built on government control of the means of production and distortion of markets, so that the inefficiency which is inevitable from such state-owned and state-influenced enterprises is not subject to the discipline of ordinary market forces.

The ill-gotten gains that arise from such distortions can then be deployed by the likes of Putin in ways that damage the fabric of liberal democracies themselves.

It is a mistake to think that this current situation arises merely from the malign proclivities of the Russian president. Forces, economic and cultural, are applied to countries, and these countries react in various ways, from time to time producing leaders that express the collision of these forces.

In order to achieve the goal of more of the world’s people living under a liberal democratic system, we need to take the following immediate steps:

All institutions of government starting with the Cabinet should be put on a war footing

We must recognise this salvo (Russia’s invasion of Ukraine) as one of a series of economic (as well as hot) wars between countries in the ‘network of liberty’ (NOL) and the new autocrats on the other side of an emerging global divide, and that we must take immediate steps in order to secure a strategic response which we will have to have the patience to deliver.

This will require a robust economy at home and stronger ties with NOL countries. The regulatory reform agenda in the UK needs to be accelerated. Only a robust economy at home will enable the UK to play the global role that is required of it at this time.

We also need stronger economic ties to NOL countries through a concentric set of circles starting with stronger economic and security partnerships with the most trusted core (AUKUS, potentially including Japan), then moving beyond that through CPTPP and the Atlantic Charter with the US. This should then extend to the UK-EU FTA which should be upgraded from a relatively modest agreement to a fully comprehensive agreement across services, as well as goods, that is truly best-in-class.

There is also a group of countries presently outside of this grouping, such as the GCC, Korea, India, and Brazil, where we need to reinforce pro-market policies and encourage a reduction of distortions. Some EU members fall into this category also.

In the WTO, and even in regional and bilateral trade agreements, we have been unserious about disciplines on market distorting activities, including the impact of SOEs and state-controlled enterprises on the global economy, as well as those private firms that benefit from distortion. This needs to change immediately.

Full disciplines mean a mechanism to tarifficate proven anti-competitive market distortions. Market distortions have led to ill-gotten gains, which have fed the dictators and autocrats and can be used to pursue hot wars as well as cyber-attacks, finance terrorism, and other illicit activities. Many of these nefarious activities are linked and the money to support them is fungible.

We need to starve SOEs and regimes that engage in market distortions from obtaining Western sources of funding in London, NY, Tokyo and other centres. Where distortions are proven, we must limit access to finance for the firms that benefit from them. Right now, those same firms use those distortions as proof that investors should invest in them. We are currently allowing investors to underwrite the fix.

Finally, our sanctions regime must in egregious cases enable network of liberty countries operating in tandem to ban the exports of products wherever produced using our technology.

Integrate our aid and development more firmly into our trade and international economic policy above

We need to fast-track the prosperity agenda in the FCDO recognising the lifting the world’s poor out of poverty will protect all of us from dangerous ideologies.

Our aid should not be agnostic about whether countries cleave to liberal democratic principles and therefore should be conditional on achievement of key objectives which should be benchmarked, in a similar way that the Millennium Challenge Account is in the US – a Platinum Challenge Account.

Ministers should prioritise the Commonwealth for this development funding to bind them more tightly into the Commonwealth network, and enable them to leverage its network effects.

We should drive British Investment International at pace, including through the development of Special Economic Zones in Africa, Latin America, and Asia working with partners to secure objectives in 1 above, as an alternative to China’s Belt and Road.

Step up a massive campaign domestically and globally explaining classical liberal democratic principles

We need to be clear, at home and overseas, why our system us better for people than living in autocratic, cronyist and heavily distorted societies. Domestically because this fight is never over – the UK almost elected an avowed hard core Marxist to be its Prime Minister in 2019.

Globally because many people in poorer countries equate liberal democracies with inequality and injustice, and cleave to autocratic leaders and their false promises.

Step up our energy production domestically and in other classical liberal democracies

We will need to pursue the full range of energy production options as we transition to more climate-friendly fuels, but the urgency is on weaning ourselves off fuel produced in autocratically controlled countries. There is no point in limiting the access to finance for those foreign firms that benefit from distortion if we simply pay them vast amounts for their energy.

Both the US and UK must ramp up energy production and eliminate the barriers to technologically-neutral energy production. This is critical to ensure that LNG and other sources of energy can be exported to the EU to make it less energy dependent on Russia.

In addition, the US and UK should work with the US and Japan on key nuclear technology. All technologies should be promoted in a technologically neutral fashion; and on AI, space, and quantum computing, including driving the global standard setting debate.

The new global divide is not a rigid “iron curtain”. But that countries on the other side can be pressurized to change, provided we apply both carrots and sticks.

Reforms in those countries should be encouraged by ensuring we have very focussed, narrowly -auged tools to deal with elements of cronyism and distortion. These should be centred on making them pay for a market distortion in their own market that gives them a market advantage at home or abroad, and move away from penalties that cannot be directly correlated to the scale of their distortions.

We must be reasonable, and they should believe that their firms can succeed on the competitive merits and not on distortion. This is the way in which we will be able to give oxygen to the reform-minded people in those countries who presently exist as a tiny, and silent, minority.