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What comes next in the Iran-Israel war, from a US response to energy impacts

Katherine Golden — Tue, 17 Jun 2025 21:37:22 +0000

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Global Energy Forum

The ninth Atlantic Council Global Energy Forum will be held June 17 and 18 in Washington, DC. Please check back regularly for updates on our programming.

As the 2025 Global Energy Forum convened on Tuesday in Washington, DC, just blocks away at the White House, national security officials were mulling over the US response to the war between Israel and Iran.

“Right now, Iran has a choice,” Brett McGurk, distinguished fellow at the Atlantic Council and former White House coordinator for the Middle East region, said at the Forum.

“The White House offered a deal to Iran about six weeks ago . . . Iran not only did not really respond to that; it actually escalated its nuclear program in the face of this,” McGurk said, pointing to activities at the Fordow nuclear site.

For McGurk, if Iran accepts the nuclear deal, “this crisis would be over.” But if it doesn’t, it would be “looking at the possibility of a US strike on Fordow.”

When it comes to escalation in the Middle East, Helima Croft—global head of commodity strategy and MENA research at RBC Capital and a member of the Atlantic Council Board of Directors—said that “the risk of this spilling over into energy is low. But it’s not zero.”

Below are more highlights from the conversation, moderated by William F. Wechsler, senior director of the Rafik Hariri Center & Middle East programs at the Atlantic Council, where Croft and McGurk also talked about the United States’ response options and the region’s future.

The objectives

McGurk said that if he were in the Situation Room, he would list three objectives for the commander in chief: The first is to protect Americans and defend Israel—which would involve “surging defense interceptors.” The second is to “contain this to Israel and Iran” and “avoid a broader regional escalation.” The third, McGurk explained, is to work with Israel on succeeding in their objectives: “dismantlement of the nuclear program and the missile program.”

McGurk said that what happens in the next week “is potentially quite decisive,” because it could weaken Iran’s influence in the region. That, he said, would set “conditions for a much more peaceful, integrated Middle East that we all want.”

“You talk about a decisive historical period: We’re living in it,” he said.

The options

McGurk said that a military response has previously had “massive risk” associated with it, but “Iran has made a series of fateful strategic miscalculations” since October 7, 2023, reducing those risks.

One such risk was the possibility of retaliation from an Iranian proxy group, such as Hezbollah; but that is “no longer a threat,” McGurk said, with Hezbollah indicating that it does not want to be involved in this latest exchange of strikes.

Another risk was Iran’s air defense, including its use of Russian air defense systems, but that risk has faded as “Israel has complete air supremacy” over Iran. “So the window of availability for a military option is now very open,” McGurk said.

He added that he could see the US administration using the threat of this military option to “try to get a deal.” But if that deal does not come to fruition, “then we have to be prepared to actually do the strike,” McGurk added. “And I think you do have to back it up.”

“The worst case here would be to leave Iran with that Fordow [site] and ten cascades [of advanced centrifuges] intact,” McGurk said. “So it’s a deal or it’s a military strike.”

The impact

Croft said that the market is “very sanguine” about the energy risks associated with the conflict. “We have ample supply on the market right now,” she noted.

If the United States decides to launch an attack on Fordow, Croft said, there would be “a little pop” in prices. But the bigger concern among market players is whether Iran plans to “internationalize” the costs of this war, such as by rallying its proxy groups in targeting tankers and shipping corridors such as the Strait of Hormuz.

That could yield some temporary disruption. “I don’t think the market would be prepared for the export infrastructure being struck,” she said.

She added that there is also concern “about risks to other countries’ energy facilities where they may not have taken the necessary steps to fortify those facilities.”

Until the war inflicts a massive impact on oil supply, Croft said she would not expect a “preemptive surge” of barrels from the Organization of the Petroleum Exporting Countries (OPEC). “They are already unwinding a voluntary cut,” she said. “OPEC has made it pretty clear: They’re not going to fill a gap in the market until one emerges.”

Croft added that there is much at stake in achieving a stable, prosperous Middle East region, as governments continue to build more resilient societies and to diversify their economies. “Having a stable security environment is so important for the millions of young people in the region whose futures really rest on everything that these governments are trying to undertake,” she said.

Katherine Golden is an associate director on the Atlantic Council’s editorial team.

Editor’s note: RBC Capital Markets is a sponsor of the Atlantic Council’s Global Energy Forum. More information on Forum sponsors can be found here.

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Southeast Europe Transatlantic Economic Forum 2025

sjones — Tue, 17 Jun 2025 20:05:57 +0000

The Atlantic Council Europe Center hosted the 2025 edition of the Southeast Europe Transatlantic Economic Forum, together with the Transatlantic Leadership Network, which took place in Washington DC on Wednesday, May 21.

This annual full-day conference is an opportunity to hear from policy-makers and experts on the most pressing issues for the US-Southeast Europe relationship and to craft a public dialogue to address these issues, hearing from the perspectives of business leaders and government officials from the United States, the Western Balkans, and wider SEE region.

Agenda

Session I

9:30 a.m. – 11:00 a.m. ET Strengthening Transatlantic Alliances Through Business Cooperation: Next Steps?

Strahinja Matejić, Associate Director, Eurasia Group

Andrej Poglajen, Member of Parliament of the Republic of Slovenia

Amb. Philip Reeker, Partner, Europe Practice, Albright Stonebridge – DGA Group

Moderator: Ms. Lisa Homel, Associate Director, Europe Center, Atlantic Council

Session II

11:15 a.m. – 11:25 a.m. ET Southeast Europe – US: Enhancing Transatlantic Cooperation

Keynote remarks by:

Vladimir Lučić, Chief Executive Officer, Telekom Serbia

Session III

11:25 a.m. – 12:30 p.m. ET Energy Diversification: Obstacles and Opportunities

Amb. John Craig, Senior Fellow, Transatlantic Leadership Network; Senior Partner, Manaar Energy Associates

Fred Hutchison, Chief Executive Officer, LNG Allies

Laura Lochman, Acting Assistant Secretary of State, Bureau of Energy Resources, US Department of State

Moderator: Olga Khakova, Deputy Director, European Energy Security, Global Energy Center, Atlantic Council

Session IV

12:45 p.m. – 1:00 p.m. ET Montenegro: At the doorsteps of the EU membership

Keynote remarks by:

Aleksa Bečić, Deputy Prime Minister of Montenegro

FULL TRANSCRIPT IN ENGLISH

It is my honor and privilege to address you on behalf of the Government of Montenegro, a country rich in a history of resistance, statehood, and pride, and a people who have never forgotten their identity, no matter how much time has passed or how many borders have changed.

Montenegro and the United States have been bound by over a century of friendship. As early as 1905, President Theodore Roosevelt recognized the strength, dignity, and freedom-loving spirit of our nation. Today, as allies within NATO and partners in the fight against organized crime and the preservation of international security, we reaffirm that this partnership has both purpose and a future.

On this day, May 21, as we celebrate nineteen years since the restoration of our independence, Montenegro stands at a historic turning point. Our strategic orientation is clear: by 2028, Montenegro aims to become the 28th member of the European Uniop. We are proudly advancing toward this goal under the mandate of this Government. The facts speak for themselves: Montenegro is the only EU candidate country that has opened all negotiation chapters, closed six chapters, and received a report on meeting the interim benchmarks in the key Chapters 23 and 24, which focus on the rule of law and security. As one of the few candidates fully aligning its foreign and security policy with that of the EU, Montenegro holds a leading position, undeniably the most advanced candidate and the next in line to join the European Union.

The foundation of this path is a resolute fight against organized crime and corruption. As Deputy Prime Minister for Security and Coordinator of the Intelligence-Security Sector, I am particularly proud of this effort.

The recognition of these efforts is evidenced by the “Champion of the Fight Against Corruption” award, bestowed by the U.S. State Department in late 2023 to Montenegro’s Chief Special Prosecutor.

For the first time in Montenegro’s history, we are conducting a form of vetting within the Police Administration, thoroughly examining the integrity, assets, contacts, and lifestyles of every police officer.

Out of 3,500 officers, approximately 100 have been suspended in recent months alone. Hundreds of additional security checks, procedures, operational analyses, and audits are underway, all with a single goal: to ensure that the police badge is worn only by those who carry it with honor.

No fight is serious unless it begins within one’s own system. We have had the courage to start there. For the first time in modern Montenegrin history, the law applies even to those who, until recently, interpreted it at their own discretion.

The excellent cooperation and trust between the security sector, competent prosecutors, and our international partners-where we have received significant support from our American friends-have led to historic results in the fight against crime. Over 2,000 prosecutions of organized crime group members and persons of operational interest, the arrest and prosecution of leaders and high-ranking members of drug cartels, a twelvefold increase in results in combating economic crime, historic seizures and returns of weapons and ammunition, and hundreds of arrested, prosecuted, or suspended police officers all testify to our determination to rid the state of crime and corruption.

Today, Montenegro is becoming a country where the law has both strength and authority. A country where the question is not “who are you?” but “what have you done?” A country where it is clear that the law is the boss, not the head of a clan.

Never again will organized crime stand above the state, above the law, or above the citizens. Today, Montenegro is becoming a country of justice and fairness. A country where verdicts have been delivered or indictments confirmed against two presidents of the highest judicial institutions, two directors of the Police Administration, the director of the National Security Agency, the chief and special state prosecutors, the director of the Agency for the Prevention of Corruption, and numerous other officials and officers.

Montenegro is becoming a country with no untouchables. A state firmly committed to peace and international stability. We confirm this commitment through concrete contributions within NATO, the modernization of our defense system, and participation in missions and battle groups. This contribution is further strengthened by a strategic investment: the construction of two patrol vessels in France, which will joir:i the Navy of the Armed Forces of Montenegro. These vessels are not merely a technical upgrade for our country; they symbolize our role as a reliable guardian of Adriatic security, in the interest of the entire Alliance.

For only a state free from crime, a state with strong institutions, a state where the rule of law prevails over fear, can be a strong international partner. Montenegro aspires to be that state. And we believe that, with the support of the United States, we can achieve this.

On behalf of all the citizens of Montenegro, I deeply thank you for that support. I am confident that everything we achieve together will benefit not only our peoples but also the future we jointly safeguard.

Long live the friendship between Montenegro and the United States!

Session V

2:00 p.m. – 3:00 p.m. ET Empowering entrepreneurs: Driving integration convergence and innovation in Southeast Europe

Eric Hontz, Director, Center for Accountable Investment, CIPE

Bogdan Gecić, Founder and Partner, Gecić Law & Associates

Ilva Tare, Resident Senior Fellow, Europe Center, Atlantic Council

Moderator: Amb. John B. Craig, Senior Fellow, Transatlantic Leadership Network

In Partnership With

Sasha Toperich
Executive Vice President
Transatlantic Leadership Network

The energy risks of escalation in the Middle East, according to Brett McGurk and Helima Croft

Atlantic Council — Tue, 17 Jun 2025 19:10:04 +0000

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Global Energy Forum

The ninth Atlantic Council Global Energy Forum will be held June 17 and 18 in Washington, DC. Please check back regularly for updates on our programming.

Speakers

Helima Croft
Board Director, Atlantic Council; Managing Director and Global Head of Commodity Strategy and MENA Research, RBC Capital Markets

Brett McGurk
Distinguished Fellow, N7 Initiative, Rafik Hariri Center & Middle East programs, Atlantic Council

Moderator

William F. Wechsler
Senior Director, Rafik Hariri Center & Middle East programs, Atlantic Council

Event transcript

Uncorrected transcript: Check against delivery

WILLIAM F. WECHSLER: Thank you for—once again, for everyone being here, being part of this discussion. It’s quite important. And it comes at, of course, an absolutely critical moment for those of us who’ve spent our lives caring about the geopolitics and stability/security of the Middle East.

So we’re going to have a thirty-minute discussion here with two of the most well-positioned people to give us their views on what’s going on now and what we should expect.

From my own point of view, I just want to lead off by saying I see four real scenarios going forward: a great scenario, a good scenario, a bad scenario, and a terrible scenario. The great one is that the military objectives in the current campaign are met and the Iranian regime is not able to pose the kind of existential threat to the region that it—of the Iranian people taking matters into their own hands. A good scenario is that the Iranian regime comes back to the Trump administration and wants to do a deal on eliminating their enrichment of their nuclear program. A bad scenario is the military objectives are not met and Iran goes nuclear. And a terrible one is that the region is in war, which could involve the United States.

So the two people that I have here discuss are Brett McGurk, who has joined the Atlantic Council recently as a distinguished fellow working our Middle East Programs and our N7 Initiative, a joint partnership of the Atlantic Council and Jeffrey M. Talpins Foundation; and Helima Croft, the head of commodities at RBC Global and the head of the Middle East there as well.

We’re going to talk about security and energy issues here today. Let me start with you, Brett. Tell us what—you know, as we sit here the people in the Trump administration are gathering at some point today in the Situation Room to talk about what the options are for the United States to advance the good scenarios I talked about and minimize the risk of the lower scenarios. You’ve spent more time in that Situation Room than anybody I know talking about these issues. What would you be telling the president today?

BRETT MCGURK: Well—is this working? OK. Well, thank you, and congratulations, Atlantic Council, Landon, and everyone setting this up, and it’s great to hear from Dr. Sultan this morning. And, Fred, great to see you.

I caveat comments on what’s happening to say if anyone tells you they know exactly where this is heading or making kind of bold predictions they don’t know what they’re talking about. This is truly a completely unprecedented situation.

It flows out of the events of October 7th. I’m happy to kind of talk about the broader strategic context but you asked a specific question so let me get to it. If I was in the Situation Room right now I think, from the White House perspective, we have three immediate objectives.

Number one, obviously, we want to protect Americans and we want to help defend Israel. That is, like, first priority. So making sure we’re surging defense interceptors, everything. I’ve dealt with that an awful lot in the last year when I was in the White House. That’s number one.

Number two, try to contain this to Israel and Iran. Avoid a broader regional escalation. I think that’s actually a very achievable objective. So far I think that’s going fairly well—something we dealt with every day, every hour, from October 7th on.

I don’t know how many predictions of uncontrollable regional war there have been since October 7th. There has not been an uncontrollable regional war because of what the United States has done, frankly, consistently day by day, hour by hour, month by month.

Number three, I think you want to be working with the Israelis to ensure a focus on their declared objectives and avoid a mission creep scenario. Their declared objectives are dismantlement of the nuclear program and the missile program.

So those are kind of the three immediate objectives. But on the third one it’s very important because we know an awful lot about this. The Iran nuclear program has been a vexing challenge across administrations and the Rubicon here has been crossed, and I think we’ll mention that one of the worst outcomes would be this kind of ends with the main enrichment facility in Fordow intact.

And let me say a little bit about that because there’s a lot of focus about what is Israel doing, why. But Iran has made a series of fateful strategic miscalculations from October 7th on. It decided after October 7th to basically support a multifront war against Israel, and I lived through this and watched the whole thing.

They turned on Hezbollah to open a northern front. They turned on the Houthis to open a southern front. They supplied the militias in Iraq and Syria to open additional fronts. They directly attacked Israel twice in April and October. That is—October 7th miscalculations.

What happened? Hezbollah was basically knocked out. You have a new government in Lebanon. The Assad regime collapsed. You have a new government in Syria. We had a ceasefire in Gaza and hostages coming out. I’m hopeful we can still get back to a ceasefire there. You had the militias in Iraq declaring a ceasefire, relations in the Gulf very strong, and Iran in its weakest position since October 7th. So that’s kind of where things were left.

On the nuclear side, Iran continued to escalate its program. And just last week the IAEA came out with its comprehensive report that was asked for last year and found flagrant—what was their word?—egregious failure of Iran to live up to its nuclear commitments and focused a lot on Fordow.

In Fordow right now, buried into a mountain, there are ten cascades of very advanced IR-6 centrifuges. That cannot be left intact. And I think the way the White House sees this, and the policy right now as I read it, is the White House offered a deal to Iran about six weeks ago. I don’t know every detail. It’s described as a very fair deal. But that would basically give the world confidence that Iran is not and will not ever move towards a nuclear weapon.

And Iran not only did not really respond to that. It actually escalated its nuclear program in the face of this, including just last week saying they’re going to feed fuel into the cascades in Fordow and actually open a new underground enrichment facility. So Iran has just made these series of miscalculations. And I used to lead this channel in Oman with the Iranians and told them repeatedly, if you keep this up, it’s inevitable, inevitable, somebody will take care of this problem. And that’s kind of where we are.

So right now Iran has a choice. I mean, Abbas Araghchi, the foreign minister of Iran, can call Steve Witkoff, President Trump’s envoy, and say, you know, I kind of—I looked at the offer you put down six weeks ago. Actually, it’s pretty good. I think we’re going to take it. And I think this crisis would be over. Or they could not do that, looking at the possibility of a US strike on Fordow. I’m just saying that as an analyst.

But in any case, to Will’s four scenarios, this has to end without Iran’s nuclear-enrichment program intact. And hopefully that can end diplomatically. That option is still available. There’s still an off-ramp. Or the military campaign is now joined. The Israelis have a lot of options. And the US has a big option when it comes to Fordow.

WILLIAM F. WECHSLER: Thank you very much for that, Brett.

Helima, I want to talk—to turn to the energy markets. The energy markets have—don’t seem to have built in the risk that—of some of the scenarios that—of some of the scenarios that I and Brett were talking about. Can you help us understand why that is, what Iran could do that would change the markets’ views, and then how OPEC and others would react and the United States would react to that?

HELIMA CROFT: Great. Thank you so much. And Fred, thank you so much for convening us again. And Dr. Sultan, what an extraordinary open to the conference today.

As you mentioned, Will, I think the market is very sanguine about the risks entailed in any type of escalation in the Middle East at this moment. I think a lot of it goes back to the Russia-Ukraine war. There had been this expectation right away—remember what oil prices did right after the Russian invasion of Ukraine. We shot up. We were running to $130. Analysts were talking about potentially $200-a-barrel price of oil. There was an expectation that we could see three million barrels of Russian oil off the market.

And when that did not materialize, I think a lot of market participants were like, we have overplayed this risk. A number of prominent investors were burned betting on a Russian supply disruption. And they were like, I’m no longer going to price in risk of disruption. You can tell me about it, but I want to see it before I start pricing this in. And we have a situation right now in the market where we are well-supplied. You know, US production has been strong. Production out of countries like the United Arab Emirates, the investments that ADNOC has made in expanding spare capacity, means that we have ample supply on the market right now.

But the question is, Will, and we talked about this, if we were to see even a repeat of what we saw in 2019, if we saw attacks on tankers—remember, in 2019, after we reimposed maximum-pressure sanctions in May, we did have tankers hit off the coast of Fujairah. They were not sunk, but they were damaged. We had drone attacks on key pipelines over that summer, including the east-west pipeline. And then in September we had the attack on Abqaiq, the world’s largest oil-processing facility.

And to some extent because that did not yield sustained disruption—and, well, we talked about that. You know, was this a ceiling of Iran’s disruptive capabilities in 2019? Could they have done far more damage to Abqaiq if they had chosen to do so? But a lot of market participants were, like, we’ve seen the worst out of this. And if it did not yield a sustained disruption in 2019 when Abqaiq was hit, I really don’t need to be worried about it now unless it actually happens.

Now, people would say, the risk is potentially low. I’ve heard many experts say the risk of this spilling over into energy is low. But it’s not zero. And if you did have a situation—even last night—where’s my friend Amena Bakr? We were back and forth, you know, on our, you know, texts last night, because we had two tankers or three tankers on fire last night. And our immediate concern was, is this a repeat of 2019? Have those tankers been struck. Is Iran seeking to internationalize the cost of this conflict? Now it turns out there was a collision. It does not look like they were actually struck by a missile or a mine. But the concern was there right away.

So if we were to see some type of incident—we’ve already seen domestic energy infrastructure targeted. We’ve already seen South Pars struck. We’ve seen attacks on the important Haifa Refinery in Israel. We’ve had oil depots struck in Iran. All domestic. All kind of warning shots. But, again, I don’t think the market would be prepared for the export infrastructure being struck. And, again, that may never happen. And the Iranians may judge that the cost of doing so is too high. The Israelis may decide not in their interest to defund Iran by attacking Kharg Island, which would take off 90 percent of Iran’s oil exports.

But, again, the risk isn’t zero. And if you were to have something—even though we’re sitting at seventy-five dollars today—if you were to have just a repeat of anything we saw in 2019, we would move materially higher. Now, the question about OPEC, I don’t think OPEC is looking to add barrels to the market this time because of this situation. They are already unwinding a voluntary cut. We expect more rolling OPEC barrels on the market. But OPEC has made it pretty clear, they’re not going to fill a gap in the market until one emerges. So I would not expect, for example, a preemptive surge of a million-plus barrels, unless we see clear evidence of a supply disruption.

WILLIAM F. WECHSLER: Thank you very much. So the implications of that is, because the risk isn’t built into the markets today, if we do have this, the market impact would be much larger than it would be. And it would be a—would be a shock.

HELIMA CROFT: I think the market is taking it as a—I think energy markets—based on everything Brett said, like, you know, we’ve had this war in the Middle East that has not disrupted energy supplies to date. Again, the clearest one was what happened with Russia [and] Ukraine, where people were really thinking, are we going to do to Russia what we did to Iran in terms of secondary sanctions? I mean, we did a lot of work, though, to prevent a Russian disruption. Again, massive releases from the SPR, carveouts in terms of energy sanctions. We did price caps after the Europeans went forward with the sixth package of sanctions, which banned the import of seaborne oil into Europe and did a services ban. There was an active effort by the White House to ensure that the market would be well supplied. So—but I think the message or the takeaway, from many market participants is, call me when there is a disruption. You tell me there’s a lot of risk, but I’m waiting to see it materialize.

WILLIAM F. WECHSLER: Thank you very much for that.

Brett, I want to come back to you. You know, the issue, as you alluded to, Fordow, Fordow, Fordow. That’s the question. That is—that’s what’s going to be on the mind of President Trump. You served President Trump in his—in his first term. You’ve been in the Oval Office with him. He’s made absolutely clear over a long period of time that he doesn’t want a war with Iran. What’s different now? What would cause him, in your mind, to make that decision? And what are ways that events could unfold that would make it more likely?

BRETT MCGURK: I’d say, first, look, nobody wants—I think no president wants to order a military strike anywhere, frankly. I mean, I’ve been around four presidents. It’s, like, the most difficult decision. And anybody with the experience over the last twenty years, and if you spend time in Iraq like I did and others, like, you better go at such a decision with heady analysis, prudence, calculation, thinking through every unintended consequence.

The issue with Fordow—and I’m just going to—a lot of you know this. But it was a secret underground facility found by intelligence, announced to the world in 2009. The JCPOA had a lot of problems. It did say no enrichment at Fordow until 2030. After the JCPOA—US left the JCPOA, Iran started installing centrifuges in Fordow. And they eventually put in ten cascades of the IR-6s, which are the most advanced. And they started enriching to 60 percent uranium grade, which can spin up very fast to weapons grade. And you just read the IAEA report from last week.

This is a huge national security challenge. And I think the hope was that it could be dealt with through a deal. I mean, frankly, we in the—in the Biden administration had worked on this knowing that this year, 2025, is the year to deal with this problem, because there’s a deadline. The deadline, again, under the JCPOA, a provision its critics like is called snapback. Snapback means any member of that deal who’s still a member, basically France and the UK, can go to the UN Security Council and say, all international sanctions on Iran snapback. And they can do that until October of this year, when that expires under the JCPOA. So this is always the year to deal with this problem. And the hope, again, still, is that it can be dealt with diplomatically.

Now, the military option has had massive risk to it. Some of them—and being around this issue over the years I’m not revealing anything that’s not known—Hezbollah. Hezbollah had 150,000 to 200,000 missiles and rockets hanging over Israel. Any military strike into Iran, you risk Hezbollah unleashing those missiles on Israel. No longer a threat. Very significant. Hezbollah, even after the start of Israel’s military operation, has said: We want nothing to do with this. Second, air defense. Iran has pretty good air defense. Russian air defense systems, S-300s. There’s the risk of a pilot being taken down. That’s a big risk. That’s no longer there. Israel has complete air supremacy over Iran, which is an extraordinary thing. And that changes the entire calculation. Third, Iran has what it has. It has proxies. It has terrorism. It has missiles and rockets. And we know all that.

So the window of availability for a military option is now very open. And then how do you use that? Do you use that to try to get a deal, which I can actually see the administration doing? And if you say, if that—if that negotiation fails, then we have to be prepared to actually do the strike. And I think you do have to back it up. And around town if you say that, it’s, like, well, that means you’re going to lead. Look what happened in the Iraq War. This is not an Iraq War scenario. We invaded Iraq in 2003 with 130,000 troops, very small force, to overthrow a government and install an entirely new system.

I mean, that—talk about ends and means gap and unintended consequences? This is—and I’m not discounting the seriousness of this—but this is a military operation that has been planned, trained on, for, like, going back ten or fifteen years. And so it is available to the president. And the Pentagon’s job is to make it available and discuss it, if the president chooses to do it. And right now, it’s available as a backstop to diplomacy. And, again, anyone talking to Abbas Araghchi, he should call Steve Witkoff tomorrow, or right now, and say, you know what? I re-looked at the deal you put down. It’s pretty good. Let’s actually get together and do it. That’s the way out of this.

And being through the crisis since October 7th, I mean, this—sometimes it’s—I can get—frustrated is not the right word. But there are ways out of these problems. And right now, there could be a—we want a ceasefire in Gaza. Ceasefire in Gaza, if Hamas releases ten hostages, you have a sixty-day ceasefire in Gaza. Israel signed up to that. The US has signed up to it. It’s there. Iran right now—this crisis can end if Iran accepts the deal on the table. Or, I think, the military option becomes very viable.

And given where we are, the worst case here would be to leave Iran with that Fordow and ten cascades intact. So it’s a deal or it’s a military strike. I mean, I just—I think that is where we’re heading, and the events over the last twenty-four hours, I think, made that pretty clear. And that’s probably being discussed right down the street right now.

WILLIAM F. WECHSLER: You know, I’ve been briefed that we got about—that Iran at the current op tempo and the current projections of Israeli taking launchers off the battlefield that there’s about a—about a week, at least, more runway of these current level of operations continue. Of course, Iran also has by my count about three thousand short-range weapons that don’t threaten Israel but threaten our friends in the Gulf if things get—things get a lot worse.

My question to you, Helima, is in the scenario that Brett was just talking about, about the United States taking a strike on the—on the nuclear facility in Fordow, what’s that implication to the energy markets? And then what does the US do if the energy markets go a little haywire?

HELIMA CROFT: Well, I mean, certainly I think that, you know, US action against Fordow you would see, you know, a little pop in prices. But again, I think given the sort of bias of the market—I would say the recency bias of the market to say if it’s not an energy facility let’s take a pause, I think the real question would be in an endgame scenario for the Iranian government, again, A, what would come after—we talk about regime change, but who’s going to emerge to run that country? But the concern would be, I think, from the people who watch energy markets, who have spent time in the Middle East, who have been to places right after attacks have happened is, would you see proxy groups?

Like, would you see potentially risk to—we’ve talked about Straits of Hormuz, but I always think about, like, risks to Basra. I think about the risk to Iraq’s four-million-plus production because of Iranian-backed militias that operate very close to those facilities. So we would be watching, you know, what would happen in terms of, obviously, tankers. We would look to what would happen to—who are—where is the sort of soft security underbelly in terms of the energy system in the Middle East? And again, I would be concerned about risks to Iraq. I’d be concerned about risks to other countries’ energy facilities where they may not have taken the necessary steps to fortify those facilities.

So I don’t think the risk is—I do not think it is tail risk in a regime that feels its days are numbered, that they are not going to at least try to impose economic cost on the West and the rest of the world.

WILLIAM F. WECHSLER: Well, thank you very much.

In just the brief amount of time that we have left, let me—let me ask each of you to leave us with a thought that we haven’t talked about and, frankly, if it’s possible, that you think most people aren’t talking about enough. Like, what should we be thinking about that most people aren’t? Let me start with you, Brett.

BRETT MCGURK: Man. Right now I think what we’re all thinking about is what we should be thinking about, which is what is going to happen in the next week. And it is—you talk about a decisive historical period; we’ve living in it. We’re living in it.

And I—and I think the potential for a Middle East—I’m looking at a lot of friends here in the audience—the potential for this region is just enormous. It is enormous. I though the president’s trip was the right thing to do, very successful. What’s happening in UAE is extraordinary, Saudi Arabia, throughout the Gulf—everything that was just talked about in this panel.

And Iran has been a huge problem in this region for decades. And what has happened to Hezbollah and Iranian networks and Iran since October 7th sets conditions for a much more peaceful, integrated Middle East that we all want. And Iran is a spoiler to that; there’s just no question about it. So what’s going to happen here in the next week, I think, or so is potentially quite decisive.

And if we were here two years ago, and the question was hypothetically what if Israel launches a massive air attack on Iran, like, tomorrow—what would happen—I think Helima would have said it’s going to be all-out Middle East war, and energy markets, and everything else you can imagine. And actually, it’s happening right now. Israel controls the skies of Iran.

I mean, this is like—you know, and I just have to say I am proud of what the United States of America has done since October 7th, not without controversy. And these are hard calls, and they should be scrutinized. But I am proud of what we have done to reduce the risks of an all-out Middle East conflict, to significantly weaken Iran and all of these networks that threaten so many people, and to set the conditions for a far more peaceful, prosperous, integrated Middle East region.

With that said, there are going to be spoilers around and terrorist groups around and extremists around, many of them funded and supported by Iran. But an Iran without the sword of Damocles of a nuclear-threshold state is a much different problem. And here we are with potential to actually resolve that, at least for a significant period of time.

And I will just finish. I hope—I hope Iran finds a way to take a deal, the deal that the US has put on the table. And if not, I think there’s no other way.

So I have to answer that question, Will, by what should we be thinking about? It’s what’s happening right now. I don’t know what else—at least that’s what I’m thinking about.

HELIMA CROFT: I will be super fast.

To echo what you pointed out about the enormous progress that we’ve seen in the Middle East—I mean, it started by the UAE with the incredible economic transformation and diversification program. I mean, Dr. Sultan, I think your portfolio speaks to everything you do in that country, just even beyond energy. And you look at the other countries, Saudi Arabia. You think about what Kuwait is trying to do, taking enormous steps to diversify their economies, to future-proof their societies. And it’s predicated on a stable security environment.

And so I do think that we should be sanguine about what’s at stake if we do not find a solution that enables, you know, a stable, prosperous Middle East. And having a stable security environment is so important for the millions of young people in the region whose futures really rest on everything that these governments are trying to undertake.

WILLIAM F. WECHSLER: Thank you very much. I think you actually hit on what I was hoping you would hit on, which is not only the risks of the region but the potential of the region is what we also need to be thinking about deeply right now.

With that, I want to say thank you very much to our panelists here for a really fascinating discussion on the issues of the day. Thank you all for listening to us.

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UAE Minister Sultan Al Jaber on how to solve AI’s energy conundrum

Katherine Golden — Tue, 17 Jun 2025 18:12:40 +0000

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For Sultan Al Jaber, the United Arab Emirates’ minister of industry and advanced technology, the race to establish artificial-intelligence (AI) supremacy is “essentially an energy play.”

Al Jaber, who is also the head of national oil company ADNOC and the renewable energy company Masdar, spoke at the opening of the 2025 Global Energy Forum, hosted by the Atlantic Council’s Global Energy Center.

“The race for AI is not just about code . . . it’s about gigawatts,” he said, explaining that one query on ChatGPT uses ten times as much energy as a Google search.

“Over the next five years, the US alone will need anywhere between 50 and 150 gigawatts of new installed capacity,” Al Jaber noted. “Meeting this demand is not just a technical challenge,” but a “once-in-a-generation” opportunity, he added.

At the same time, Al Jaber noted that AI can help “unlock its own energy challenge,” by helping energy grids optimize their efficiency and power generation.

Below are more highlights from his remarks, which also touched upon energy policy reforms and the widening conflict across the Middle East.

An engine of peace

Speaking as the conflict between Israel and Iran continues to escalate, Al Jaber called upon “all parties” to “show restraint.” He also pushed for “peace over provocation, calm over confrontation, and progress through partnership—and only partnership.”
“Moments like these remind us that energy is not just the engine of progress,” he said. “It is a cornerstone of peace, stability, and ensuring prosperity.”

Shift into hyperdrive

Meeting AI’s energy demand, Al Jaber argued, will require a “systemwide shift” that brings the energy, technology, finance, and policy sectors “in sync.”
It will also require an effort to “hyperscale” energy, by creating a “reliable base load” of energy sources such as gas, renewables backed by energy storage, and nuclear breakthroughs, Al Jaber said.
He added that such an effort would also require placing a “pragmatic pause” on the early retirement of existing power plants, to help ensure constant supply while energy leaders work to bring nuclear back into the mainstream.

Power to the people

“Power generation is only half of the story, though,” Al Jaber said. “Getting the power to the end user is the other half, and . . . it’s the more complex part of that equation.”
He added that solving the equation—updating the energy grid in the United States—would require “an investment surge” of $300 billion annually. “You can’t run tomorrow’s technology on yesterday’s grid,” he added.
Al Jaber announced that ADNOC would be increasing its US energy investments, issued through ADNOC’s XRG arm, from $70 billion to $440 billion over the next ten years. “The United States is not just a priority. It is more of an investment imperative,” he said.
But beyond investment, policy can also help, he added, pointing to measures that de-risk capital investments and fast-track permitting.

Katherine Golden is an associate director on the Atlantic Council’s editorial team.

Editor’s note: ADNOC and XRG are sponsors of the Atlantic Council’s Global Energy Forum. More information on Forum sponsors can be found here.

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The AI race ‘is not just about code,’ it’s ‘about gigawatts,’ says the UAE’s Sultan Al Jaber

Atlantic Council — Tue, 17 Jun 2025 16:02:49 +0000

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SULTAN AL JABER: Good morning, everyone. It is indeed a great pleasure to be back here in Washington, DC. And it’s a real pleasure to see so many friends, colleagues, and partners at this very important forum.

Let me begin by thanking my dear friend and partner Fred Kempe for his commitment, and his guidance, and his support throughout the years. And allow me also to thank his team for working very closely with us and for hosting this very important and relevant forum. With your focus on energy security, economic competitiveness, and global prosperity, this forum could not be more on point.

Colleagues, before I continue allow me to address the evolving situation in our part of the world. The United Arab Emirates stands for dialogue, for de-escalation, and diplomacy. We call on all parties to show restraint. And we reaffirm our belief in peace over provocation, calm over confrontation, and progress through partnership, and only partnership.

Colleagues, moments like these remind us that energy is not just the engine of progress. It is a cornerstone of peace, stability, and ensuring prosperity. And as we say—or, as we stay committed to dialogue and diplomacy, we must also stay focused on the opportunities that lie ahead. Because while the world seeks calm, a new chapter in human progress is being written. And this chapter is defined by two simple truths. The first is that artificial intelligence is driving the next stage of evolution. And the second is that AI is driven by energy. In short, AI supremacy is essentially an energy play.

And the race for AI is not just about code. In fact, it’s about gigawatts. Every advance in AI uses more energy. A single ChatGPT query uses ten times the energy of Google search. AI generated video, one hundred times more. And we are now entering the era of the one gigawatt hyperscaler, where a single datacenter consumes as much electricity as a city of the size of Pittsburgh. And over the next five years, the US alone will need anywhere between 50 and 150 gigawatts of new installed capacity.

And meeting this demand is not just a technical challenge. It is a once-in-a-generation investment opportunity. In fact, it is an opportunity that will require a system-wide shift, with energy, technology, finance, and policy all operating in sync. That’s why yesterday, and here in Washington, DC, and in partnership with The Atlantic Council and MGX, we brought together leaders from all these relevant sectors to the second ENACT forum. And we do this in an effort to answer the fundamental and pressing questions, and to help build an integrated roadmap for a systemwide action.

Our first recommendation may seem obvious, but in my view, it is very urgent: In the age of hyperscalers, we must hyperscale energy. That means reliable baseload like gas, renewables backed by storage, breakthroughs from [small modular reactors] to fusion, and perhaps most critically a pragmatic pause on early retirements of existing power plants while we bring back nuclear to be part of mainstream energy mix.

Power generation is only half of the story, though. Getting the power to the end user is the other half. And in fact, it’s the most—it’s the more complex part of that equation. The fact is, you can’t run tomorrow’s technology on yesterday’s grid. And many—and that’s a fact—many of our grids were built for a completely different century and a completely different circumstance.

Wait times for key components like transformers and turbines can take more than three years to make them available. And this is not just a supply chain problem; it is a bottleneck to industrial growth, and that’s how we should view it. It is a bottleneck to economic prosperity and to industrial growth.

And solving it will require an investment surge of up to 300 billion US dollars annually in the US alone. We must de-risk major capital investments, and here policy can and must help. Policy cannot hold up progress. And we must take the gridlock out of the grid.

Currently, there are about 2,600 gigawatts of planned capacity around the world waiting for a proper grid connection. We must fast-track permitting and unlock that great potential. Let us train the one million electricians needed for a twenty-first-century power system. And let’s not forget that AI can unlock its own energy challenge by managing peaks and dips in demand, optimizing grid flows, and supercharging operational efficiency.

Friends, colleagues, and partners, the opportunity ahead is massive, but the window to act is very narrow. And the key to success is cooperation and true partnership. That is why the UAE is wasting no time in taking our powerhouse energy partnership with the US to the next level.

Over the next ten years we plan to grow our US energy investments sixfold, from the existing 70 billion US dollars to 440 billion US dollars. And we will do this through XRG, our international energy investment company. We are an anchor investor already in the largest LNG plant here, in Texas, and we produce specialty chemicals across the United States of America through Covestro and Nova Chemicals. And through Masdar, we have developed 5.5 gigawatts of renewable energy and storage capacity from coast to coast, and we are just getting started.

And to help harness our ambition, we just opened and activated our XRG-Masdar offices here in Washington, DC. Because, for us, the United States is not just a priority; it is more of an investment imperative. This is not just capital. It’s conviction in a shared future.

Partners, colleagues, and friends, to realize the full power of AI we must give it the power it needs. And this starts with a coordinated roadmap, a holistic approach, a comprehensive, cohesive roadmap that can be applied locally and scaled globally. We need policy that clears the path, infrastructure that carries the load, and investment that meets the moment. AI and energy are the twin engines of human progress—two engines, one direction, fast-forward into the future. And I’m here to invite you all to help shape that future together. I thank you.

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US global leadership in the age of electricity

Robert F. Ichord, Jr. — Mon, 16 Jun 2025 12:00:00 +0000

The international system is experiencing a period of significant realignment, shaped by shifting geopolitical relationships, economic tensions, and evolving security challenges. Within the broader context of global uncertainty, President Donald Trump’s initial foreign policy actions during his second term, for example on trade, support for Ukraine, and foreign assistance, have contributed to questions among allies about the future trajectory of US global leadership and engagement.

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This shake-up has important implications for global energy security, which has come into sharp focus since the full-scale Russian invasion of Ukraine. Considering the Trump administration’s renewed focus on an “energy dominance” agenda, including an emphasis on furthering US oil and gas production and exports, one should not overlook the equally important geopolitical aspects of the electricity sector. Increasingly relevant to global affairs, the electricity sector has experienced rapid global demand growth of 4 percent per year—often placing new energy systems at the heart of geopolitics.

As the world enters an “age of electricity,” decisions made during this second Trump administration will have far-reaching consequences impacting the future of international conflict, competition, and cooperation around the world.

Security, growth, and innovation

A dominant geopolitical feature impacting the electricity landscape is Russia’s military aggression against Ukraine, which has sharpened the confrontation between the West and a coalition of authoritarian states that have in various ways supported Russia’s war effort, including China, Iran, and North Korea. The conflict has illustrated and heightened the priority of electricity security, as the executive director of the International Energy Agency (IEA) recently emphasized to European Union (EU) leaders. The EU, with major help from US liquefied natural gas (LNG) exports, reduced its dependence on Russian gas for electricity, ramped up renewable energy to 47 percent of total generation, began to replace Russian nuclear fuels with Western sources, and disconnected the Baltic states from the Russian power grid.

Meanwhile, outside of the EU, the rest of the world saw record levels of electricity demand growth in 2024, especially in Asia, with China accounting for about half of the increase. Although the International Monetary Fund (IMF) forecasts slower world economic growth given the impact of uncertainty given ongoing trade pressure from Trump’s tariff strategy, the IEA still projects substantial electricity growth over the next three years.

Partly fueling this expected rise in demand is the explosion of digital information, along with the artificial intelligence (AI) systems to analyze this data. This trend is revolutionizing the electricity sector and creating growing demands for reliable, flexible, secure, and resilient electricity supplies for data centers and in other key civilian and military spheres. More complex and interconnected national and regional electricity grids are growing in almost all regions of the world. But these large digital systems are increasingly vulnerable to cyberattacks, especially from malign actors such as China and its Volt, Flax, and Salt Typhoon threat teams. Electricity security is therefore a vital component to national security in this new age.

This growing demand has set off a race to innovate and deploy new energy technologies. One critical strategic area is the development of advanced nuclear power systems, with designs under development to meet needs for electricity, industrial heat, desalination, military systems, district heating, data centers, hydrogen production, and shipping. There has been a resurgence of interest in nuclear power around the world—at COP28, leading countries pledged a tripling of nuclear power by 2050 from 2020 levels.

Competition for electricity markets

Against this complex backdrop, the Trump administration’s expanded use of tariffs has added new dimensions to global economic competition that is affecting relationships both allies and opponents alike. These measures have also introduced added strain on already fragile electricity supply chains, including those of power transformers, switchgear, and meters. This added pressure for the West and Western-aligned countries gives China, the world’s largest exporter of electric power equipment and electronics, an opportunity to expand further its global market presence, especially in emerging markets and developing economies (EMDEs). EMDEs generate about two thirds of the world’s power and are projected to account for 85 percent of global electricity growth over the next three years.

Moreover, over the past decade as the costs of solar and wind have dropped, EMDEs have pursued a transition to renewable energy. Although renewables supplied only 26 percent of EMDE generation in 2023, they now provide over 75 percent of new EMDE generation capacity outside of China. China’s dominance in renewables gives it significant market—and geopolitical—influence. Global installed solar photovoltaic (PV) capacity increased by 30 percent in 2024, and Chinese companies are poised to continue flooding the market with solar PV systems and components.

EMDE natural gas demand for power, which can complement intermittent renewables and improve grid reliability, and for industry is also growing. This creates space in EMDE electricity markets for a growing US role. As the world’s largest LNG exporter, the United States is looking to increase export capacity and access markets in India, Southeast Asia, and other EMDEs. Some countries may commit to increasing US LNG imports in their trade negotiations with the Trump administration to address trade imbalances and reduce tariffs. In 2024, US volumes went to 20 EMDEs and represented about 30 percent of total US LNG exports.

In the past five or so years, the United States has made significant progress in the development of advanced nuclear power systems, some of which are now beginning construction. This has placed the United States in a strong position to compete for new nuclear contracts in EMDEs, particularly to build small and micro reactors. These systems offer the prospect of lower total capital costs, faster construction times, and more appropriate sizes for the smaller grids in many of these countries than large 1000-MW reactors. Russia has dominated the international new-build market with Rosatom constructing large VVER 1000/1200 reactors in India, Bangladesh, Egypt, Turkey, Iran, and China and beginning a small modular reactor (SMR) project in Uzbekistan. China has the largest number of reactors under construction (30 domestically) and is working to expand exports of its Hualong I large reactor beyond the completed units in Pakistan as well as developing several types of SMR systems. South Korean, European, and Canadian companies are also eyeing foreign markets and nuclear supply chains for new reactors are linking companies from these regions.

Recognizing the critical role nuclear can play in meeting US electricity demand growth, the Trump administration, with bipartisan cooperation, is supporting advanced reactor development and demonstration as well as domestic uranium mining, enrichment, and fuel production efforts. Trump recently signed an executive order targeting an increase in US nuclear capacity from 100 to 400 gigawatts by 2050. Domestic growth in the sector would enable the administration to export both large AP-1000s and SMRs, with at least a dozen projects and cooperation in the works not only in advanced economies, like the United Kingdom, Canada, Poland, Romania, Bulgaria, but also with EMDEs like Ukraine, India, Ghana, Kenya, the Philippines, Indonesia, and Vietnam. Interest in SMRs is at play in most of these countries and US companies could achieve of a sizeable share of the IEA’s projected SMR global market of 120 GW by 2050.

National security and global engagement

Given its broad-based excellence in the electricity sector and emerging digital and AI technologies, the United States is well positioned to engage with allies on the adoption of technologies that advance grid reliability, flexibility, and resilience. US involvement in these growing overseas markets, valued at over $2 trillion annually, is vital to its commercial, technological, and national security interests and to restoring trust and confidence in the United States as a reliable partner.

In this effort, the United States should leverage its strengths as the largest producer of both natural gas and nuclear power to help other countries build out firm, baseload, and peaking power, helping reduce dependence on Chinese solar and battery systems in an age of electricity. But US investment both at home and abroad in renewables, energy efficiency, carbon capture, hydrogen, and other technologies is also critical to US influence in the world.

As the Trump administration reconfigures US foreign policy, it is important to forge a new partnership with industry to enhance US energy leadership and coordinate deployment of key diplomatic and economic tools—including technology and commercial agreements, policy and regulatory assistance, capital allocation, and trade and investment promotion—in a package that can be tailored to the energy needs of individual countries. In addition to bilateral efforts, successful US global leadership will require close cooperation with allies in supporting sound multilateral financial and technology cooperation mechanisms, Western-oriented regional electricity markets, and secure supply chains.

The age of electricity is coming. Will the United States step up and recognize that being a global leader in this sector is critical to its national security?

Robert F. Ichord Jr. is a nonresident senior fellow at the Atlantic Council Global Energy Center.

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The strategic reserve and the Israel-Iran conflict

Joseph Webster, Landon Derentz — Fri, 13 Jun 2025 21:29:31 +0000

Note: This is an update to a New Atlanticist article from October 2024 on the US Strategic Petroleum Reserve. Given the policy urgency surrounding Israel’s strikes on Iran, the authors have updated the previously-published work with the latest data and developments.

The US Strategic Petroleum Reserve (SPR) of crude oil is well-stocked, expanding policymakers’ optionality in the crisis in the Middle East.

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After accounting for fifty-two-week averages of imports and exports, as well as current inventory levels, the SPR’s net import cover is historically high, holding 23.8 weeks’ worth compared to the 17.1-week average since 2009. Over 107 million barrels from the SPR could be released without falling below post-2009 historical levels of net import cover. Fatih Birol, Executive Director of the International Energy Agency (IEA), issued a statement noting there are over 1.2 billion barrels of emergency oil stocks in the IEA oil security system.

The United States’ SPR has shifted since the early 2010s, when it held nearly 730 million barrels, covering roughly 11.5 weeks of crude net import demand, at fifty-two-week averages. With rising US oil production and exports, the SPR’s net import cover gradually increased over the early and mid-2010s.

As the United States rapidly became a major crude oil exporter, inventory management strategy shifted. Congressionally mandated sales from the SPR occurred from 2017 through the first days of the COVID-19 pandemic, as the barrels in inventory declined from around 695 million barrels at the beginning of 2017 to around 635 million barrels in April 2020. Inventories were further reduced between 2022 and 2023, as the United States and its allies worked to combat Russia’s full-scale invasion in Ukraine and its effects on energy markets. Since mid-2023, the United States began slowly restocking the SPR and inventories currently stand at over 402 million barrels.

While SPR inventories are near their lowest absolute levels in over three decades, the stockpile is very well-placed to meet its mission, which is to “reduce the impact of disruptions in supplies of petroleum products and to carry out obligations of the United States under the international energy program.” That’s because while the SPR’s crude oil inventory levels have fallen, US imports needs have receded, even as US exports have surged. Accordingly, US net crude oil imports stand at just over two million barrels per day, down sharply from ten million barrels per day in 2007, or eight million barrels per day in 2017.

The rise in US crude exports and the drop in net imports have bolstered US oil security. However, challenges remain. US refineries are optimized for specific crude grades, many of which still need to be imported. Shifting light, sweet crude exports to domestic use could, for example, disrupt refineries optimized for heavier, more sulfuric crude grades.

Despite these limitations, SPR inventories are at elevated levels, allowing the United States to cover about 23.8 weeks of demand. Net crude oil import cover is sharply higher than before the shale boom, or even immediately before the COVID-19 pandemic.

Finally, US crude oil production and consumption are projected to remain stable in 2025 and 2026. Technological improvements and—critically—the removal of energy infrastructure bottlenecks are supporting domestic crude production. The recently inaugurated Matterhorn Express natural gas pipeline, which runs west-to-east across Texas, has removed a key takeaway constraint from the Permian basin, improving US oil production fundamentals and sending domestic output higher. The EIA’s latest forecast holds crude oil net imports will remain flat or decline modestly, enabling the United States to draw down inventories even further while still maintaining net import coverage.

The United States’ strategic petroleum reserves and substantial domestic oil production leave it well-positioned to weather a crisis in the Middle East, barring major, prolonged outages to Gulf oil production.

Joseph Webster is a senior fellow at the Atlantic Council’s Global Energy Center and the Indo-Pacific Security Initiative; he also edits the independent China-Russia Report.

Landon Derentz is senior director and Morningstar Chair for Global Energy Security at the Atlantic Council’s Global Energy Center. He previously served as director for energy at the White House National Security Council and director for Middle Eastern and African affairs at the US Department of Energy.

This article reflects their own personal opinions.

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Complex energy systems face low-tech threats

Travis Nels — Wed, 11 Jun 2025 17:06:40 +0000

The dramatic destruction of parked Russian strategic bombers through a daring operation of the Ukrainian intelligence service has once again shone a spotlight on the power of asymmetric warfare. After initial reactions of delight in the West at seeing Russian aircraft burn, such feelings quickly turned to concern that similar events could relatively easily happen here as well.

The fact that cheap, low-end systems could wreak havoc on advanced military forces is indeed fear inducing—and unfortunately, that risk extends beyond jets parked on an airfield apron.

The electrical grid has been described as “the world’s largest machine.” In terms of defending it, a better mental model is that of a very complex supply chain. Electrons are produced from molecules pulled from the ground, atomic reactions, or the movement of wind, water, or sun. Those electrons are transported through a vast network of wires to their ultimate end use.

Notably, that end use—whether light, warm or cold air, artificial intelligence inference, or a Netflix movie—is all that matters. The electrons in an intermediate form or location are useless to a human being, so disruptions anywhere along the supply chain are functionally equivalent.

Attacking energy infrastructure has long been recognized as a useful combat tactic because those electrons are a precursor to many legitimate military end uses. Attacking electric power can also terrorize civilian populations, best evidenced in Ukraine by thousands of Russian attacks against the grid by high-end cruise missiles and guided weapons.

The number of global actors with access to cruise missiles is, thankfully, limited. But that does not reduce the risk to the grid. Being able to disrupt end use anywhere along the electron supply chain is a boon to the asymmetric attacker, who can find plenty of choke points along that chain. They can look for targets with the greatest impact at the lowest cost in time, resources, and risk.

To combat these threats, discussion of asymmetric risk vectors has increasingly focused on cybersecurity vulnerabilities. Recent revelations that the global supply chain for solar power inverters has been compromised by Chinese manufacturers is another reminder of the sector’s cyber vulnerabilities. The North American Electric Reliability Company (NERC), through its Critical Infrastructure Protection (CIP) program strives to address these risks through compliance activity, and players in the electric power ecosystem have invested heavily in software and processes to defend against cyberattacks.

Beyond cyber, attention is often focused on physical risk to the generation end of the electron supply chain. Certainly, it is easy to envision both attacking and defending a large, fixed piece of infrastructure like a power plant from an asymmetric attacker’s drones. The same applies to substation infrastructure. But what if one were to push the imagination a little further?

Electric utilities across the United States must constantly deal with outages from technical challenges, weather, animals, and even mylar balloons, which have disrupted utility services for years.

Listings on Amazon and Alibaba show that approximately 10,000 mylar balloons could be filled and released for less than $15,000 (with 95 percent of that being the cost of helium). Given that electric transmission and distribution infrastructure is in fixed, known locations—often highly visible and open to the air—it is acutely vulnerable to aerial attack.

Such an attack wouldn’t require smuggling drones and explosives, clandestinely attaching them to trucks in an action worthy of a Hollywood spy thriller—it would just require waiting for a delivery from the attacker’s e-commerce provider of choice. Think less of a spy thriller, and more of a dark remake of Up.

Infrastructure risk is increasing on two fronts—from the diffusion of high-end digital technology and from an evolving understanding that high-end energy systems can be threatened by cheap and low-tech weapons, or weaponized commercial products.

To counteract this threat landscape, policymakers are trying to support infrastructure owners and operators in protecting the grid. In addition to NERC CIP measures for infrastructure security, there is legislation pending that would hold states to the same federal standard as interstate transmission infrastructure, or elevate the US Department of Energy’s leader responsible for emergency response to a Senate-confirmed position.

This is not a call to action to ban mylar balloons—though some states are trying. Instead, infrastructure stakeholders must realize that the threat environment is broadening at both the high and low ends of the spectrum. After watching videos of burning Russian bombers, the sinking feeling that society is more vulnerable today than it was yesterday extends far beyond the military domain.

Travis Nels is a Veterans Advanced Energy fellow with the Atlantic Council’s Global Energy Center and the vice president of planning, analytics, technology, and transformation at AES Corporation in Arlington, Virginia. The views and ideas expressed in this article are his own.

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Donovan quoted in China Daily on potential US reactions to proposed EC sanctions on Russia

bpiasecki — Wed, 11 Jun 2025 16:34:49 +0000

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How Kazakhstan can anchor a resilient rare‑earth supply chain for the West

Miras Zhiyenbayev — Tue, 03 Jun 2025 10:00:00 +0000

The rare-earth supply crunch underscores a critical lesson: The United States cannot afford to rely on China’s goodwill for minerals essential to its economy and security.

China dominates the rare-earth supply chain, with Beijing supplying about 60 percent of global rare-earths output and controlling up to 90 percent of refining capacity. For the United States, which needs neodymium and dysprosium for F‑35 fighter jet engines as badly as it needs lithium for electric vehicles, continued dependence on Beijing is impossible. The solution is not wishful “onshoring” to the United States alone; it is establishing a portfolio of reliable partners. Kazakhstan, already the world’s leading uranium producer and a top‑ten copper and zinc exporter, is a prime candidate for such a partnership.

Rare earths have become a geopolitical flashpoint. In practice, that means Beijing can throttle supply at will. In April, for example, China abruptly restricted exports of several important rare earths and permanent magnets—actions triggered by trade disputes with the United States under the pretext of “energy security.” US firms and strategists described the move as China’s latest attempt to weaponize its rare-earths dominance.

Supply shocks will recur, not recede. After Beijing halted exports of rare-earth refining technology to the United States in late 2023, it spent 2024 steadily ratcheting up export-license requirements on strategic rare-earth oxides or outright banning its exports. These moves culminated in April of this year, with Beijing placing export restrictions on seven heavy and medium rare-earth elements (samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium) on dual-use national-security grounds.

The United States has only just begun to free its high-tech supply chain dependence on China. Over the past few years, for example, US policymakers have launched some domestic projects and lured allies in Europe and Australia to develop alternatives, but many of those efforts are still nascent. New supply lines will take years to mature. Washington needs a long-term partnership strategy that goes beyond homespun mining; it needs countries capable of supplying rare earths at scale. Since 2020, Kazakhstan has ramped up rare-earth mining, increasing its exports nearly fivefold by 2024. Still, both in 2023 and 2024, 100 percent of its rare-earth output is exported to China—a telling indicator that the resource is there, but does not currently flow to the West. By moving swiftly, the United States could hedge against future Chinese disruptions—and help build a secure, diversified global supply chain for these critical minerals.

Kazakhstan’s rare earths

Unlike some prospective supplier countries, Kazakhstan already knows it has rare-earth wealth. In early April, geologists in the country announced the “Zhana Kazakhstan” discovery: an estimated twenty million metric tons of rare-earths‑bearing ore in the Karagandy region, including sizable heavy‑rare‑earth concentrations. If even 10 percent of the ore proves recoverable at today’s grades, that equates to around 200,000 tons of rare-earth oxide content—enough to meet current US neodymium magnet demand for a dozen years. If validated, the site would give Kazakhstan the world’s third‑largest rare-earth element reserves, trailing only China and Brazil. While promising, these preliminary findings are no sure thing and will require deeper study.

This find is not an outlier. Soviet‑era data and recent airborne surveys point to additional prospects across southern and eastern Kazakhstan. The geology has been there; what was missing was investor certainty. That is changing fast. In just the past few years, the government has opened scores of new exploration projects.

Kazakhstan is no newcomer to big mining. In 2024, the country led the world in uranium output (about 38 percent of global supply) and ranked among the top ten producers of copper and zinc. The national mining concern, Tau-Ken Samruk, consolidates dozens of mines and has global joint ventures in everything from gold to base metals. Kazakhstan’s energy and transport infrastructure likewise favors large-scale mining, as it already accounts for 14 percent of the country’s gross domestic product.

Kazakhstan’s “multivector” diplomacy also plays a factor. Kazakh President Kassym-Jomart Tokayev courts Beijing and Moscow, yet he also seeks deeper ties with Washington and Brussels to balance against those giants. That instinct makes Astana a willing partner for the United States, and a less risky one than conflict-scarred alternatives such as Myanmar and the Democratic Republic of the Congo. At the same time, the United States should not expect Kazakhstan to choose only Western partners over the major powers along its eastern and northern borders.

Since 2018, Astana has overhauled its subsoil code on a “first come, first served” model. New legislation helps promote fiscal stability, offers value-added tax holidays on exploration equipment, and caps royalties. As a result, majors from Rio Tinto to Fortescue have launched joint ventures, while US‑backed Cove Capital began drilling rare-earths targets near Arkalyk in 2024.

Kazakhstan also has an edge in infrastructure. The Middle Corridor rail‑and‑port network—which runs from western China through Kazakhstan to the Caspian Sea and onward to Europe—was expanded last year with European Union (EU) financing. Aktau’s Caspian port already handles uranium concentrate bound for Canada and France; rare-earths concentrates could follow the same route with minimal modification.

In short, Kazakhstan offers what many mining countries do not: favorable geology and the business environment and infrastructure to exploit it. Kazakhstan already has smelters and refineries for many ores, and it boasts production of advanced materials such as purified manganese sulfate and titanium metal. It even produces gallium (used in semiconductors) and recycles rhenium, though admittedly it still lacks deep processing for rare-earth oxides.

The way forward

Washington has learned the hard way that pledges alone won’t break Beijing’s monopoly, and its next move should elevate quiet deals into an explicit strategy. On the Kazakh side, top leaders have made it clear that developing mining for Western markets is a priority. For example, Tokayev has called critical minerals the country’s “new oil,” and he has signed a number of memoranda with foreign partners on exploration and processing. Kazakhstan’s September 2024 “Kazakh-German” forum alone produced twenty-three agreements in mining, including rare-earth joint ventures.

Here are the three critical steps Washington and Astana should take next:

Unlock normal trade by repealing the Jackson-Vanik Amendment and grant Permanent Normal Trade Relations (PNTR) to Kazakhstan. The United States should finish what H.R. 1024 has already teed up: removing Kazakhstan from the Soviet-era Jackson-Vanik Amendment and extend PNTR to Kazakhstan. Scrapping this relic costs no money, instantly signals strategic seriousness, and eliminates the legal ambiguity that still shadows US financing and offtake contracts with Kazakh mines. PNTR lets both sides write binding long-term supply agreements.
Set up a US–Kazakhstan rare-earth task force to drive the deals. The United States and Kazakhstan should co-chair a cabinet-level task force comprised of the US State Department and US Commerce Department, as well as Kazakhstan’s Ministry of Industry. This task force would set annual, public targets for the number of exploration licenses issued to Western consortia, the amount of pilot separation plants financed and built on Kazakh soil, and the export tonnage of heavy and medium rare-earth elements to non-Chinese markets. The task force could instruct the US International Development Finance Corporation and Export-Import Bank of the United States to prioritize Kazakh rare-earth projects, while Kazakhstan fast-tracks permitting and guarantees site security. Early co-location of processing near the mine head would lock in long-term offtake for US buyers and complement EU infrastructure money already pledged for the Aktau port.
Deploy a blended-finance and technology package along the full value chain. Washington should pair loan guarantees with technical assistance from the US Geological Survey, Oak Ridge National Laboratory, and the Department of Energy’s Critical Materials Institute. Kazakhstan should match that support by streamlining visas for engineering teams and auctioning new mine blocks on transparent terms. The Pentagon’s National Defense Stockpile could start purchasing Kazakh oxides, while the Department of Energy and Nazarbayev University co-fund recycling research and development to close the loop at home.

To be sure, there are challenges ahead, and mining remains a difficult, uncertain venture. Bringing a greenfield rare-earths mine to commercial output can take more than a decade. But doing nothing cements Beijing’s leverage for that same decade and beyond. By acting now, Washington can buy future resilience and signal to market actors that rare-earths diversification is real.

Miras Zhiyenbayev is the advisor to the chairman of the board for international affairs and initiatives at Maqsut Narikbayev University, Astana, Kazakhstan. He is also co-sponsoring the June 4 US-Central Asia Forum at the Atlantic Council.

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Why the Middle Corridor matters amid a geopolitical resorting

Karel Valansi — Mon, 02 Jun 2025 14:00:00 +0000

Geopolitical earthquakes are redrawing trade routes across Eurasia. Russia’s war in Ukraine has awakened Central Asian countries, which have discovered their strength through cooperation to develop their economies and attain independence. Without the constant attention of Russia, this cooperation contributes to developing the Middle Corridor, a key trade route linking China to Europe via Central Asia, the Caspian Sea, and the South Caucasus. It is an alternative to traditional east-west trade routes that bypasses Russia and Iran. The Middle Corridor is a regional initiative, not an external, imposed idea. It boosts regional cooperation, flexibility, economic growth, and diplomatic dialogue. While Russia and China try to maneuver according to new geopolitical developments, Iran is ignored in these initiatives.

The Middle Corridor creates a strategic role for Turkey as a central energy hub connecting Europe to additional suppliers. The European Union (EU) has recently increased its interest and investment in the corridor. However, the United States is still sitting on the sidelines even though the Middle Corridor presents a vital opportunity to counterbalance Russian and Chinese dominance in the region and limit Iran’s desire to mitigate the effects of economic sanctions. Moreover, greater connectivity means access to Central Asia’s vast deposits of rare earth elements crucial for civilian and defense products, new energy, and information technology. As corridor countries seek to reach new markets and lessen their dependence on Russia and China, Turkey, the EU, and the United States share a common interest in increasing cooperation and counterbalancing the power of Russia and China.

The rise of trade corridors

Following Russia’s annexation of Crimea in 2014, the European Union faced unprecedented precarity and had to reconsider its energy structure to diminish its vulnerable interdependence on Russia’s asymmetrical control over pipelines and weaponization of energy. China’s Belt and Road Initiative and Europe’s urge for diversification increased the need for connectivity and shifted international attention toward trade corridors. As corridor wars intensify and become the new scene for great power competition, the United States needs a more assertive policy concerning Central Asia. This is especially true as the growing cooperation between Russia, China, Iran, and, to some extent, North Korea aims to challenge Western influence by building alternative trade routes aligned with their political agenda. Washington must actively engage in infrastructure initiatives across Central Asia to counterbalance this trend.

The Middle Corridor: A strategic alternative

The Trans-Caspian International Transport Route (TITR), or the Middle Corridor, is a multimodal trade route connecting Europe and China via Azerbaijan, Georgia, Kazakhstan, and Turkey. Since Russia’s full-scale invasion of Ukraine in 2022, its strategic importance has grown as it bypasses both Russia and Iran. The Middle Corridor relies primarily on existing rail and port infrastructure and requires further development and investment. Countries along its path are working to position it as an alternative to the Northern Corridor (the traditional route through Russia) and the Southern Corridor (which runs through Iran).

Before 2022, the Northern Corridor carried more than 86 percent of transport between Europe and China, while the Middle Corridor constituted less than 1 percent. Following the full-scale Russian invasion of Ukraine, the Northern Corridor became a financial and political liability, especially for Western countries aiming to counter Russian control over trade routes. Shipping volumes of the Northern Corridor dropped by half in 2023 compared to 2022. Part of this traffic moved to the Middle Corridor, with increases of 89 percent and 70 percent in 2023 and 2024, respectively.

The Middle Corridor has many advantages. It is a relatively safer route, especially given the disruptions along the Northern Corridor due to Western sanctions on Russia and those in accessing the Suez Canal through the Bab el-Mandeb Strait due to increased Houthi attacks on vessels. In addition to providing economic revenues to corridor countries, some define the Middle Corridor as a “crossroads of peace,” echoing the “peace pipelines” strategy of the past.

According to the World Bank, by 2030, the Middle Corridor can reduce travel times, while freight volumes could triple to 11 million tonnes, with a 30 percent increase in trade between China and the EU. However, progress in the Middle Corridor is slow, and various operational and regulatory problems are causing unpredictable delays. There are still logistical and infrastructural challenges. Most importantly, its annual capacity (6 million tons in 2024) is drastically below the Northern Corridor’s annual capacity of over 100 million tons.

Corridor wars through connectivity

Recently, connectivity and diversification have become key drivers in international politics, with regional and global powers seeking to expand their influence in the Middle Corridor. Japan is following these developments to diversify its trade routes while countering Russia and China. Although the Gulf Cooperation Council (GCC) is not yet a key player in the Middle Corridor, various summits between GCC and Central Asian countries since 2023 have manifested growing cooperation and increased GCC investments in the region’s infrastructure.

As the natural entry point into Europe, Turkey understood the importance of connectivity to sustain economic, commercial, and investment relations and political and cultural ties within the region. In line with its geostrategic location, Turkey has invested in many connectivity projects since the 1990s, such as the Baku-Tbilisi-Ceyhan pipeline, the International Transport Corridor, the Black Sea Ring Highway, the Eurasia Tunnel, the Yavuz Sultan Selim Bridge, the Edirne-Kars high-speed railway, and the Northern Marmara Motorway.

The Middle Corridor, as “the most reliable trade route between Asia and Europe,” presents Turkey with a historic opportunity to establish itself as a strategic transit hub in Europe-China trade. Diversifying its energy suppliers could reduce Russian influence in Turkey’s energy policy while expanding its influence in Central Asia and strengthening its economic ties with the EU. From the Turkish perspective, the corridor would improve its strategic position and strengthen its relations with Turkic-speaking countries in the region.

For the European Union, the Middle Corridor aligns with its Global Gateway strategy. The EU defined the development of the Middle Corridor as a priority to secure connectivity in the transport and energy sectors and promote sustainable economic growth in the region. While current global challenges increase the need for solid partnerships, Central Asia is a €340 billion economy, growing at an average rate of 5 percent annually, with further potential for collaboration. The EU sees the Middle Corridor as a fast and safer route connecting Europe and China, which helps diversify supply chains.

The Middle Corridor serving Russia, China, and Iran

For China, the development of the Middle Corridor is an opening to integrate into global markets and supply chains, an opportunity to reduce its financial burden and dependence on routes controlled by Russia, and also an escape from US sanctions.

Russia remains a major obstacle in developing the Middle Corridor. For regional countries, Moscow would “do everything in its power to control overland trade flows.” While Russia is currently distracted with its war against Ukraine, considering Russia’s sensitivities, it will at some point want to disrupt Western involvement in the region or even exploit the corridor for its own benefit. Russia has already begun exploiting the Caspian Sea and Kazakhstan to bypass Western sanctions. Moscow aims to leverage the enhanced connectivity of the Caspian Sea for military purposes, including the transport of Shahed drones from Iran. Additionally, since 2022, Russia has increased its investment in the International North-South Transport Corridor (INSTC) to diversify its trade routes, reducing its reliance on East-West routes. Iran’s neighbors and even its allies bypassed Iran in current connectivity projects. This result is mainly due to international sanctions, Iran’s poor infrastructure, and a lack of investment. In 2023, representatives from Turkey, Iran, Kazakhstan, Turkmenistan, and Uzbekistan met to discuss the Turkmenistan-Uzbekistan Route, and Tehran immediately proposed a third alternative connecting this route to Iran. Tehran also invests in routes linking Iran to China via Afghanistan to secure a stronger foothold and influence the balance of power within regional trade routes. Iran perceives the Zangezur Corridor as a potential threat that might increase Turkey’s presence near its borders. For Tehran, this project is “Turkey’s highway to Turan.”

Potential strategy for the United States, the EU, and Turkey

Although Central Asia is pivotal in ongoing corridor wars, the region is still not an American priority. The United States needs a comprehensive and updated Central Asia strategy. As Secretary of State Marco Rubio recently signaled, a first step could be to end the Jackson-Vanik Amendment , which restricts formal trade relations with nonmarket economies such as Azerbaijan, Kazakhstan, Tajikistan, Turkmenistan, and Uzbekistan. The region also needs American investment to modernize the Middle Corridor. In addition to direct economic benefits, the United States could counterbalance the influence of Russia and China. While great connectivity would enable regional countries’ ambitions, for the United States, it would facilitate access to vast mineral and rare earth reserves, which globally are under significant Chinese control.

The Middle Corridor serves as a lifeline for the landlocked region. Regional countries have the political will and determination to develop the corridor’s potential. In the age of great power competition, these countries have significant room for maneuvering, and they benefit from the multidimensional foreign policy they pursue to enhance their autonomy. However, there is a growing mismatch between expectations and the capacity of the Middle Corridor.

The United States, the EU, and Turkey should cooperate and intensify their engagement with these countries to cultivate mutually beneficial partnerships. Turkey is wildly successful as Ankara invests political capital in strengthening relations. Enhancing partnerships with regional governments and investing in infrastructure would benefit regional governments and the West, as they can maintain their influence in shaping global trade routes. Given that Russia, China, and Iran are trying to prevent the growing Western influence in the region, the West must immediately recognize the strategic importance of transit corridors. As an influence war is intensifying over transit routes, the United States should be at the center of these developments—and not in the periphery—to benefit and counter the geopolitical challenges of Russia, China, and Iran.

Karel Valansi is a political columnist who analyses the Middle East and foreign policy issues in Şalom Newspaper and T24. Follow her on X @karelvalansi.

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MDBs must finance nuclear power—or Russia and China will

Juzel Lloyd — Mon, 02 Jun 2025 13:23:32 +0000

The world is entering a new age for nuclear energy, as developing nations like India, Argentina, Egypt, and Pakistan consider adding nuclear power to their energy mix to rapidly increase domestic energy access. Multilateral development banks (MDBs) are in a position to enable this expansion of energy in their mission to help developing economies achieve economic growth and energy access, but the banks are hindering the use of nuclear power. Meanwhile, Russia and China, both nuclear technology export leaders, are filling the gap and gaining geopolitical influence. Other countries, such as France and the Republic of Korea, have state-owned nuclear enterprises, but they are market competitors and not geopolitical adversaries. As developing nations seek nuclear power to meet rising energy needs, MDBs must revise their outdated and politicized views of the technology—or risk ceding political capital to autocratic actors.

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An essential tool in the development toolkit

Developing countries’ energy demand is rising, requiring more firm power generation. Nuclear energy offers a reliable baseload critical for economies industrializing with energy-intensive sectors such as manufacturing and data centers. A 900-MW nuclear reactor can produce—with a much smaller footprint—the same power as 8.5 million solar panels or 800 wind turbines. And, unlike hydropower and geothermal energy, nuclear power is much less geographically constrained, enabling it to be sited in many locations.

Major economies are exporting their nuclear aversion

Currently, most MDBs do not fund nuclear energy projects. The Asian Development Bank (ADB) refuses to finance nuclear energy projects due to issues such as waste management and high investment costs. The European Bank for Reconstruction and Development (EBRD) prioritizes its energy strategy for “scaling up renewables,” supporting nuclear projects solely in areas of safety like decommissioning, with no involvement in construction. EBRD states it is neither in favor of or opposed to nuclear energy; it is simply operating within the mandate determined by its shareholders. The World Bank—the largest and arguably most influential MDB—cites a lack of expertise as its reason for not funding nuclear energy projects, although it frequently relies on external contractors for expertise in other sectors.

However, the World Bank’s president, Ajay Banga, recently signaled a potential shift by pushing the board to reconsider its stance on funding nuclear energy projects. In reality, the World Bank’s voting structure, which allocates voting power according to how much funding a country provides, grants its biggest funders with veto power. Germany serves as a key example: it shut down its nuclear reactors and opposed the inclusion of nuclear power in the European Union’s green investment taxonomy. The World Bank is held hostage by this tunnel vision, which supports only renewable projects, even though these technologies alone cannot meet the growing energy demands of developing nations.

MDBs’ refusal to fund nuclear power projects exacerbates the geopolitical divide between developing economies and the developed nations. This results in missed opportunities to expand energy access in poorer nations based on the prejudices of wealthier nations.

Lenders of last resort

MDBs’ current failure to finance nuclear projects cedes opportunities to other lenders. Western banks, including Goldman Sachs and Barclays, recently announced their support for nuclear energy, but this long-term commitment is questionable given private lenders’ risk-averse nature. Prolonged construction timelines and high capital costs for nuclear energy projects in countries like the United States may eventually deter commercial banks from maintaining their support for the technology.

Russia and China could fill the gap if the West leaves nuclear financing to others. Russia leads global nuclear power plant construction, accounting for about 60 percent of reactor exports, with ongoing projects in nations like Turkey, Bangladesh, and Egypt. Similarly, China is rapidly building out its domestic nuclear capacity—targeting over 100 new reactors by 2035—and leveraging the technology as a geopolitical tool under its Belt and Road Initiative, establishing projects in nations such as Pakistan and Argentina.

The MDBs’ absence in nuclear financing starkly contrasts with the generous loans offered by Russia and China. By leveraging state funding, Russia offers highly attractive terms, covering up to 85 percent of total project costs, as seen in Egypt’s loan, with lower interest rates and longer repayment periods than those required by the Organisation of Economic Co-operation and Development (OECD) for its members—an organization that does not include Russia or China. Russia is also expanding its equity stakes in international nuclear projects, such as Turkey’s Akkuyu nuclear power plant, where it holds a majority stake, fostering closer geopolitical ties and exerting influence over critical energy infrastructure.

Similarly, China extends significant financial support, covering 85 percent of construction costs for Pakistan’s Chasma 5 reactor along with a $100 million discount on the total project cost. China has also offered to cover 85 percent of costs in loans for Argentina’s Atucha III reactor.

By refusing to finance nuclear projects, MDBs force developing nations to rely on Russian and Chinese nuclear exports. Both nations’ dominance in nuclear energy exports risks creating significant geopolitical imbalances, expanding their grip on critical energy sources while weakening Western influence over international energy security. The MDBs must rectify this problem to ensure a more geopolitically diverse financing model for nuclear power construction and operation in developing nations.

Breaking the logjam

MDBs must consider structural changes to bypass the veto power of its major players and begin funding nuclear energy projects. One option is to create a consortium of pro-nuclear states within the MDBs. These nations could create a separate fund for nuclear energy financing, independent of contributions from anti-nuclear nations. This would not be a complete fix—the bank’s broader policy against nuclear finance would remain unaffected—but it’s a crucial step in the right direction.

Outside of direct financial support, development banks do have other options. They can establish pathways for technical assistance for nuclear projects, similar to the Energy for Growth Hub’s nuclear trust fund proposal for the World Bank. This can include enlisting expert contractors as advisors to governments building nuclear power plants and fostering open dialogues on nuclear energy. By taking these steps, development banks can empower developing nations to harness nuclear power and create a more equitable energy future.

Don’t hand adversaries a nuclear victory

The increasing dominance of Moscow and Beijing in global nuclear energy finance risks reshaping future energy affairs. It is time for MDBs to acknowledge nuclear energy as an essential tool to expand energy access. The World Bank and other multilateral organizations must reform their antiquated policies to support nuclear energy deployment and allow developing countries to more readily achieve economic growth. If they don’t, autocratic regimes willing to weaponize their energy dominance will eagerly fill the void.

Juzel Lloyd is an energy/environmental technology researcher at the Lawrence Berkeley National Laboratory and a former Atlantic Council Global Energy Center Women Leaders in Energy and Climate fellow.

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Replace the Inflation Reduction Act with FUEL-AI

Joseph Webster — Wed, 21 May 2025 13:00:00 +0000

The race to artificial general intelligence (AGI) could be the most consequential technological competition in history. Some American technologists see initial AGI leadership as self-reinforcing, granting early adopters lasting advantages. By contrast, many Chinese and (increasingly) US experts believe broad, cross-sectoral artificial intelligence (AI) adoption will shape long-term outcomes. This requires an all-of-the-above energy approach: natural gas, coal, and advanced energy technologies like solar, batteries, advanced nuclear, and wind. Regardless of whether the AI race proves to be a sprint or a marathon, however, US policymakers face difficult, complicated choices resourcing AI and its energy needs.

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As AI and data centers expand demand for power, natural gas and coal alone can’t meet future needs, while current solar and battery supply chains carry security risks. To resolve these challenges, the United States should expand domestic manufacturing of advanced energy technologies while maintaining natural gas—and, possibly, coal—production in the near term.

To win the AI race against the Chinese government, US energy policy must shift from a climate-first lens to one that prioritizes national security and securing a growing supply of power. To do so, Congress should pass the Future Usable Energy Legislation—Artificial Intelligence (FUEL-AI) Act, which would prioritize key national security interests such as providing power for key AI hubs like Northern Virginia’s Data Center Alley, streamlining permitting, modernizing transmission and the grid, supporting domestic energy manufacturing, and incentivizing energy efficiency technologies.

Energy and the race for AI supremacy

Whether the AI race is a sprint or a marathon, both paths demand massive amounts of new electricity. Though energy is a small share of AI costs, it’s a critical operational constraint: data centers can’t run without power.

While acknowledging profound uncertainties, top forecasts project data centers and AI-driven electricity demand could reach 4.6–9.1 percent of total US consumption by 2030, up from 4 percent today. If the sprint scenario holds, only fast-to-deploy sources like solar and batteries can keep pace with demand.

Even in the marathon scenario of broad AI adoption, the United States will likely need large amounts of new electricity—fast. Relying on natural gas and coal alone to power AI won’t work. Natural gas turbine production is constrained, and no major coal plant has opened since 2013. Supply chain constraints, profound grassroots opposition, and investor reluctance make new coal capacity unlikely.

Even though gas and coal will play a major role in powering US AI, a gas and coal-only strategy won’t succeed. In the worst-case scenario, insufficient electricity generation could create shortages and necessitate persistent brownouts that were last seen in the United States in the 1970s. Even if those dire conditions don’t materialize, however, higher domestic natural gas prices would reduce the competitiveness of US liquefied natural gas and pipeline gas exports. But the impact of a natural gas and coal-only approach would be felt most acutely by consumers, since residential electricity prices are already outpacing inflation.

Rural Americans would be hit hardest by rising electricity costs and poor reliability. They spend 4.4 percent of household income on energy—versus 3.1 percent in metropolitan areas—and face more outages.

Fueling AI with a summer peaking resource

In both AI sprint and marathon scenarios, solar and battery storage are highly suitable for meeting rising demand due to their speed, low cost, scalability, and geographic flexibility.

Solar is highly capable for matching data centers’ peak summer demand, especially in warm-weather markets. In Northern Virginia, home to 13 percent of all reported data center operational capacity globally, regional solar generation typically peaks in the summer—matching peaks for both commercial data centers’ cooling needs and residential consumers’ electricity consumption.

Solar’s flexibility makes it ideal for data center clusters, as it requires minimal infrastructure and no resupply. China appears to recognize solar power’s strategic value, concentrating rooftop solar in coastal provinces and deploying at least 3,000 megawatts of capacity at the dual-use Shigatse Peace Airport near the Indian border.

Strengthening solar cybersecurity

China’s dominance of solar supply chains poses security risks, especially given solar power’s importance for AI. Reports of Chinese-made inverters with unexplained communication equipment underline the dangers, as such devices could destabilize the grid—a risk the US Department of Energy has long flagged.

However, inverter threats are just one among many. The Chinese government and other adversaries already have broad ability to target US and partner infrastructure. Cybercriminals operating in Russia attacked Colonial Pipeline, while China has been linked to Mumbai’s 2021 blackout, malware found in US power and water systems, a still-unexplained transformer interdiction in Houston, and crypto mines operating near US military sites. Indeed, Chinese firms are estimated to own one-third of US crypto mining infrastructure and supply the vast majority of its machinery. Furthermore, ERCOT, the operator for most of the Texas grid, warns these high-load operations can worsen grid events, turning low-voltage issues into frequency control problems.

China’s role in software and hardware supply chains poses sabotage risks. Just as Russia weaponized energy in Ukraine, Beijing could exploit electricity systems in a Taiwan conflict. The United States should assess the inverter threat by reviewing installed units, ramping up inspections of Chinese-connected devices, and conducting other risk mitigation and software hygiene measures.

Instead of fruitlessly seeking to eliminate vulnerabilities and establish perfect security across pipelines, crypto mines, and inverters, however, the United States must rely on deterrence, threatening proportionate responses if China conducts electricity sector sabotage.

Replace the Inflation Reduction Act with FUEL-AI

The AI race with China carries immense stakes and uncertainty. To compete, the United States will need vast new electricity generation—regardless of whether the race is a sprint or a marathon. This requires an all-of-the-above energy approach: natural gas, coal, and advanced technologies like solar, batteries, advanced nuclear, and wind.

The United States should replace the Inflation Reduction Act with FUEL-AI, shifting focus from climate to national security. FUEL-AI would make it easier to build new energy infrastructure by streamlining permitting and modernizing transmission. Additionally, it would support domestic energy manufacturing for key national security technologies, such as transformers and advanced batteries; and prioritize power demand and supply measures at AI hubs like Northern Virginia’s Data Center Alley.

These reforms could attract bipartisan backing. Both parties oppose the Chinese government and support strategic technologies like nuclear power and transformers, while US advanced energy supply chains support hundreds of thousands of jobs and hundreds of billions of dollars in investment. Reorienting energy policy toward AI competitiveness can unite national security and economic priorities without abandoning the advanced energy technologies of the future.

Joseph Webster is a senior fellow at the Atlantic Council’s Global Energy Center and Indo-Pacific Security Initiative, and editor of the independent China-Russia Report. This article reflects his own personal opinion.

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Feeding the ‘water mafia’: Sanctions relief and Iran’s water crisis

Nik Kowsar — Thu, 15 May 2025 19:11:45 +0000

As temperatures soar and Iran’s water and power crises deepen, many officials are once again pinning their hopes on sanctions relief and a potential deal with the United States. They argue that freeing up frozen assets could ease shortages and stabilize the country. But decades of bitter experience suggest otherwise: without deep structural reform, more money will not save Iran—it will only hasten collapse.

Earlier this week, US President Donald Trump made headlines by stating what many Iranians have known for years: a corrupt “water mafia” has looted the nation’s resources while its leaders have “managed to turn fertile farmland into dry deserts.” He underscored the regime’s role in fueling the crisis, declaring that “their corrupt water mafia—it’s called the water mafia—causes droughts and empty riverbeds. They get rich, but don’t let the people have any of it.”

For millions of Iranians displaced by environmental degradation and water scarcity, it was the first time a sitting US president openly echoed what whistleblowers and environmental advocates have been shouting for decades.

The term “water mafia” has been used by Iranian journalists, scientists, and activists for more than a decade to describe a powerful and politically connected network responsible for pushing ecologically catastrophic megaprojects. These actors thrive on opacity, benefiting from unchecked dam-building, wasteful water transfers, and the relentless overextraction of groundwater, often under the guise of development and national security. Trump’s remarks may have been blunt, but they captured the essence of the crisis: Iran is not just running out of water, it is being robbed of it.

The aftermath of the 2015 Joint Comprehensive Plan of Action (JCPOA) nuclear deal offered a clear warning. Billions of dollars flowed back into Iran, yet no serious reforms followed. Instead, environmental destruction accelerated. Expensive dam-building and ill-conceived water transfer projects continued unchecked, groundwater depletion worsened, and land subsidence spread across critical plains. Agricultural practices remained wasteful, and environmental priorities were ignored.

In the Islamic Republic, the reflexive belief that crises can be drowned in money has repeatedly backfired. Over the past four decades—particularly since the Iran-Iraq War—financial windfalls without transparency, accountability, or public participation have fueled corruption, exacerbated environmental damage, and triggered deeper social unrest. Funds intended for resilience and renewal have instead bankrolled inefficient megaprojects, enriching politically connected contractors while pushing the country’s ecosystems closer to collapse.

Parliament and oversight bodies have long been reduced to hollow institutions, offering little more than a façade of accountability. Public dissent—especially from provinces ravaged by water scarcity—has been met with suppression, not solutions. Now, with the prospect of ongoing US negotiations delivering some sanctions relief, the economic arm of the Islamic Revolutionary Guard Corps, the Khatam al-Anbiya Construction Headquarters, stands ready to tighten its grip. Under the banners of “development” and “poverty alleviation,” it will likely expand its empire of megaprojects—ventures that, without environmental safeguards or transparency, have consistently deepened corruption, entrenched inefficiency, and accelerated environmental collapse.

Widespread corruption and lack of oversight

Water governance in Iran is tightly controlled by the Supreme Water Council—a body that exists more as a rubber stamp for elite interests than a forum for sustainable planning. Dominated by the Ministry of Energy, with the president or vice president merely present in name, the council has consistently prioritized unsustainable development over ecological integrity. In practice, it has functioned as a front for the water mafia—an entrenched network of bureaucrats, contractors, and cronies whose goal is profit, not preservation.

The Ministry of Agriculture, as the largest water consumer, is a major influencer within this council. Civil society and non-governmental organizations are almost entirely excluded from decision-making, and local stakeholders lack the ability to prevent resource destruction. The Department of Environment, while occasionally voicing concerns, has been reduced to a ceremonial role.

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Most large-scale water projects in recent decades have either bypassed environmental permits or obtained them under pressure, often through compromised processes involving firms with direct ties to the water mafia. In cases where local courts attempted to intervene, rulings were ignored or overruled by higher judicial officials loyal to political interests. Environmental defenders and whistleblowers who challenge these projects face intense security pressures, harassment, and, in many cases, exile.

Powerful consulting firms, many of which have long benefited from insider connections, have greenlit projects that have devastated entire ecosystems, displacing upstream communities, triggering deforestation, damaging cultural heritage sites, salinizing rivers, depleting aquifers, and contributing to widespread land subsidence in urban and agricultural zones alike. From Tehran to Isfahan, cities are literally sinking under the weight of institutional negligence. These aren’t development projects—they’re environmental crimes disguised as infrastructure. And if sanctions are lifted and new capital flows into the system without strict oversight, the water mafia will seize the opportunity to expand its empire, accelerating Iran’s ecological collapse.

IRGC involvement

The Islamic Revolutionary Guard Corps (IRGC), through its Khatam al-Anbiya Construction Headquarters, has become Iran’s largest and most politically untouchable contractor, positioned squarely at the center of what many now call the “water mafia.” This deeply entrenched network includes senior officials within the Ministry of Energy, politically favored consultants, and powerful construction and engineering firms. Shielded by military influence and judicial complicity, they operate with near-total impunity. Whenever a major dam or inter-basin water transfer project is launched, Khatam is either directly involved or quietly profiting through layers of subcontractors. Although sanctions have constrained some of its operations in recent years, the IRGC has routinely sidestepped these limits by deploying a spiderweb of front companies to keep cash and construction flowing behind the scenes.

Any future sanctions relief would give Khatam and the broader IRGC-industrial complex even greater control over state development budgets, further emboldening the water mafia. Since its post-1989 transformation, engineered by former President Akbar Hashemi Rafsanjani and sanctioned by Supreme Leader Ali Khamenei, Khatam has overseen disastrous megaprojects.

Those include the Karkheh and Gotvand dams, which have inflicted irreversible ecological damage across Khuzestan. Its inter-basin water transfer schemes, including the Garm-Siri project, not only jeopardize domestic water security but risk igniting future disputes with Iraq over shared river systems. Far from alleviating Iran’s water crisis, the JCPOA-era influx of capital largely served to reinforce the very machinery driving the collapse.

Lack of environmental impact assessment

Today, major multinational projects funded by international loans typically require rigorous Environmental Impact Assessments (EIAs) to ensure that long-term benefits outweigh ecological and social costs. In Iran, however, EIAs have become a hollow formality. They are often conducted by firms with vested interests in project execution, many of them closely tied to the water mafia. There is little to no independent review, and virtually no public scrutiny.

In many cases, projects begin without any assessment at all. Only after public outrage or activist pressure do authorities scramble to produce retroactive EIAs—by then, the damage is often done. The Gotvand Dam remains one of the most damning examples: its post-construction mismanagement of saline layers in the reservoir has created a chronic, man-made disaster.

Then there’s Lake Urmia—once the largest lake in the Middle East, now a stark reminder of systemic mismanagement. Over forty dams and multiple diversion tunnels throttled its inflows, all while upstream expansion of water-intensive crops like sugar beets continued unchecked. Climate variability may have accelerated the decline, but the collapse was largely engineered. Today, it’s exposed salt flats that feed dust storms that damage farmland, corrode infrastructure, and pose serious public health risks across the region.

Despite the efforts of environmental activists and a handful of parliamentary investigations, Iran’s annual budget continues to greenlight hundreds of new projects without proper assessments, many pushed through by consulting firms and contractors aligned with the water mafia. Without strict environmental conditionalities and oversight, sanctions relief will only accelerate this destructive trajectory, handing more capital to those who profit from ecological collapse.

More recently, the water mafia has set its sights on large-scale seawater desalination projects—particularly along the Persian Gulf and the Sea of Oman—without seriously accounting for the massive carbon footprint or the ecological harm to already stressed marine ecosystems. These projects are not only energy-intensive and environmentally hazardous, but the plan to pump desalinated water to central Iran comes with astronomical upfront and long-term maintenance costs. For the water mafia, however, it’s a goldmine: billions in unaccountable contracts, minimal oversight, and endless opportunities for profit—another expensive illusion sold as a solution.

The absence of a comprehensive plan

Countries facing severe water scarcity have developed innovative governance models that Iran could learn from—not by copying policies wholesale, but by embracing their core principles.

After enduring the Millennium Drought, Australia implemented the Murray–Darling Basin Plan, establishing basin-level governance and water trading systems to balance ecological sustainability with agricultural needs. Singapore, lacking natural freshwater sources, has become a global leader in integrated water management through its “Four National Taps” strategy, which includes water catchment, desalination, imported water, and wastewater recycling (NEWater). Spain utilizes river basin councils (Confederaciones Hidrográficas) that involve stakeholders from various sectors in decentralized water decision-making. Israel, situated in one of the world’s most arid regions, has achieved a high level of water security through a mix of technological innovation and strict efficiency standards, including the reuse of over 85 percent of its wastewater for agriculture.

These models share a commitment to transparency, adaptability, and inclusive governance—qualities that are currently lacking in Iran’s centralized and opaque water management system. For Iran to address its escalating water crisis, it must shift from supply-centric megaprojects to participatory and sustainable resource management.

The billion-dollar question: What should be done?

With sanctions relief, poor water governance, inefficient management, and structural corruption will not disappear. Scientists like Kaveh Madani, head of the United Nations University’s Institute for Water, Environment and Health, believe that Iran has become a water-bankrupt nation due to misguided policies, weak governance, and decades of poor management. Even if billions of dollars are released, absent a genuine will for reform, these resources will merely accelerate the execution of costly, unnecessary, and environmentally damaging projects.

A system resistant to methodical review and structural rebuilding will only collapse faster when flooded with money. The core problem lies in decision-making behind closed doors, the exclusion of public participation, and neglect of environmental imperatives.

To change course, Iran needs immediate, transparent, and measurable actions:

Halt all projects lacking legitimate environmental assessments.
Mandate the public release of water resource data and project budgeting details.
Reform budget allocation laws to prevent the approval of scientifically unjustified projects.
Establish an independent national body composed of experts, academics, farmers, and civil society actors to oversee and redefine macro water policies.
Pilot participatory governance models in critical watersheds to lay the groundwork for institutional learning and environmental democracy.

Ultimately, drafting a comprehensive, sustainable national water plan—regularly reviewed and adapted—is crucial for restoring balance to Iran’s fragile environment. As long as policymaking focuses on “increasing water supply at any cost” rather than preserving and optimizing resources, every newly injected dollar will only deepen the crisis, not resolve it.

Nik Kowsar is an Iranian-American journalist and water issues analyst based in Washington, DC. He produces and hosts a weekly TV program on Iran’s water crisis. He is also known for his past work as a political cartoonist.

The post Feeding the ‘water mafia’: Sanctions relief and Iran’s water crisis appeared first on Atlantic Council.

The United States’ role in managing the nuclear fuel cycle

Kemal Pasamehmetoglu — Wed, 14 May 2025 21:10:18 +0000

While there is uncertainty about the magnitude of nuclear energy required as global energy demand increases, it is likely that global nuclear energy usage will increase significantly in the next few decades. Such an expansion will require considerable growth in the nuclear energy ecosystem and enabling technologies, presenting a chance for the United States to shape the global nuclear energy landscape. US leadership is critical for upholding the highest global standards of safety, security, and nonproliferation —moreover, nuclear energy partnerships with other nations can help the United States establish and reinforce strong diplomatic ties. Its engagement in the sector brings an added national security benefit.

Building on the Atlantic Council’s previous report on the nuclear innovation ecosystem, this new report by Kemal Pasamehmetoglu explores the role of the United States in establishing a full domestic nuclear fuel cycle.

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Four energy deals Trump will look to make on his Middle East trip

Ellen Wald — Tue, 13 May 2025 13:32:41 +0000

President Donald Trump is traveling to the Gulf states this week in a visit aimed at negotiating business deals rather than wading into geopolitical issues. Here are four ways this strategy may play out.

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1. Investment in US energy and manufacturing

Last month, the United Arab Emirates (UAE) committed to investing $1.4 trillion in the United States over the next decade. Some of the investments in the package have already been announced, including a recent commitment by Emirates Global Aluminum to fund the construction of a smelter in the United States. If built, it would be the country’s first new aluminum smelter in thirty-five years and could potentially double US production. Trump will likely push the UAE to announce additional plans to invest in US manufacturing, infrastructure, and energy production, with petrochemicals, steel, and battery production likely targets.

Trump is expected to press Saudi Arabia to announce where it intends to invest the $600 billion that Crown Prince Mohammed bin Salman committed to during a post-inauguration call in January. Just like during his first term, Trump said that if Saudi Arabia agreed to large purchases of US products, he would make the country his first foreign visit. Now, he will look to hammer out the specifics, which will likely include purchases of military equipment in addition to investments in infrastructure, technology, and mining.

2. Nuclear energy cooperation

Saudi Arabia has tried to start a domestic nuclear power program since 2006. It has signed multiple agreements with various contractors and consultants—but with very little progress other than a small research reactor in Riyadh due to come online soon. Saudi Arabia has engaged with Chinese companies to explore domestic uranium mining and enrichment—a potentially problematic move from the perspective of the International Atomic Energy Agency (IAEA) because it can easily lead to weapons production.

However, there are signs that Saudi Arabia is now interested in complying with IAEA standards. Last August, Riyadh agreed to IAEA spot inspections designed to ensure that weapons are not being developed, potentially paving a pathway for cooperation with the United States. Last week, the Trump administration announced that it was dropping the Biden administration’s demand that Saudi Arabia normalize relations with Israel as a condition for civil nuclear cooperation negations, putting Saudi nuclear power back on the table. At stake may be commitments from Saudi Arabia to use US companies and American-made materials to build future reactors, as well as deals to supply Saudi-produced critical minerals to US customers.

3. Pumping more oil

Trump has been extremely vocal about his desire to lower oil prices. While US producers don’t want to see prices fall below the sixty dollars per barrel range (breakeven prices in the most productive shale basins are currently in the low to mid sixty dollars per barrel range), consumers would welcome lower gasoline prices this summer. Middle East producers seem eager to help, as OPEC+ recently committed to increase production by 411,000 barrels per day in June and is expected to recommit to gradually put more oil on the market at its ministerial meeting at the end of May. It is unlikely that Trump will press the Gulf countries to make additional commitments, but he will expect them to follow through—and will likely say so to the press.

4. LNG purchases

Trump is likely to push Gulf countries to expand their orders for US liquefied natural gas (LNG). Kuwait and Iraq already import US LNG and Bahrain just received its first cargo last month. Both Kuwait and Bahrain want to buy more LNG to meet high domestic electricity demand over the summer while natural gas outputs decline. Trump should push them to sign long-term offtake agreements with US LNG companies rather than rely on spot market purchases. This will ensure that these countries continue buying US gas even when more LNG become available from nearby Qatar, which is expanding its production.

This should be an easy sell to Kuwait, which is already in talks with the Australian company Woodside to buy a 40 percent stake in its Louisiana LNG terminal. Kuwait is aiming to secure LNG supplies from this project, but even with assistance from the Trump administration, it won’t be fully operational until the early 2030s. Trump should push Kuwait to sign additional offtake agreements, with the idea that if Kuwait does find itself oversupplied with LNG in the future, it can always resell cargos on the spot market.

Strategically, announcing at least two new LNG agreements with Middle Eastern countries will help the Trump administration’s position as it presses Europe to move forward with long-term offtake agreements for US LNG. Europe has been dragging its feet over concerns about emissions reporting, even though Europe needs US gas to replace the Russian LNG it currently buys. Trump can use LNG deals with Middle Eastern consumers to pressure Europe to commit to US purchases before winding down imports of Russian LNG. This would also help Trump pressure Russia to negotiate on Ukraine, as it would further squeeze Moscow’s income.

It isn’t just business

The focus of Trump’s visit to the Middle East may be on strengthening economic ties, but it is tough to ignore the backdrop of rising geopolitical tensions, particularly regarding Israel, Iran, and the Houthis. Business, trade, and energy markets are important to both the president and the leaders of the Gulf countries he will be meeting, but so are security and diplomacy. In Trump’s mind, business and geopolitics operate in tandem and everything is up for negotiation. It should not come as a surprise to see energy deals, trade negotiations, sanctions enforcement and even weapons sales materialize in concert.

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Environmental risk weighs heavily on the possible rewards of deep sea mining

William Yancey Brown — Fri, 09 May 2025 16:37:31 +0000

Many industry stakeholders and policymakers view deep sea mining (DSM) as a panacea for securing sufficient supplies of critical minerals, which are needed for clean energy and defense technologies. In March, the White House issued an executive order promoting mining generally and, in April, followed with a second order to fast-track deep sea permitting and circumvent multilateral regulations of the practice.

However, an analysis of the applicable international and US environmental requirements for DSM reveals that, in practice, the risks to deep sea ecosystems would prohibit DSM from proceeding under current laws.

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Why pursue deep sea mining?

DSM is focused on collecting polymetallic nodules (PMNs) that look like potatoes and contain critical minerals that currently are sourced from mining on land. A patch of the Pacific Ocean called the Clarion-Clipperton (CC) Zone, which covers more than 4 million square kilometers, may hold more cobalt, nickel, and manganese reserves¹ than are available on land.

A. PMNs scatter scattered on the deep seabed
B. Front of a PMN
C. Side of a PMN

Copyright British Geological Survey, National Oceanography Center © UKRI 2018

What rules govern DSM?

DSM in the CC Zone and elsewhere beyond national jurisdiction is regulated by the International Seabed Authority (ISA) under the United Nations Convention on the Law of the Sea (UNCLOS), to which most United Nations members are parties. The ISA has entered into 15-year exclusive rights contracts for DSM exploration with 17 contractors looking at PMNs in the CC Zone.

The United States is not a party to UNCLOS and cannot sponsor DSM exploration contracts beyond its national jurisdiction, but it and other nations can pursue DSM on their continental shelves, as countries like the Cook Islands are doing. No country is currently mining in the CC Zone, but Nauru is trying.

But the United States has its own applicable laws on DSM: the US Deep Seabed Hard Mineral Resources Act and the US Outer Continental Shelf Lands Act.

So, what do international and US laws say about whether DSM is permissible?

United Nations Convention on Law of the Sea

UNCLOS addresses environmental protection for seabed activities. It directs the ISA to adopt rules for “the prevention of damage to the flora and fauna,”² to disapprove exploitation where “substantial evidence indicates the risk of serious harm to the marine environment,”³ and to include measures “necessary to protect and preserve rare or fragile ecosystems as well as the habitat of depleted, threatened, or endangered species and other forms of marine life.” ⁴

International Seabed Authority

The ISA has issued final rules for exploration⁵ and draft rules for exploiting⁶ deep sea resources. Both regulations require a “precautionary approach” (Principal 15 of the Rio Declaration on Environment and Development) and prohibit activities in international waters that would cause “serious harm,” which both rules define to be any effect which represents a “significant adverse change in the marine environment.”

US Deep Seabed Hard Mineral Resources Act

The United States has its own DSM policy in the Deep Seabed Hard Mineral Resources Act (DSHMRA). This awkward and long-dormant statute prohibits any person under US jurisdiction from exploration or commercial recovery in international waters unless the activity “cannot reasonably be expected to result in a significant adverse effect on the quality of the environment.” That standard is incorporated in regulations. Despite the obvious schism with UNCLOS and objections from the ISA and UNCLOS parties including China and Russia, Canada’s The Metals Company, encouraged by the White House, announced in March that it will apply for a DSHMRA permit to mine in the CC Zone.

US Outer Continental Shelf Lands Act

The Outer Continental Shelf Lands Act (OCSLA) applies to any DSM activities on the 13 million square kilometer US “outer continental shelf”—including Pacific territories where PMNs are found. OCSLA and its regulations have several environmental standards addressing exploration and also requiring mining operations to be “designed to prevent serious harm or damage to … any life (including fish and other aquatic life), property, or the marine, coastal, or human environment.” The potential for DSM in US territory is not an idle consideration. A company named Impossible Metals made an unsolicited request for a lease in 2024 to mine PMNs offshore American Samoa, and has reportedly resubmitted the proposal to the Trump administration, which is likely to be more receptive to the idea.

In sum, the environmental takeaways under these laws are similar:

Don’t mine if there will be “serious harm” to the environment (UNCLOS).

Don’t mine if there could be a reasonable expectation the activity will “result in significant adverse effect on the quality of the environment” (DSHMRA).
Don’t mine if there is “a threat of serious, irreparable, or immediate harm or damage to life (including fish and other aquatic life) … or to the marine, coastal, or human environment” (OCSLA).

Would DSM meet these standards?

Out of concern for environmental impacts of DSM, the International Union for Conservation of Nature (IUCN)—a leading global conservation organization with governmental members, including the United States—approved a resolution in 2020 calling for a moratorium on DSM in international waters. To date, 32 nations have called for a ban or moratorium on the practice.

Studies have shown that the habitats of PMNs teem with exotic and little-understood life. One seminal article estimates that over 6,000 multicellular species occur in the CC Zone, living on and among the PMNs. About 90 percent are probably still undiscovered to science. Each mining operation is likely to remove⁷ PMNs from hundreds of square kilometers each year of operation. If the PMNs disappear, so will these animals, potentially including pink “Barbie” sea pigs and other species that the Natural History Museum of London’s scientists have discovered.

Things go slowly in the deep sea. The PMNs form over millions of years. This is the oldest of old growth—if it is stripped away, the nodules would probably take the same millions of years to come back, if ever.

DSM impacts besides habitat removal include dispersion of animals, noise, and possible oxygen depletion. During DSM testing, contractors primarily use self-propelled collectors that leave tracks and produce sediment plumes with potentially far-reaching consequences⁸ for the marine environment. One recent study found some small and mobile animals commonly found in sediment everywhere in the CC Zone had re-colonized testing track areas after 44 years, however, large-sized animals that are fixed to the sea floor were still very rare in the tracks, showing little signs of recovery. Impossible Metals proposes to hover and pluck the nodules, but its technology is untested at scale.

The CC Zone is huge—4.2 million kilometers have commercial potential and 3.4 million⁹ are considered particularly attractive for mining. This isan area larger than Alaska, Texas, California, and Montana combined, and the abundance and diversity of life forms vary substantially across it.

What’s the takeaway?

No experienced and objective environmental regulator could reasonably conclude that DSM, as now proposed, would meet the environmental standards of UNCLOS, DSHMRA, or OCSLA.

With new technology, greater understanding of the deep sea environment, and advancements in artificial intelligence, future DSM efforts may be able to selectively harvest PMNs with less impact. But for now, deep sea mining does not pass the environmental tests of the laws that apply.

William Yancey Brown is a nonresident senior fellow at the Atlantic Council Global Energy Center. From 2013–2024, Brown was the chief environmental officer of the Bureau of Ocean Energy Management in the US Department of the Interior, where he oversaw the implementation of NEPA.

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John E. Herbst: This deal gives Trump a concrete interest in Ukraine’s survival

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Experts react: At last, the US and Ukraine signed a minerals deal. Here’s what to expect next.

Atlantic Council experts — Thu, 01 May 2025 02:20:00 +0000

Rock paper signed. After months of getting close only to come up short—including a rocky Oval Office meeting in late February between US President Donald Trump and Ukrainian President Volodymyr Zelenskyy—the United States and Ukraine quietly struck a much-anticipated economic partnership on Wednesday. The agreement is intended to open US access to Ukraine’s natural resources, including its critical minerals, while helping to finance Ukraine’s reconstruction. What does the partnership entail? Where do Washington and Kyiv stand with each other now? And what message does the deal send to Russia? Below, Atlantic Council experts dig into the details and offer their answers.

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Shelby Magid: Ukraine is now in its strongest position since Trump took office

Matthew Kroenig: The United States now has a stronger stake in the future of Ukraine

Reed Blakemore: Ukraine’s critical minerals deposits will take years to bring to market

Ed Verona: With its unequal and exploitative terms, the deal’s future is uncertain

Doug Klain: The hard-won deal could reopen the door to more US military aid to Ukraine

Suriya Jayanti: Zelenskyy walked a very difficult line but the deal is a success

Andrew D’Anieri: There will be political drama, but expect Ukraine to ratify the deal

Oleh Shamshur: For Ukraine, the signed minerals deal is a major improvement over its earlier drafts

This deal gives Trump a concrete interest in Ukraine’s survival

This is a bad day for Russian President Vladimir Putin. The deal is a plus for US economic and national security policy. One, it is essential for the United States to have friends providing critical minerals. It cannot be dependent on adversaries such as China or Russia for that. So that is a plus. It is also positive for Ukraine, and not just because it now has an investor clearly committed to working on this subject of Ukrainian economic development. More importantly, this deal gives Trump—in terms he understands—concrete interest in Ukraine’s long-term survival as a secure, economically viable state.

The Kremlin will note with unhappiness that this agreement is the first occasion on which the new administration is talking about the provision of additional arms to Ukraine. It is unclear what the economic meaning of this is for the development of Ukrainian rare earths. What is absolutely clear is that, in Article VI of the deal laying out “Contributions to the Partnership,” the Trump administration is broaching for the first time sending arms to Ukraine. Making sure that does not happen has been one of Putin’s principal goals since the new administration took office.

—John E. Herbst is the senior director of the Atlantic Council’s Eurasia Center and a former US ambassador to Ukraine.

Ukraine is now in its strongest position since Trump took office

With the deal finally signed, Ukrainian officials can breathe an all too rare sigh of relief. Between fighting off a full-scale invasion and navigating a rocky road with Washington through cease-fire proposals, summits, contentious meetings, and a now iconic pull-aside meeting at the funeral of Pope Francis, Ukrainians have put in tremendous effort to close a deal that puts them in their strongest position yet with Washington since Trump took office.

Through intense negotiations, Ukrainian officials showed they could maneuver and persevere to ultimately get a fair deal. While the Trump administration put tremendous pressure on Ukraine to accept earlier deals, Ukraine managed to show that it is not just a junior partner that has to roll over and accept a bad deal. Ukrainian officials put their nation’s future first and managed the serious work to get to a final agreement that can be called a win on both sides.

This success and improvement in the US-Ukraine relationship comes as the Trump administration expresses increasing frustrations with Russia, questioning Putin’s willingness to end the war. Ukraine found itself under major attack shortly after the deal was signed, evidence of Putin’s pique at the agreement. While peace talks slow, the United States partially lifted its pause on military aid for Ukraine, approving the Trump administration’s first fifty million dollars’ worth of arms exports to the country through direct commercial sales.

As US Treasury Secretary Scott Bessent put it: “This agreement signals clearly to Russia that the Trump Administration is committed to a peace process centered on a free, sovereign, and prosperous Ukraine over the long term.” Such a statement and commitment from Washington now undercuts all of the Kremlin’s aims. With this deal and the administration’s other recent statements, perhaps Putin might realize he once again underestimated Ukraine.

—Shelby Magid is deputy director of the Atlantic Council’s Eurasia Center.

The United States now has a stronger stake in the future of Ukraine

Trump has said that the critical minerals deal provides a security guarantee for Ukraine. Traditional security experts have doubted whether such an arrangement can replace boots on the ground as an adequate assurance, but it will facilitate increased American investments and presence of US personnel in Ukraine. This will give the United States a strong stake in the future security and stability of the country. Indeed, for a businessman like Trump, this may even be a stronger statement of commitment than troop deployments.

—Matthew Kroenig is vice president and senior director of the Atlantic Council’s Scowcroft Center for Strategy and Security and the Council’s director of studies.

Ukraine’s critical minerals deposits will take years to bring to market

The fact this deal got over the finish line after weeks of ups and downs speaks to the strategic value of the United States putting a marker down on Ukraine’s future—especially as the Trump administration accelerates efforts to negotiate an end to the war in Ukraine.

Whether or not that strategic marker manifests in natural resources is still very unclear, if not unlikely. Though the US-Ukraine deal treats natural resources in a broad sense—including oil and natural gas in addition to critical minerals—access to Ukraine’s mineral resources has remained a consistently animating feature of negotiations. To that end, little of Ukraine’s mineral future has changed since this deal was first put on the table. Many of its critical minerals deposits remain in contested environments that will take years to bring to market, assuming that a negotiated peace keeps those minerals in Ukraine. Post-conflict stability, energy and logistical inputs to make project development successful, as well as the quality and quantity of those mineral resources will all bear strongly on investor appetite to pursue the licenses that are the backbone of this new reconstruction investment fund. If those upstream resources are successfully developed, then a separate but necessary question is how much of the raw material then passes through value chains that bottleneck in China as it becomes finished precursors and components. The answer to that question will determine if this deal supports the de-risking strategy that the Trump administration is deploying on a number of fronts.

To be clear, the United States needs all the below-ground opportunities it can secure given the increasingly stark vulnerabilities it faces regarding China’s control of mineral supply chains. That makes this deal, in broad terms, a positive story. Yet it’s much too soon to characterize this deal as a “win” for supply chain de-risking rather than a useful card in Trump’s negotiations with Putin.

—Reed Blakemore is the director of research and programs at the Atlantic Council Global Energy Center.

With its unequal and exploitative terms, the deal’s future is uncertain

It must come as a relief to the Ukrainians that the United States dropped its insistence on including the cost of all previous financial and military aid on the balance sheet of this deal. Nevertheless, the so-called partnership agreement is so onerous that it is tantamount to picking the pockets of an assault victim. Faced with an invasion by an enemy three times its size, Ukraine had little choice but to acquiesce to terms that reduce it to the status of a virtual colony or risk incurring the enmity of what has been until recently one of its staunchest allies. Under such extenuating circumstances, Zelenskyy bit the bullet and signed off on the deal. However, some nettlesome questions remain.

Will this deal have to be ratified by the Rada, Ukraine’s legislature? The unequal and exploitative terms are not likely to be accepted without opposition from across the Ukrainian political spectrum. Is the deal subject to a “yes or no” vote, or will amendments be considered? If it is ratified by a slim majority, then would potential investors be willing to commit to projects if a future government might abrogate a deal that was arguably imposed under duress?

The history of mineral resources deals offers ample reason to doubt that this one would stand up well over the period typically required to develop large and capital-intensive projects with lead times of up to a decade. Russia, ironically, provides an example of how resource-related deals can come unraveled. Production sharing agreements signed during the difficult transitional period of the 1990s were subsequently repudiated by Putin’s regime, with Western partners forced to surrender control and majority ownership in major projects. There are many more such examples in the developing world. I suspect that few serious US investors will put their shareholders’ money at risk based on such a clearly unbalanced “deal.”

—Ed Verona is a nonresident senior fellow at the Atlantic Council’s Eurasia Center covering Russia, Ukraine, and Eastern Europe, with a particular focus on Ukrainian reconstruction aid.

The hard-won deal could reopen the door to more US military aid to Ukraine

After months of tough negotiations and cease-fires agreed to, Ukraine has given Trump another win. The announcement of an economic partnership between the United States and Ukraine—which started as a deal on access to Ukraine’s minerals but has since morphed into a broader investment fund for Ukraine’s reconstruction—is welcome news for anyone who wants to see Washington step back from the last few months of hostility toward Kyiv.

More than any specifics in this deal, the top takeaway is that while Putin continues to say “no” to Trump’s push for peace, Ukraine has yet again said “yes.”

But the specifics do matter, and Ukraine seems to have pulled off some seriously tough negotiating with the Trump administration. Past proposals from Washington reportedly saw the United States taking partial or total ownership of broad swaths of Ukraine’s natural resources and infrastructure, something that prompted Zelenskyy in February to say, “I’m not going to sign something that ten generations of Ukrainians will be paying for.” Now, Ukraine retains full ownership of its assets and has turned the deal into a joint investment fund toward the country’s future reconstruction, with only future—not past—US assistance to Ukraine counting as a contribution to the fund. It’s a big win indeed after Trump has repeatedly mentioned inflated figures of what Washington has sent to aid Ukraine.

More than anything though, agreeing on a deal may reopen the door to military assistance from the United States to Ukraine. While weapons obligated by the Biden administration continue to flow, Trump has yet to make any new commitments to aid Ukraine’s defense since taking office. Ukrainian Deputy Prime Minister Yulia Svyrydenko, who signed the agreement on Wednesday in Washington, said that in addition to direct financial contributions to the investment fund, new assistance such as air defense systems would be considered an investment in the fund. No country but the United States can provide long-range air defenses against Russia’s ballistic missile strikes on Ukrainian cities.

Trump has spent months searching for a win in Ukraine, and now he’s got one. But Russia’s invasion will not be solved by an economic partnership. Putin has repeatedly rejected cease-fires because he does not want peace—he wants Ukraine. If the White House really hopes to secure a peace deal with Russia, that will require putting meaningful pressure on the Kremlin through the type of new sanctions Congress has prepared and by following through with new military support for Ukraine.

—Doug Klain is a nonresident fellow at the Atlantic Council’s Eurasia Center.

Zelenskyy walked a very difficult line but the deal is a success

Ukraine seems to have managed to negotiate itself out from under a proposed colonial-style resource concession, signing what has evolved into the framework for a deal with the United States that is actually mutually beneficial. Earlier White House drafts of the deal sought de facto US ownership of all Ukraine’s extractive commodities and their supporting infrastructure in perpetuity, with some profit possible for Ukraine after $500 billion in “repayment” to the United States. But the final deal leaves ownership and control with Ukraine, has no such repayment threshold, requires the United States to contribute to the Reconstruction Investment Fund, and other much more balanced terms.

Although Zelenskyy didn’t clinch security guarantees or NATO membership in exchange, the result is a commercial advantage for the United States. It is also a chance at huge foreign investment for Ukraine with the profits kept safe(r) from corruption and thus more likely to actually fund the country’s reconstruction. Ukraine still has work to do to make itself a more attractive country for foreign investment, such as stronger anti-corruption and rule-of-law adherence. But as written, this deal is a big win. Zelenskyy can rightly take credit for walking a very difficult line and coming out successful. It may well buoy him politically and buttress his chances of staying in office, which had been in decline, not least due to the White House’s hostility, which may also have been tempered with this deal. At least as of now, this is a win-win for all involved.

—Suriya Jayanti is a nonresident senior fellow at the Atlantic Council’s Eurasia Center.

There will be political drama, but expect Ukraine to ratify the deal

There’s no doubt that the US-Ukraine natural resources deal is a significant step forward in relations between the Trump and Zelenskyy administrations. After months of will-they or won’t-they speculation that centered on the Trump-Zelenskyy relationship, two of the most competent officials on each side—Bessent and Svyrydenko—got the deal done. Washington gets priority access for US companies to develop new natural resource projects in Ukraine and some solid investment protections to mitigate regulatory and corruption risks. Kyiv did not get security guarantees per se, and the donation of further military aid by the United States would count toward the US contribution to the Investment Fund. But it did secure a 50-50 management partnership over the fund, concessions on only future projects (rather than reach-back clauses that would have included proceeds from existing natural resource operations, previously put forward by the Trump team), and a long-term commitment by the United States to invest in a major piece of Ukraine’s renewal.

On the technical side, expect some opposition lawmakers in the Ukrainian parliament to try to hold up the ratification process. The technocrats and European-minded parties will likely focus on oversight over the deal, while populist parties and Russian influence operations will attempt to paint the deal as Zelenskyy selling Ukraine’s sacred lands to the decadent West. Neither element is likely to matter given that Zelenskyy’s Servant of the People party retains a legislative supermajority and can count on support from a range of independent MPs; the agreement will be ratified sooner rather than later.

For the United States, the agreement provides a new, more high-profile mandate for the Development Finance Corporation (DFC). Indeed, DFC, rather than Bessent’s Treasury Department, will oversee the fund from the US side. DFC, which had focused on providing hundreds of millions in risk insurance and small-scale loan guarantees in Ukraine under the Biden administration, will now be tasked with managing billions of dollars in strategic assets in Ukraine alone. The focus on natural resource development is a welcome broadening of DFC’s mandate and one that could extend to other areas across Eurasia.

—Andrew D’Anieri is a resident fellow at the Atlantic Council’s Eurasia Center.

For Ukraine, the deal is a major improvement over its earlier drafts

Judging from the published text of the minerals deal, it seems that the Ukrainian side managed to ensure that the most notorious elements of the last US draft were not included in the agreement’s final version. Most importantly, Ukraine retained control over its mineral wealth and will exercise full influence over the functioning of the reconstruction investment fund. The deal also recognizes Ukraine’s obligations as part of the process of the country’s accession to the European Union (EU). However, this recognition cannot be considered ironclad, as any conflicts that arise between complying with this agreement and Kyiv’s EU accession obligations are subject to consultation and negotiation.

In a notable reversal of some of the Trump team’s previous positions, the deal’s text refers to “Russia’s full-scale invasion,” indicates the possibility of continued US military assistance to Ukraine, and does not consider future revenue from Ukrainian critical minerals projects as repayment for assistance provided to Ukraine by the Biden administration. However, it remains to be seen whether signing this deal will prompt the Trump administration to modify its peace proposal by making it more acceptable for Ukraine. I still have my reservations about that.

—Oleh Shamshur is a nonresident senior fellow at the Atlantic Council’s Eurasia Center and a former Ukrainian ambassador to the United States.

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Canada’s voters send a message to Washington—and the world

Atlantic Council — Tue, 29 Apr 2025 18:06:07 +0000

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It was a state-ment. Canadian voters returned the Liberal Party to power on Monday after a stunning political comeback fueled by tensions with the United States—including an election-day message from US President Donald Trump calling for Canada to become the “fifty-first state.” Prime Minister Mark Carney declared in his victory speech that the United States will never “own” Canada. “But we also must recognize the reality that our world has fundamentally changed.” Our Canada-watchers are here to diagram what this new world looks like as Carney prepares to form a government.

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Christopher Sands (@USCanada_Sands): Adjunct lecturer and the director of the Hopkins Center for Canadian Studies at the Johns Hopkins School of Advanced International Studies
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Maite Gonzalez Latorre: Program assistant at the Atlantic Council’s Adrienne Arsht Latin America Center

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The election was essentially a referendum on the Canada-US relationship, Chris tells us, as “a surge of nationalist sentiment swept the country, including in Quebec,” which historically has maintained its own identity.
Carney, who took over from Justin Trudeau in March, and the Liberal Party appear to have fallen short of a hoped-for majority of 172 seats. Meanwhile, the Conservative Party stumbled—with its leader Pierre Poilievre losing his own seat. “Carney outperformed expectations, but the appetite for change remains strong. Canadians are still divided on who should lead,” Chris says.
The Trump administration, Chris says, could view a minority government as “weak.” Therefore it could ratchet up “pressure on Canada to meet NATO’s 2 percent of gross domestic product defense spending target, strengthen border security, and unlock its critical minerals—goals first promised by Trudeau in 2019 with little progress.”

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Let’s make a deal

Given Ottawa’s ongoing tensions with Washington, Imran says we should expect Carney “to look beyond the traditional defense partnership with the United States and to forge new, smaller defense deals with a variety of nations.”
We got a few hints during Carney’s first overseas trip, when he went to Paris and London rather than Washington and said Canada was reconsidering its decision to purchase F-35 fighter jets from the United States. Imran also points to a radar deal with Australia, a potential submarine deal with South Korea, and a proposed closer partnership with Nordic countries.
Carney’s Ottawa will distance itself from Washington on defense, “except where needed,” Imran predicts, “such as on North American Aerospace Defense Command (NORAD) modernization.”

Rocky Mountain low

Though Carney called for unity in his victory speech, that will be put to the test in the Conservative stronghold of Alberta, Maite notes, where the Liberals won just two ridings. “With blue-collar Albertans significantly impacted by US tariffs, Carney now faces a critical opportunity to demonstrate his commitment to all Canadians, not just Liberal supporters or Ontario residents.”
Carney and Trump-aligned Alberta Premier Danielle Smith, Maite points out, “have not started their relationship on solid footing.” But the Edmonton native Carney “may leverage his Alberta connections to build bridges with Smith and provincial voters.”
Alberta will also be the site of global intrigue in June, when Canada hosts Trump and other world leaders for the Group of Seven (G7) Summit in Kananaskis. That trip to the Canadian Rockies, followed by a flight to the Netherlands for the NATO Summit, represent “two defining tests” for Carney, Chris says: “How he performs will shape Canada’s standing abroad—and at home.”

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Can Nord Stream really rise from the dead?

Alan Riley — Tue, 29 Apr 2025 15:31:12 +0000

Recently, Russian Foreign Minister Sergey Lavrov announced that Moscow is in discussions with Washington to bring the Nord Stream pipelines back into operation. But upon closer examination, such a reopening looks difficult to execute in practice.

There are first the legal barriers, particularly with respect to the Nord Stream 2 pipelines. The European Union (EU) Gas Directive of 2024 imposes a supply security test on non-EU asset owners—clearly a problem for Gazprom. However, US investors may be able to take advantage of EU rules to push forward their proposal for the acquisition of Nord Stream pipelines (possibly one, two or all the pipelines) arguing they are more likely to pass such a test than any Russian entity.

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However, there is potentially a major second barrier: civil damages. A range of multibillion dollar claims against Gazprom are now underway because of its refusal to supply gas to its long-term customers during the energy crisis of 2021–22. There is not much point in investing in a pipeline if the gas or the revenues will then be seized by Gazprom’s former customers.

Furthermore, if Chinese tariffs on US liquefied natural gas (LNG) remain, US producers will likely want to keep Russian gas out of the EU market. This factor may weigh decisively on the Trump administration.

The Nord Stream Pipelines

The Nord Stream pipelines consist of two sets of pipelines, Nord Stream 1 and 2, which run along the seabed of the Baltic Sea. Prior to the full-scale invasion of Ukraine in February 2022, Nord Stream 1 was fully operational, while Nord Stream 2 was awaiting German and EU authorization. Each set in turn consist of two pipelines: Nord Stream 1A and B, and Nord Stream 2A and B. Each has a total annual capacity of approximately 27.5 billion cubic meters (bcm), amounting to 110 bcm in all—equal to two thirds of pre-2022 Russian gas exports to the EU.

Leading up to the full-scale invasion of Ukraine, Gazprom progressively cut the flow of gas to the EU via all pipeline routes—not just Nord Stream 1, but also the Yamal pipeline and Ukrainian transit routes. These supply cuts sent EU gas prices spiraling to over €340 per megawatt hour by August 2022, well over the 2009–19 range of €9–29. By early September 2022, no gas flowed through Nord Stream 1, and Nord Stream 2 remained unauthorized. Later that month, explosions ruptured three of the pipelines leaving only Nord Stream 2A intact.

The EU responded first by providing social protection for its consumers and businesses and funding gas purchases, principally from LNG providers. This cost the EU and member states approximately €500 billion. Subsequently, the EU significantly diversified its gas market, increasing pipeline supplies from Norway and LNG from the United States, Qatar, and even Russia. The EU plans to prohibit all Russian pipeline gas by April 2027. With the end of Russia’s Ukrainian transit contract in December 2024, the only Russian pipeline gas arriving in the EU is the 15 bcm which flows via the Turk Stream 2 pipeline principally to Hungary and non-EU Serbia.

Can Nord Stream restart?

The major US figure pushing for a restart is investment banker Stephen Lynch, who has focused particularly on the still-intact Nord Stream 2B pipeline. Lynch has also suggested that repairing the other NS2 pipeline would cost less than $700 million.

It is natural that one would start with the intact pipeline. However, the fundamental regulatory problem is that neither Nord Stream 2 pipeline has been authorized under German or EU law. The 2024 Gas Directive imposes two key requirements on pipeline owners. First, the owner must demonstrate that it is not also the supplier of the gas. Second, a non-EU owner person must show that certification will not risk the energy or overall security of any member state or the EU itself.

One can see how the Lynch proposal could work with the EU law provisions. A US-owned pipeline would be far more likely than Gazprom to obtain certification under the supply security test, given Gazprom’s behavior during the energy crisis. Furthermore, as the US investors would own the pipeline but not provide the gas, they would be able to pass the separation of ownership and supply test.

However, for such a proposal to work, the sale would need to be at full arm’s length—at market prices and with no Russian money or Russian state connections on the US side. The 2024 Gas Directive imports a very broad definition of control from the EU Merger Regulation. Any below-market-price transaction or Russian participation could raise the prospect of a legal challenge against the certification of the new non-EU owner—some EU member states would certainly launch a challenge if there were any suspicion of Russian involvement on the US side.

One also must ask whether Gazprom—which has never willingly sold one of its long-distance pipeline systems—would be prepared to do so now. Gazprom ran a half-decade campaign to get Nord Stream 2 authorized so it could run the pipeline, and it would be unprecedented for Gazprom to surrender it.

A further problem is that in response to the prospect of Nord Stream 2 restarting, the EU could seek to deauthorize Nord Stream 1, which was authorized under an older assessment regime which did not include the supply security test. As both Nord Stream 1 pipelines are ruptured and have not been repaired in over two years, the European Commission could propose amending legislation to the 2024 Gas Directive which could provide that any significant and lengthy rupture to a major piece of gas infrastructure would require the application of the supply security test.

Adopting such legislation would potentially strengthen US investors’ hands with Gazprom. It would mean the only way that Russian gas could flow through the pipelines would be if they were sold. However, Gazprom would probably be even more reluctant to surrender all of its pipelines to outside hands. Taking that position, however, would mean that Nord Stream 1 could never be revived.

The damages barrier

Perhaps the most formidable barrier to US investment in the Nord Stream pipelines is the fact that Gazprom would have difficulty selling its gas in the European Union, stemming from its behavior during the 2021–2022 energy crisis.

From spring 2021—presumably as a means to weaken Europeans’ resolve to assist Ukraine once the full-scale invasion got underway—Gazprom progressively cut gas flows to the EU. This started with a failure to respond to demand for more gas on the European spot market as COVID restrictions lifted. Then, Gazprom did not fill its own European-based gas storages and indeed drew from them as the winter heating season began. By early winter 2021–22, some of Gazprom’s EU storages were as little as 5 percent full.

Following the invasion in February 2022, Moscow went much further. In March, the Kremlin issued a presidential decree requiring all of Gazprom’s long-term customers to pay in rubles rather than in euros or dollars as per their contracts. Because it was difficult to be sure that payments would be cleared, many customers refused to pay in rubles. By May, Gazprom began systematically cutting off its long-term customers, starting with Poland in May and finishing with Italy in October. Over the summer, Gazprom progressively cut gas flows via Nord Stream 1, reducing supplies even for those continuing customers it was nominally still supplying.

This led to at least twenty long-term customers suing Gazprom. As these arbitration proceedings are private, it is not possible to know how many cases there are or the scale of their claims. However, it is known that Germany’s Uniper has been awarded €13 billion by the Stockholm Court of Arbitration, and that Austria’s OMV is pursuing several claims and has so far received awards amounting to €330 million. In addition, Poland’s Orlen has said publicly it has a claim outstanding for €1.45 billion.

The problem for Gazprom is that such awards create a major barrier to returning to the EU market. Gazprom will face seizures of its gas as it enters the EU market or more likely its customers payments will be seized to satisfy outstanding arbitration awards such as that handed down to Uniper.

However, it is not only the long-term customers of Gazprom who have claims. Gazprom was the dominant gas supplier in most of Central and Eastern Europe and parts of Western Europe. Given that refusal to supply is an antitrust abuse of dominance under EU law, and indirect purchasers (including energy-intensive industrial users) as well as consumers are able to bring claims, the potential scale of damages against Gazprom may be enormous.

With its long-term customers, Gazprom could potentially offer very cheap gas as a means of compensation. It could adopt a divide-and-conquer strategy by doing similar low-price compensation deals with high-volume users while seeking to contest consumer cases. The question remains however, as to whether the scale of compensation that Gazprom may have to pay undermines the economic case for entry to the EU market—and thereby the economic case for US investors to acquire one, two or all of the Nord Stream pipelines.

Chinese tariffs and US LNG interests

With the imposition of Chinese tariffs on US LNG, US gas shipments are already being redirected toward the European market. If the current tariff regime is sustained, then US producers will want to maximize access to alternative markets. This then raises the question as to whether the US government would be willing to support any Russian gas flows returning to the EU.

Potentially, Chinese tariffs may give Beijing greater incentive to finally consent to a version of the Power of Siberia 2 pipeline, which would, for the first time, bring natural gas from the Western Siberian gas fields—the main supply fields for the EU—to China.

If this ends up being the case, one can see the potential reshaping of global gas markets. Russia would increase its gas flows to China, while the United States—via long-term LNG contracts—would supply the EU market. In such a world there would only be a limited role—if any—for the Nord Stream pipelines. Given the formidable obstacles, restarting Nord Stream may simply be one pipe dream too far.

Alan Riley is a non-resident senior fellow at the Atlantic Council Global Energy Center and a Professor at the College of Europe, Natolin.

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If Russian gas returns to Europe, it must go through Ukraine

Sergiy Makogon — Mon, 28 Apr 2025 13:25:23 +0000

The possibility of resuming Russian gas supplies to Europe as part of a cease-fire agreement in Ukraine is being actively discussed. Technically, this would be feasible—Ukraine’s gas transmission system is still capable of transiting up to 100 billion cubic meters (bcm) per year of Russian gas to Europe.

Nearly three months of zero gas flows have shown that Europe can manage without the volumes of Russian gas that previously transited Ukraine—only 15 bcm in 2024, compared to 84 bcm in 2019. Nevertheless, rumors of possible restoration of Russian gas deliveries to the European Union (EU)—either via Nord Stream or through Ukraine—continue to circulate in the press. Resuming this trade could be a potential Russian condition for halting hostilities as Russia desperately needs gas export revenues. If that is the case, resumed flows might be a necessary step to create peace. But they must be routed through Ukraine and under conditions that will ensure energy security and full transparency.

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Russia is extremely interested in resuming supplies to the premium European gas market. Since 2021, Russia has lost more than 100 bcm per year of gas exports to Europe, undermining Gazprom’s financial stability. Desperate attempts by Gazprom to redirect exports to Central Asia and China have not brought significant financial returns, as prices there are two-and-a-half times lower than European prices. Moreover, pipeline export capacity to those markets is very limited. Russia’s direct pipeline export capacity to China currently stands at 38 bcm per year via Power of Siberia. This infrastructure is not connected to the large gas fields historically used to supply European markets. Additionally, Russia’s ability to export liquefied natural gas (LNG) faces significant constraints due to US sanctions. To cushion the loss of the European market, the Russian government has been forced to raise domestic prices, an unusual and very unpopular move in the country.

Additionally, the Kremlin is eager to maintain its political influence over Europe, including through export revenues. Hungary and Slovakia are clear examples of how this influence manifests—both nations have repeatedly opposed or diluted EU sanctions against Russia and blocked critical financial and military support for Ukraine.

The Russian government and several members of the German far right regularly raise the issue of resuming Russian gas supplies to Germany via the surviving branch of the Nord Stream 2 pipeline, which has a capacity of 27.5 bcm per year. However, German authorities categorically rule out the possibility of such a resumption. Other Northern European countries, as well as Poland and the Baltic states, also strongly oppose restoring transit through Nord Stream, fearing increased militarization of the Baltic Sea and the potential reversion to EU dependence on Russian gas. Resuming transit through Poland is also unlikely, for both political and technical reasons, as the Yamal–Europe pipeline has now been almost fully integrated into Poland’s domestic gas system and can no longer handle flows from Russia.

This leaves Ukraine as the most feasible route for resuming Russian gas deliveries to Europe.

EU officials and most member states officially do not support the idea of resuming gas transit through Ukraine. However, the EU has not imposed sanctions on Russian pipeline gas or LNG, allowing Russia to retain a significant market share in Europe. The European Commission continues to reaffirm its commitment to phasing out Russian gas completely by 2027, and this month plans to present a detailed roadmap for this process.

Unfortunately, the European Commission has been unable to fully ban Russian gas imports. Combined pipeline and LNG imports from Russia accounted for less than 19 percent of total EU gas inflows in 2024. However, there may be concern that a complete ban could significantly impact gas prices in Europe. Given that the Commission has outlined a plan—not a binding commitment—to fully phase out Russian gas by 2027, it might opt to delay sanctions on Russian gas until then in exchange for peace. The anticipated influx of new LNG volumes from the United States, Canada, and Qatar between 2026–28 could mitigate EU concerns about price volatility during this transitional period.

The position of the United States will be determinative. On one hand, the Trump administration consistently demands that EU countries increase purchases of US LNG and may not welcome significant increases in Russian gas imports to Europe. However, for the sake of a peace deal, Trump may agree to limited imports of up to 15 bcm annually—a volume that flowed via Ukraine in 2024 and would have only a minor impact on US exports to Europe.

As for Ukraine, estimated annual revenues of $400–600 million from Russian gas transit are a miniscule contribution to the economy. Therefore, the question of resuming transit should be considered in a broader context of cease-fire agreements and establishing long-term peace. Continued transit of Russian oil and renewed gas transit through Ukraine could allow Russia to earn up to $12 billion annually. Accordingly, Ukraine is entitled to expect not only transit fees of around $200 million for oil and an estimated $400–600 million for gas, but also significant additional concessions from Russia.

These concessions should include Ukrainian control over the Zaporizhzhia nuclear power plant, which can produce 6 gigawatts of electricity annually, but was occupied by Russia in 2022. This would help balance Ukraine’s power system, large parts of which have been destroyed by Russian missile and drone attacks, and eliminate the need to import electricity from the EU. It is worth noting that Russian control over the plant has little economic sense, as Russia cannot restart the plant without restoring the Kakhovka Reservoir, which is unlikely without Ukrainian cooperation.

Additionally, Ukraine has the right to demand 15–20 percent of Russian oil and gas exports—either in monetary terms or in kind—as a transit tax. These funds should go into a special fund for the restoration of Ukraine’s energy production, which has been destroyed by Russian attacks. The proposed percentage is reasonable, given the existing discounts on Russian oil and gas which, as sanctions are lifted, should disappear.

In order to limit Kremlin’s influence on the European gas market and on political processes within Europe, the EU should place red lines on its reengagement with Russian energy.

First, import volumes of Russian gas should be capped, both for the entire EU and for individual member states, to prevent any renewed dependency on Russian energy supplies.

Second, gas purchases should be carried out collectively through the AggregateEU initiative, with the delivery point for European buyers located at the Russia–Ukraine border. This would eliminate Gazprom’s ability to offer politically motivated pricing to more loyal countries and energy companies.

Finally, the EU and Ukraine should create an international consortium to manage Ukraine’s gas transmission system. This idea was explored in 2018, and its revival could increase European traders’ confidence in transit reliability through Ukraine.

Conclusion

If a cease-fire necessitates resuming Russian gas flows to Europe, it must flow via Ukraine and be conditional on key concessions from Russia. These must include safeguards to ensure that the EU does not become dependent on Russian gas again and that Moscow can no longer use gas as political leverage. Ukraine should also regain control over vital energy assets like the Zaporizhzhia nuclear plant and secure a substantial transit tax for reconstruction of its energy infrastructure. Policymakers in Kyiv, Brussels, and Washington must remain resolute in demanding these terms to ensure any peace agreement reinforces, rather than undermines, regional stability and energy security.

Sergiy Makogon is a non-resident senior fellow at the Center for European Policy Analysis and the former CEO of GasTSO of Ukraine (2019-2022).

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Illicit mineral supply chains fuel the DRC’s M23 insurgency

Clarkson Kamurai, Brad Handler, and Morgan Bazilian — Wed, 23 Apr 2025 19:46:26 +0000

The insurgency by M23 in the eastern Democratic Republic of the Congo (DRC) is the latest example of the damage that can be wrought by the illicit trade of mined materials. It also highlights the limitations of some developing economy governments to oversee mining, particularly when the deposits are easily accessible. As the United States considers a deal that would provide security to the DRC in exchange for access to its critical minerals, it is important to understand the level and nature of the commitment required to address the complex challenges related to critical mineral development in the country. Indeed, broader international engagement—from neighboring governments to commercial buyers—is likely needed to bolster the DRC’s capacity to manage its minerals.

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Conflict minerals and the M23 insurgency

The Great Lakes region of Africa, which straddles the DRC, Rwanda, Burundi, and Uganda, supplies 30 percent of the world’s coltan, a crucial mineral for high-end electronics. Other valuable minerals, such tin, tungsten, tantalite, and gold, are often mined alongside coltan in the region. Artisanal mining is common—while this provides livelihoods for many, it also gives rise to dangerous working conditions, child labor, and political conflict and instability.

Much of the region’s coltan is deemed a conflict mineral as mining areas are controlled by armed groups and organized crime. The DRC government lacks firm control of its territories, especially in the eastern provinces, and transportation infrastructure is underdeveloped. Because of these challenges, foreign companies often avoid direct mining in the DRC, instead purchasing minerals through middlemen.

The M23 rebel group, an ethnic Tutsi-led militia in the eastern DRC, is fighting the DRC national army and claims to protect Tutsi populations from Hutu militias. Its resurgence in 2022 is linked to frustrations over the government’s slow implementation of peace agreements and worsening security, although it is argued that M23 acts in service of Rwanda’s interests in the region’s minerals. The M23 insurgency is allegedly financed through the exploitation of coltan and other minerals, including reports that M23 fraudulently exported at least 150 metric tons of coltan (7-10 percent of DRC’s annual global supply) to Rwanda in 2024. Current estimates put this as high as 120 metric tons per month. The current involvement and role of Rwanda is evidenced by the presence of 4,000 Rwandan army personnel and heavy weaponry.

The ongoing insurgency has halted regular mining activities, leading to “command” mining in which rebels control operations. This is affecting production levels, worker safety, and regional investment. Conflict has placed all transport routes under rebel control, increasing costs and delays due to road closures and violence.

An important dynamic for global supply chains is that rebel groups like M23, along with other middlemen, foster the mixing of legal and illegal minerals. This effectively launders the illegally mined material, allowing its sale to parties that are mandated to buy ethically sourced product, such as US-based customers who must comply with the Dodd-Frank Act. These sales channel profits to armed groups while depriving the DRC of its rightful revenue. Rwanda is effectively complicit, as it does not charge taxes on mineral exports and allows imported goods to be reassigned as “Made in Rwanda” if they are transformed or processed within the country with a minimum 30 percent value addition.

DRC efforts to regain control

Amid the ongoing conflict in the eastern DRC, there is an intensified call for international accountability and economic reforms to address resource-driven violence. At the February 2025 United Nations (UN) Human Rights Council session, the International Chamber of Commerce and Development urged the UN to enhance transparency in raw material transfers from Rwanda to combat mineral exploitation crimes. Enhanced oversight, it argued, would hold resource looters accountable.

Additionally, at the Munich Security Conference, the DRC accused Rwanda of destabilizing the region to exploit its minerals and proposed measures to encourage legitimate investments and transparent contracts while urging the international community to facilitate peace.

The DRC, meanwhile, has classified certain mining sites in North and South Kivu provinces as “red” zones, halting mineral trading in these areas. The country is orchestrating legal and regulatory efforts, including installing ore tracking mechanisms to combat the illegal mineral trade, disrupt conflict financing, and align mining practices with international standards. The red zone classification is intended to last six months and includes independent audits to ensure responsible sourcing.

On the diplomatic and military front, a quid pro quo of mineral rights for security cooperation seems to be developing whereby the DRC is courting Western governments’ security assistance to thwart the Rwanda-backed incursion. Much of the international community is also demanding stricter standards for purchasing minerals ostensibly mined and processed in Rwanda. The DRC will need international support to implement measures for strict oversight of the region and, more fundamentally, addressing the sources of instability that fuel the conflict. On a positive note, in late March, a Qatar-brokered peace summit resulted in commitments by the leaders of the DRC and Rwanda to cease hostilities.

Next steps

Achieving lasting peace in the eastern DRC requires addressing the root causes of conflict, including ethnic tensions, political instability, and competition for mineral resources. It will not come quickly.

The DRC needs sustained dialogue with rebel groups and neighboring countries to reach a peace agreement and foster reconciliation among ethnic groups. It also needs to improve the capacity and legitimacy of institutions to manage resources, provide security, combat corruption, and enhance transparency.

Meanwhile, mineral buyers and the international community can help the DRC by enforcing ethical sourcing that follows regulations like the Dodd-Frank Act and OECD guidelines, supporting peace initiatives with diplomatic and financial aid, and providing humanitarian assistance to support displaced populations, rebuild communities, and enforce human rights laws.

The M23 insurgency is yet another reminder that the international community must support resource-rich countries in building the capacity to formalize mining and adhere to recognized principles for working and living conditions. The United States’ and others’ overtures to help provide security may be a good first step, but it only sets a foundation for much more work to be done.

Clarkson Kamurai is the critical minerals program manager at the Payne Institute and a PhD researcher in the minerals and energy economics program at the Colorado School of Mines. Kamurai has engineering experience in base and precious metal mining in sub-Saharan Africa and South America.

Brad Handler is the program director for the Payne Institute for Public Policy’s Energy Finance Lab. Previously, he was an equity research analyst in the oil and gas sector at investment banks including Credit Suisse and Jefferies.

Morgan Bazilian is the director of the Payne Institute for Public Policy at the Colorado School of Mines and a former lead energy specialist at the World Bank.

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Gas diplomacy: A blueprint for Middle East peace and global energy security

Luay al-Khatteeb — Wed, 23 Apr 2025 15:13:28 +0000

In a region long defined by proxy wars, sanctions, and sectarian divides, a quiet shift is underway. A new chapter in US-Iran relations is emerging, centered on renewed nuclear talks. But beyond the centrifuges and uranium stockpiles lies a far bigger opportunity: the future of global energy cooperation.

As landmark negotiations unfold between the government in Tehran and the new administration of US President Donald Trump, the prospect of a new US-brokered agreement with Iran could serve as a turning point—not merely another iteration of the Joint Comprehensive Plan of Action (JCPOA), but a wider strategy encompassing nuclear compliance, regional de-escalation, and energy collaboration. Such a deal would reframe negotiations from an exclusive focus on uranium enrichment and arms controls to a broader architecture centered on commerce, infrastructure, and regional integration.

If implemented with foresight, transparency, and inclusive governance, establishing a regional gas corridor could transform the Middle East’s fractured geopolitics into a system of mutual benefit.

Mapping a “Gas Peace Corridor”

At the center of such opportunity is South Pars, Iran’s share of the world’s largest natural gas field. Straddling the maritime border with Qatar, where it’s known as the North Dome—South Pars, holds an estimated 14 trillion cubic meters of gas and eighteen billion barrels of condensate. That’s more than forty percent of Iran’s proven gas reserves and nearly eight percent of the world’s total.

Despite this immense resource, South Pars remains significantly underutilized due to international sanctions, underinvestment, and outdated infrastructure. Although Tehran launched a seven billion dollar initiative in March 2025 to sustain pressure levels in the aging field, the scale of South Pars demands much more: international partnerships, modern technology, and access to global markets.

This is where diplomacy and energy intersect.

Under this framework, Iran would commit to placing its nuclear energy program under comprehensive International Atomic Energy Agency (IAEA) monitoring, curbing support for regional proxies, and opening its natural gas sector to foreign investment. In return, Tehran could gain access to up to $120 billion in frozen assets, kickstart its economy, and begin exporting gas at scale to neighboring countries and Europe.

The blueprint envisions a “Gas Peace Corridor,” serving as the primary conduit for this transformation—connecting Iran’s South Pars field through Iraq and Syria to the Mediterranean, with links extending into Turkey and the European grid.

An Iranian pivot from military to markets

Iran, for its part, stands to gain enormously. Home to the second-largest proven gas reserves in the world, second only to Russia, Tehran has long been isolated from the global energy economy. Its domestic sector suffers from inefficiencies, periodic blackouts, and reliance on unsustainable subsidies. Despite sitting atop the world’s second-largest proven gas reserves—33.8 trillion cubic meters—Iran struggles with domestic shortages. In winter 2023–2024, peak demand exceeded 800 million cubic meters per day, while supply hovered around 700 mcm/d, leading to rolling blackouts and industrial shutdowns. A foreign investment–backed development of South Pars would allow Iran to rebalance domestic demand and redirect surplus toward exports, reducing pressure on internal subsidies that cost the government an estimated $63 billion annually.

A strategic pivot away from militarization toward markets would allow Tehran to modernize its energy infrastructure, reenter global trade networks, and redefine its international image. A successful transition from isolation to integration could open Iranian markets to US and Gulf Cooperation Council (GCC) investment, expand regional trade, and reduce the economic rationale for military adventurism.

This would mirror and modernize the long-dormant Iran–Iraq–Syria pipeline, also known as the Friendship Pipeline, which was initially proposed in 2011 but was derailed by civil war, sanctions, and political resistance. Today, with the region searching for stability and energy markets desperate for alternatives to Russian gas, the geopolitical logic of that project is stronger than ever. A re-imagined peace corridor would also be an economic lifeline to post-conflict states and a bridge between long-divided regional powers.

In economic terms, transit revenues and associated infrastructure investments could inject billions of dollars annually into transit countries like Iraq and Syria, serving as a stabilizing force amid reconstruction efforts.

Global opportunity

This corridor has clear benefits for the West, too.

For Washington, backing such an initiative could reassert US leadership in a region where its influence has waned. If designed, financed, and operated by US and allied firms, the pipeline could generate significant long-term returns through tariffs, service contracts, and equity stakes, embedding American business interests into the region’s energy future.

Once fully operational, the Gas Peace Pipeline could transport up to one billion cubic meters of natural gas (bcm) annually, equivalent to nearly one-fifth of Europe’s current import needs. Such capacity could rival existing corridors like the Nord Stream system and significantly bolster Europe’s energy diversity and resilience.

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At its peak, Russian gas accounted for over 40 percent of the European Union’s imports; even after sanctions and supply disruptions, the continent remains vulnerable to shortages and price fluctuations. By enabling the flow of Middle Eastern gas, particularly from a reserve as vast as South Pars, Europe could stabilize prices, reduce dependency on Russian supply, and align with its climate goals by replacing coal and oil with cleaner-burning gas.

Expanding gas exports from South Pars also aligns with the EU Green Deal and global net-zero ambitions, with the potential to displace an estimated 100–150 million tons of CO₂ emissions annually, particularly by substituting coal in power generation across Europe, Asia, and Africa. Natural gas emits approximately fifty to sixty percent less CO₂ than coal per unit of energy produced.

The war in Ukraine and subsequent energy crisis underscored the fragility of relying on a single dominant supplier. South Pars gas, transported through a modern regional pipeline system, would offer a reliable alternative, especially since Europe’s gas demand is projected to remain significant well into the 2030s. By aligning with this Middle Eastern initiative, the EU could secure long-term supply agreements while promoting cleaner alternatives to coal in countries like Poland and Germany, thereby supporting its own decarbonization strategy.

In March 2024, the Gas Exporting Countries Forum (GECF) released its Global Gas Outlook 2050, forecasting a 34 percent rise in global natural gas demand. Meanwhile, Europe, with approximately ninety percent of its consumption sourced from imports, would benefit from a diversified and secure energy supply at a time when energy geopolitics returns to the forefront.

Yet this vision also carries risks. Russia is unlikely to welcome a pipeline that competes for its most critical market. Moscow may respond by deepening ties with Tehran or by fostering instability in key transit zones to derail the project. Conversely, the deal could pressure Russia diplomatically, creating leverage for Washington and its allies in negotiations over Ukraine and broader European security.

A regionally stabilizing force

Turkey, already a key energy transit hub, would gain geopolitical capital as the linchpin between the Middle East and Europe. Hosting a major leg of the gas corridor would increase its negotiating leverage with both Brussels and Washington, particularly on contentious issues like NATO expansion and regional security. It would also deepen Turkey’s economic ties with Iraq and Iran, strengthening its regional position at a time of multipolar competition.

The gas peace pipeline would also serve as a stabilizing force for Syria and Lebanon—both economically and in terms of security—under the joint guarantee of the United States and Iran, whose cooperation would be anchored in their investment agreement. Syrian reconstruction efforts could be jump-started by pipeline development and transit revenues, gradually shifting the country from battleground to bridge. For Iraq, with its central geography and ties to both Tehran and the West, this project could accelerate its emergence as a regional energy corridor.

The GCC would also stand to benefit. Joint ventures in Iranian gas development would allow the GCC to diversify their portfolios, export routes, and hedge against volatility in oil markets. Economically, such cooperation would foster interdependence, while politically, it could cool long-standing rivalries. The political dividends for all stakeholders, including Turkey and Qatar, would be no less significant than the commercial ones. Regionally, the project could foster greater cohesion and economic integration in the Middle East. Internationally, it would offer Europe a viable alternative to Russian gas, reinforcing energy security across the continent.

The broader regional effects would also be notable. Reduced Iranian support for groups like the Houthis could de-escalate the conflict in Yemen, increasing security in the Bab al-Mandab Strait—a vital chokepoint for global shipping. Jordan and Lebanon could gain access to affordable energy, easing economic crises and supporting development goals.

The pathway forward lies not in reviving failed doctrines of containment or conflict, but in embracing a pragmatic doctrine of peace and commerce. Energy, in this vision, is not merely a commodity—it is a diplomatic instrument, a stabilizer, and a platform for cooperation.

Rather than trench lines and warships, the region could be connected by pipelines and trade routes. Rather than exporting instability, it could export energy and opportunity. And rather than cycling through confrontation, regional powers—under the facilitation of the United States, and in alignment with European interests—could craft a new era where shared prosperity becomes the foundation of durable peace.

Energy talks, while unconventional, mirror the kind of transactional diplomacy that characterized the Trump administration’s foreign policy, focused on tangible economic outcomes and energy price relief for American consumers. While the stakes of energy diplomacy are high, so is the potential for a lasting impact—economically, strategically, and diplomatically. The convergence of energy needs, geopolitical shifts, and strategic opportunity makes this not only feasible but urgent. What is required now is leadership—bold, strategic, and clear-eyed enough to see that the path to peace may run through a pipeline.

Luay al-Khatteeb is the former Minister of Electricity in Iraq and a member of Iraq’s Federal Energy Council. He can be found on X @AL_Khatteeb.

The post Gas diplomacy: A blueprint for Middle East peace and global energy security appeared first on Atlantic Council.

Tariffs can help secure US critical mineral supply chains—if they’re done right

Reed Blakemore, Alexis Harmon — Fri, 18 Apr 2025 16:17:23 +0000

Critical minerals have officially entered the tariff spotlight. On Tuesday, US President Donald Trump signed an executive order launching an investigation under Section 232 of the Trade Expansion Act of 1962 to determine whether critical mineral imports impair US national security. The Commerce Department investigation will help determine whether and to what extent the Trump administration will levy tariffs on imports of critical minerals as part of its sweeping global tariff efforts.

The United States is over 50 percent import-reliant on forty of fifty designated critical minerals. With China dominating many mineral supply chains from extraction to processing to finished products, US policymakers have spent years trying and largely failing to effectively de-risk supply chains. US critical mineral suppliers face a complex set of challenges: volatile and opaque price signals, Chinese market manipulation through subsidies and dumping that undercut other projects, and the inherently higher costs of US projects due to stricter environmental and labor standards.

Now, the Commerce Department has 180 days to assess how imports create vulnerabilities in US critical mineral supply chains, investigate foreign market distortion, and strategize how to boost domestic processing. Tariffs could be highly effective tools in addressing these challenges—but optimal results require a scalpel, not a chainsaw.

After all, at the heart of the US critical minerals challenge lies project economics. The administration can streamline permitting processes and prioritize mining on federal land, but investment will still struggle to reach the levels needed for a robust domestic mining sector without increased market certainty. De-risked supply chains need massive capital investment, which only flows when investors can count on predictable returns, reliable and cost-competitive contracts for securing future inputs (intake) and outputs (offtake), and consistent federal support.

Mineral tariffs should be precise and predictable

As the government investigates how tariffs can strengthen domestic supply chains, strategic floor tariffs should be top of mind. Setting price floors through tariffs can directly counter Chinese market manipulation and boost producer confidence without reducing incentives to become increasingly cost-competitive.

Precision is critical in these complex and fragile markets. Blanket tariffs across all mineral and metal imports would distort markets and do more harm than good. For starters, the United States simply does not have domestic reserves of many minerals, and tariffs can’t change the composition of the earth’s crust. Even for minerals the United States has in abundance, building up mining and processing capacity is a lengthy process. Recent administration efforts to streamline processes will help, but it will still be years before they bear fruit—leaving the United States exposed as vulnerabilities deepen. Exemptions from blanket tariffs for key allies and free-trade partners would alleviate pressure, but for many minerals, robust alternatives to Chinese suppliers just don’t exist yet.

There are no tariff shortcuts here; hard work and long-term commitment to developing and growing supply chains are prerequisites for success. The question of investor confidence is key. Blanket tariffs exacerbate market volatility, which alone is enough to scare off capital. Instead, tariffs should be used with precision to provide more market transparency and predictability.

How floor tariffs can help de-risk rare earths

Floor tariffs are an ideal tool. Coordinated floor tariffs can diversify mining and processing among strategic partners by de-risking project development, unlocking critical private financing, helping sustain existing mines, and offering a clear signal to invest in new processing initiatives. Floor tariffs effectively function as a form of offtake support that largely pays for itself. Particularly volatile and opaque markets that would benefit most from other forms of offtake support are the best candidates here. The dramatic price swings for critical materials oversupplied by China have grabbed headlines—lithium collapsing 85 percent, nickel up 90 percent, and so on. Despite erratic prices, however, these markets have generally avoided a huge reduction in offtake demand due to their market maturity, sustained demand confidence, or strong US policy support.

Rare earths, however, have largely slipped between the cracks—and present a great opportunity for floor tariffs to have a huge impact. These seventeen elements are key to the permanent magnets, heat-resistant coatings, and other high-tech components that keep missiles precise and data centers humming. Since rare earths are often secured as byproducts of other mining activities, extraction and processing have particularly high upfront costs and long development timelines. With investor confidence low and demand signals unsteady due to manipulated prices, demand guarantees are key to catalyzing rare earths retrieval projects, while supply confidence is crucial to incentivizing new rare earths separation facilities.

Notably, the United States has one active rare earth mine in Mountain Pass, California—but it has historically sent its raw materials to China for processing since it could not process locally cost-competitively. The mine’s new owner, MP Materials, aims to ramp up production and send its outputs to a new refining and magnet facility in Texas that will supply General Motors. This is an important first step to reducing dependence on Chinese processors, which currently produce over 90 percent of the world’s refined rare earths—yet the Texas facility is only expected to produce in a year what China produces in a day at full capacity. With Chinese restrictions on rare earths and permanent magnets progressively tightening, it is crucial to give companies the confidence to help address this strategic vulnerability.

No quick fixes

While floor tariffs on rare earths can help secure one piece of the United States’ critical mineral supply chains, the Trump administration should adopt distinct mineral-by-mineral tariff strategies. Lumping all fifty critical minerals into a blanket tariff will likely do more harm to US industry than good. Thoughtful tariff policy needs to be part of a larger conversation about improving the United States’ understanding of relative criticality among the nearly fifty minerals Washington has designated as critical.

Moreover, tariffs cannot successfully improve US supply chain security without a comprehensive suite of supportive policies. Recent efforts to empower the International Development Finance Corporation and use the Export-Import Bank to secure global feedstocks for domestic processing are powerful steps toward US supply chain security, but even more ambitious actions are required. The Trump administration should introduce innovative financing mechanisms, invest in workforce development, and consider establishing a strategic resource reserve. These complementary tools can help tariffs work by ensuring market signals are backed by capital inputs and reliable demand.

Finally, the Trump administration cannot pursue this strategy in isolation. At a moment when partners, allies, and resource-rich nations are similarly eager to develop alternatives to China’s dominance over critical minerals, coordinated tariffs and vigorous supply chain diplomacy—such as crafting mineral deals and investing in mines and refining infrastructure abroad—can be a force-multiplier toward wider supply chain diversification. Not only would this help alleviate stress on minerals that the United States cannot produce affordably or in sufficient quantities, it could also help coordinate technology and knowledge transfer at a moment when allies are entering unfamiliar economic territory.

The turbulence surrounding recent tariff implementation should not scare policymakers away from this tool altogether. When implemented precisely and strategically—such as floor tariffs on rare earths—tariffs can be a powerful force for market stabilization and supply chain security. This Section 232 investigation provides an opportunity to address one of Washington’s most serious strategic vulnerabilities—and the United States can’t afford to squander it.

Reed Blakemore is the director of research and programs at the Atlantic Council Global Energy Center.

Alexis Harmon is an assistant director at the Global Energy Center.

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How the National Energy Dominance Council can set the US on the path to energy security

Ellen Wald — Thu, 17 Apr 2025 14:37:52 +0000

When US President Donald Trump called for “energy dominance” on inauguration day, he quickly followed up with a few executive orders—one issued the same day that overturned the Biden administration’s liquefied natural gas ban and another on February 14 that established the National Energy Dominance Council. Chaired by Secretary of the Interior Doug Burgum and vice-chaired by Secretary of Energy Chris Wright, the council was created to advise the president on “strategies to achieve energy dominance by improving the processes for permitting, production, generation, distribution, regulation, and transportation across all forms of American energy.” But despite these positive steps, three months into the Trump administration, this early momentum is in danger of dissipating.

US energy producers are growing increasingly wary of Trump’s policies and are calling 2025 the year of “uncertainty.” They see geopolitical uncertainty, volatile oil prices, and erratic tariffs as reasons to exercise capital discipline, potentially shut in production, and forgo planning for future operations. One executive told the Dallas Federal Reserve that he has “never felt more uncertainty about our business in my entire forty-plus-year career.”

The National Energy Dominance Council must act quickly to restore stability to the energy industry. The council can take advantage of this juncture to craft reasonable, achievable energy strategies that aren’t driven by ideology or underpinned by untested technology. To ensure real progress toward energy security, the council should follow these seven principles.

1. Move quickly

Energy infrastructure is a long game. The council needs to figure out its plan in the next two months, because four years is considered short-term in energy development. For example, it can take a decade or more from the time a discovery well is drilled to bring a new onshore oilfield online, and it can take seven to nine years to build a new natural gas pipeline. The Trump administration is operating in a new paradigm for energy policy, in which there are no guarantees from one administration to the next. With the stroke of a pen, permitting processes can be suspended, funding can be eliminated, and lease auctions can be canceled. The council doesn’t have a year to come up with a policy—it needs a well-articulated strategy in place before this summer.

2. Communicate with industry

The energy industry needs to know what to expect over the next four years, and, if possible, beyond that. The council should publish and publicize a timeline laying out the administration’s plans for energy regulation, permitting, funding, and leasing. This would allow businesses to make concrete plans and allocate capital effectively. The best way to encourage industry participation in domestic energy growth is to provide a clear map of the administration’s goals and intentions. Otherwise, lack of trust will either keep businesses and financial institutions from investing in US projects or force them to gamble on the accuracy of information they’ve obtained from inside sources. Oil company executives are already facing tremendous uncertainty due to the Trump administration’s tariff policies. The council could help alleviate this by establishing open, direct communication channels with industry.

3. Establish regulatory stability

Streamlining and stabilizing permitting processes doesn’t mean eliminating or scaling back environmental reviews. It means that when a company applies for a permit from the federal government, it should have reasonable certainty that, if the application meets the guidelines set by the agency, then it will be approved in a timely manner. This process was disrupted during the Biden administration, first when it halted all auctions to lease federal land for drilling just after taking office in 2021, and then when permits to drill on land already leased were held up in a bureaucratic backlog. The Biden administration further delayed the process by agreeing to reevaluate National Environmental Policy Act reviews that had already been completed for a large portion of the land leased during the first Trump administration in five western states. This prolonged an already lengthy process for oil and gas development, disincentivizing companies from exploring new land. Streamlining and simplifying the permit-review process would help reestablish industry confidence and encourage investment in US energy production.

Regulatory stability also means issuing new regulations in a timely manner and adhering to the deadlines those regulations establish. In recent years, the White House has not met this benchmark. The Biden administration, for example, delayed finalizing new methane emissions rules to oil and gas producers and new vehicle emissions standards to car manufacturers and dealerships well past its established deadlines. Today, the Environmental Protection Agency under Trump is reconsidering the Biden administration’s tailpipe regulation, which would have forced car dealerships to sell increasing numbers of electric vehicles regardless of consumer demand. No replacement regulations have been proposed, so the vehicle industry has no idea what to expect. New regulations need to be set so businesses can prepare, and federal agencies need to stop delaying the process beyond established deadlines. Regulatory uncertainty is extremely problematic for the auto and energy industries. Even when standards are stricter than industry would like, business leaders still prefer regulatory certainty to ambiguity.

4. Prioritize legislation over executive action

It is much more difficult, onerous, and time-consuming to pass legislation through Congress than it is to implement policy through executive orders or through regulatory agencies. But cementing policies through legislation ensures their implementation long after the sitting president leaves office. The council should push for legislation to secure future lease offerings for oil and gas drilling and for wind and solar farms so that no future administration can cancel or delay them for political purposes. The market should determine whether companies wish to bid for the rights to drill or build on this land, not politics. Likewise, land that should be protected from any energy development should be protected by law, not just the whim of the executive.

5. Develop strategic reserves of certain critical minerals

The United States has known for nearly a decade that China controls a startlingly high percentage of the world’s critical-mineral resources and that it is actively working to expand that control. Many of these resources, such as battery-grade lithium and cobalt, are critical to energy storage. There is bipartisan agreement that the United States needs to diversify its critical-mineral sources, but policies encouraging domestic production have been slow to emerge. Trump’s March executive order on critical minerals calls for fast-tracking the permitting process for new mining operations in the United States, but any new hard-rock mining operation will take many years to come online. To help secure supplies of the materials the United States needs to maintain its energy infrastructure and military readiness, the Trump administration should establish a strategic reserve for key critical minerals. Such government-controlled reserves would act as a cushion that could be used to temporarily alleviate supply shortages.

This would be especially valuable if Trump expects to continue to employ tariffs as a foreign-policy tool. For example, in February, China banned the export of certain critical minerals to US and allied defense companies in retaliation for tariffs. US weapons manufacturers, which rely on Chinese supplies of the metal tungsten, are now scrambling to find other sources. With 90 percent of the world’s tungsten supply controlled by China, Russia, and North Korea, a US strategic tungsten reserve would help keep the market from experiencing severe dislocation.

Likewise, copper is necessary for electrical wiring, semiconductors, and military hardware. The United States should establish a strategic reserve of copper to stabilize US copper supplies. This would be especially useful if, for example, Canada were to impose retaliatory tariffs on copper exports to the United States. The United States imports over one quarter of its copper from Canada, and the mere threat of tariffs is already upending the global copper market as companies increase imports to create their own stockpiles. A strategic reserve that could be released to combat the impact of potential future Canadian tariffs would likely help prevent panic buying and combat price spikes.

6. Incentivize investment in long-term oil and gas production

Production from conventional oil resources in the United States has been on a downward trajectory since 1986. The major increase in production since 2011 has come from unconventional resources, such as hydraulic fracturing, or fracking. Generally, production from fracking wells can be brought online more quickly than production from conventional wells. However, production from fracked wells declines more rapidly than production from conventional wells.

There isn’t much the federal government can do to incentivize companies to invest in oil and gas production in the United States outside of offering land, tax incentives, favorable regulation, government stability, rule of law, infrastructure, and predictability. The National Energy Dominance Council should examine each of these areas and find ways to improve their implementation. For example, it could recommend to Congress and the president that they amend the 1970 National Environmental Policy Act to include specific requirements for environmental assessments and environmental impact statements so that groups can no longer bring lawsuits demanding that permits and lease sales be invalidated because a government agency did not include a particular energy-market forecast. Lawsuits play an important role in checking corporate power in the United States, but the recent rise in frivolous lawsuits and lawsuits based on technicalities just to stall production disincentivizes companies from investing in long-term projects in the United States because they increase uncertainty. Changing the law could reduce the number of wasteful lawsuits and allow operations to move forward with reasonable environmental assessments.

7. Modernize infrastructure

While energy production is a major component of energy security, it is useless without the infrastructure to transport and transmit energy to consumers safely. The federal government should support the development of new pipelines to safely deliver natural gas to consumers. It should also support modernizing and improving electricity transmission infrastructure, including building long-distance transmission lines so that communities can access the cheapest and most efficient sources of electricity available, when they need them. Grants to study the state of the United States’ electricity infrastructure and government-backed loans to fund upgrades and modernizations that will improve safety and reliability should be made available to state and local governments.

The National Energy Dominance Council has the unique opportunity to recommend policies that could restore stability to the US energy sector and help ensure the United States’ energy security into the next century, but it needs to act soon. The council’s policy agenda should remove barriers to energy production without jeopardizing environmental protections, resolve regulatory uncertainties, streamline regulatory and permitting processes, build new strategic reserves for critical minerals, and modernize electricity transmission and pipeline infrastructure. Its most urgent task is to offer a sense of assurance and stability to energy producers that have been buffeted by regulatory, market, and geopolitical uncertainty.

Ellen Wald is a nonresident senior fellow with the Atlantic Council Global Energy Center and the president of Transversal Consulting.

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Central Asia’s geography inhibits a US critical minerals partnership

Haley Nelson and Natalia Storz — Tue, 15 Apr 2025 17:14:58 +0000

Recognizing the national security risks posed by China’s chokehold over critical mineral supply chains, the new Trump administration has issued an executive order that aims to increase domestic production. This and previous administrations have also courted alternative critical mineral suppliers to diversify US supply chains. Now, attention is also shifting to the five countries of Central Asia (Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan)—a resource-rich region with a wealth of minerals necessary for energy and defense technologies.

Through the C5+1 Critical Minerals Dialogue, the Group of Seven’s (G7’s) Partnership for Global Infrastructure and Investment (PGII), and bilateral memoranda of understanding signed with the region, the United States has begun to explore Central Asia’s untapped critical mineral wealth. However, the political ambition has not necessarily reflected the logistical difficulties inherent in Central Asia-originated supply chains.

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Central Asia’s untapped potential

Much has been written on Central Asia’s position as a “new frontier” in the global contest for critical minerals. The region has a wealth of lithium, copper, aluminum and uranium, although some reserves require further exploration as existing data was collected during the Soviet era.

But just because the region has critical minerals, does not mean the United States can easily access them. Taking a closer look at the region, infrastructure, governance, topography, and geopolitical complexities presents numerous challenges for US companies to navigate.

Regional energy grids are not well equipped to handle expanded mineral production. Mining is highly energy intensive, accounting for 69 percent of Kazakhstan’s industrial energy use. Central Asia’s power system already struggles to balance generation and distribution, suffering high transmission losses and frequent blackouts. To improve the grid and ensure that reliable power is supplied to mines and enrichment facilities, modern power plants and upgraded high-voltage transmission lines are needed, which would cost an estimated $25–49 billion.

Subpar resource governance is also impeding Central Asia’s mineral potential. The region is home to inconsistent tax regimes, lacks government transparency, and has a history of nationalizing or renegotiating contracts with foreign companies. Stronger regulatory protections are needed to ensure investor confidence.

Beyond these challenges, newcomers to this frontier market face deeply entrenched Chinese and Russian influence in regional supply chains. Soviet-era pipelines, highways, and railways initially pulled trade northward after the collapse of the Soviet Union. But, since 2013, China’s Belt and Road Initiative (BRI) has reoriented trade eastward through infrastructure projects like the China-Kyrgyzstan-Uzbekistan railway. Through partnerships with regional transit operators like Kazakhstan Railways (KTZ), and investments in locomotive production and Caspian ports, Beijing has bought out regional transit infrastructure and skewed the investment bidding process. US businesses may face challenges in securing contracts in a region where critical infrastructure is controlled by Chinese and Russian entities.

In the critical mineral sector, China holds the majority of mining permits in Kyrgyzstan and Tajikistan, Russia has monopolized regional uranium enrichment, and several Central Asian mining companies have been sanctioned by the United States for their close relationships with Russia. These geopolitical and regulatory barriers not only limit Western access to critical mineral resources, but also reinforce China and Russia’s control over the region’s strategic industries.

Moreover, the primary bottleneck in the critical minerals supply chain is processing, not mining. While Kazakhstan can refine copper, zinc, and lead, the region lacks processing capacity for energy minerals like lithium, uranium, nickel, and cobalt. Most of these raw metals end up in China or Russia for further enrichment.

Promises and pitfalls of the Middle Corridor

For Central Asia’s critical minerals to reach Western markets at scale, new export routes must be established; energy infrastructure issues must be addressed; mineral survey maps must be modernized; and local enrichment facilities must be developed.

Raw minerals can be shipped to processors in the West, but westward routes are largely underdeveloped. Because the region is surrounded by sanctioned and adversarial states—Afghanistan, China, Iran, and Russia—the Middle Corridor, a multimodal transport route that links Central Asia to Europe via the Caspian Sea and South Caucasus, is the only way to ensure secure, sanction-free export. However, due to regional infrastructure inefficiencies, checkered contractual practices, and rapidly developing environmental issues, Western investors have been slow to develop the route’s capacity.

Infrastructure issues have kept the route’s container capacity low, the shipping times unpredictable, delays frequent, and prices volatile. Caspian ports are restrained by low vessel capacity; there are significant, time-consuming “break-of-gauge” issues across Central Asian railways; and unaligned tariff regimes, cargo regulations, and customs procedures impede the flow of goods across borders.

While climate-driven water loss could see the Caspian’s shoreline lower by 21 meters by 2100, port capacity is expected to shrink further, and ports could be pushed back at least one kilometer from the shoreline, necessitating major redevelopment and causing billions of dollars in economic losses. Rising temperatures and the construction of dams along Russia’s Volga River, the Caspian’s main source of water, have seen the average sea level drop to its lowest point in 400 years, reducing cargo ship capacity by 20 percent. In the northeast Caspian, where waters are shallowest, ships leave ports before they are fully loaded to reduce ship depth. If waters decline further, northeast Caspian ports will likely be unusable. Desalination projects have been implemented by Kazakhstan, Azerbaijan, and Turkmenistan to slow the declining water levels of the Caspian. However, the energy-intensive desalination process has unintended negative impacts on marine life and water quality, and its ability to slow declining water levels has been highly debated. Therefore, the region needs investment in new forms of water-saving technologies, like atmospheric water harvesting, in order to prevent shrinkage that will eliminate the feasibility of the Middle Corridor.

Can this frontier be tamed?

In its current state, the Middle Corridor is incapable of accommodating the United States’ critical mineral needs. Its limited capacity and higher-than-average transit costs would offer little strategic benefit to US businesses while exposing investors to significant financial and geopolitical risks.

For investors to see the benefits of Central Asian critical mineral mining, improved transit routes are necessary; some studies have estimated €18.5 billion is required to ensure commercial viability. Transport costs remain high, delays create logistical uncertainty, and limited domestic processing forces reliance on neighboring markets. Without addressing these bottlenecks, the region’s potential as a critical mineral hub will remain constrained.

Unified tariffs and cargo regulations and the digitalization of regional transit could help to reduce delays along the Middle Corridor, helping to set the groundwork for additional infrastructure investments. Kazakhstan, Azerbaijan, and Georgia have already begun working towards a unified customs system after signing a trilateral union in 2023 to establish a jointly owned logistics company. However, with China Railway Container Transport Corporation (CRTC) joining the joint venture at the end of 2024, the corridor is beginning to look like another BRI project.

China’s formal involvement in the Middle Corridor Multimodal Joint Venture, its agreement with Kazakhstan to construct the Tacheng-Ayagoz railway line, and China’s construction and management of Georgia’s Anaklia deep-sea port underscore the importance of this route for China. Any increase in the route’s capacity will help increase the capacity of China’s westward exports. Investing billions into the westward export of Central Asia’s critical minerals will benefit Chinese transit and open more opportunities for the dumping of Chinese goods into Western markets.

Although the United States strategically benefits from engaging with Central Asia and offering an alternative partner, investing billions of dollars into regional transit routes may lead to negative unintended consequences. Not only does the route require massive infrastructure investments and significant regulatory improvements to benefit Western markets, but from a US national security perspective, investments will undoubtedly encourage westward Chinese transit.

The reality of a US-Central Asia critical mineral partnership

Quickly securing critical mineral partnerships is vital to US efforts to reduce dependence on China. However, the United States should be wary of unrealistic expectations for what Central Asia can provide. Regional infrastructure development is incomparable to any other region in the world. Central Asia is uniquely burdened by its encirclement between US-sanctioned countries. In the short and medium term, low export capacity, high transit costs, geopolitical volatility, and a high-risk investment environment significantly reduce the region’s commercial viability.

The United States should choose its battles wisely. Political will is not enough to move billions of dollars’ worth of minerals across oceans. Infrastructural, logistical, environmental, and legal complexities should guide decision-making. With the time-sensitive nature of US critical mineral needs, efforts should start closer to home with US-allied countries with established mineral export industries, like Canada or Chile. US supply chain efforts need to be driven by capacity, reliability, and economic viability, rather than political pipe dreams.

Haley Nelson is assistant director at the Atlantic Council Global Energy Center.

Natalia Storz is program assistant at the Atlantic Council Global Energy Center.

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Want to understand the US-China trade war? Start with soybeans and batteries.

jcookson — Fri, 11 Apr 2025 15:06:18 +0000

The bottom has fallen out of US-China trade ties. The world’s two largest economies have imposed massive tariffs on each other that will sharply curtail trade between the two sides. While the disruption will undoubtedly have across-the-board effects on global supply chains, if it is sustained, two markets will be directly and immediately impacted: soybeans and lithium-ion storage batteries.

Though a major and sustained trade spat between Beijing and Washington would undoubtedly inflict major damage on the global economy, it could also provide limited, discrete opportunities for other actors. For example, Brazil could increase exports of soybeans to the People’s Republic of China, while Taiwan and South Korea could find it economically useful and politically convenient to ramp up purchases of US soybeans. Meanwhile, the US battery-storage sector faces profound uncertainty due to the tariffs, but it could emerge stronger over the long term.

Imposing large tariffs on China carries undeniable risks—and any decoupling of the two massive economies will bring pain, especially in the short term. Yet the crisis also presents opportunities to draw the United States and its allies and partners closer on discrete issues, even as broader, US-driven uncertainty continues to persist.

US-China trade is unbalanced

The US-China trade war doesn’t come from nowhere. Due to China’s export promotion policies, including subsidies, and the United States’ low savings rate, the bilateral goods trade deficit has exploded in recent years, peaking at $418 billion in 2018.

In order to reduce the bilateral goods trade deficit, the United States has imposed several waves of tariffs on Chinese exports. In response, China has, among other measures, targeted specific goods, such as soybeans, which are a major import it receives from the United States. China is betting that targeting soybeans will be a pain point for the White House: US soybean farmers are an important political constituency, about half of all their production is shipped abroad every year, and China is the largest single purchaser.

At the same time, China cutting its soybean imports from the United States could also present opportunities for other buyers and markets. Brazil, already China’s largest source of soybeans, could expand its exports. On the other side, the European Union, South Korea, and Taiwan could make politically useful and showy purchases of US soybeans as a way of trying to earn favor with the White House before or during their own negotiations on trade or other issues.

—Joseph Webster is a senior fellow at the Atlantic Council’s Global Energy Center and Indo-Pacific Security Initiative; he also edits the independent China-Russia Report. This article reflects his own personal opinions.

SPOTLIGHT ON BRAZIL

Trade tensions between the United States and China have the potential to drive economic opportunities for Brazil, given its status as a global agribusiness powerhouse and one of the world’s leading agricultural exporters. However, the current global and domestic outlook for Brazil is more complex—and perhaps less optimistic—than it might initially appear.

During the first Trump administration, rising trade tensions with China prompted Beijing to reduce its dependence on US agricultural imports, turning instead to alternative suppliers such as Brazil. Brazil is the world’s largest exporter of soybeans and has China as its top destination. The latest round of tariffs and renewed US-China friction could once again stimulate Chinese demand for Brazilian soybeans.

Yet today’s trade conflict appears broader in scope and potentially more consequential, even encompassing tariffs against Brazilian products—though these are currently under a ninety-day suspension. At the same time, Brazil’s domestic economic fundamentals are under pressure: the country’s weakened currency and elevated interest rates heighten its vulnerability to external shocks. In addition, sustained global trade tensions threaten to dampen overall economic activity, not just in Brazil but also in China—its largest trading partner. This might undermine Brazilian exports, even in sectors where demand has historically been strong.

In this context, Brazil must navigate a delicate balancing act. Overreliance on China risks geopolitical and economic exposure, while alienating the United States could strain key trade and diplomatic ties. With turbulent global markets and a perhaps more fragile domestic economy, Brazil’s ability to manage these relationships strategically will be critical to mitigating risk and seizing opportunity.

—Valentina Sader is a deputy director at the Atlantic Council’s Adrienne Arsht Latin America Center, where she leads the Center’s work on Brazil.

Storage battery markets

Just as the US-China trade war could curtail or even halt soybean trade, the US battery complex could face severe disruptions if the United States and China continue down the road of decoupling. China is, by far, the largest exporter of batteries to the United States, accounting for over 70 percent of the United States’ lithium-ion battery energy storage system imports in 2024. These batteries, a single module of which can be as big as a truck, store electricity from the grid (often solar) and discharge power during peak demand periods.

If 145 percent US tariffs on Chinese goods remain in place, Chinese-produced lithium-ion batteries may be priced out of the market, especially since South Korean-made batteries are highly competitive and face only a 10 percent tariff (as of April 10). Accordingly, US tariffs may see a reorientation of storage-battery supply chains, with fewer imports from China and more from treaty allies such as South Korea, Japan, and Canada.

Without commenting on the other disruptions of the trade war, the reshoring and friendshoring of battery supply chains would hold significant national security benefits. Advanced batteries are strategically important: in addition to commercial uses, they hold military applications for drones, electronic warfare systems, and submarines.

A drone view shows California’s largest battery storage facility, as it nears completion on a 43-acre site in Menifee, California, U.S., March 28, 2024. REUTERS/Mike Blake

But it won’t be easy to shift battery supply chains, at least not in the near term. US allies have limited spare capacity. The international battery workforce disproportionately consists of Chinese nationals. China controls critical parts of the supply chain, such as graphite. And new factories—built in the United States or in friendly countries—will take years to complete. Significantly, the United States has no domestic manufacturing capacity for lithium iron phosphate batteries, which are highly suitable for grid-scale storage. It will take time for supply chains to reorient themselves.

If the United States and China move forward with hard decoupling, the US battery-storage sector will face immediate pain. At the same time, higher tariffs on Chinese-made batteries would incentivize greater manufacturing capacity in the United States and its allies and friends. In order to compete with China, the United States should pair any tariffs on China with investments in research, development, and manufacturing for batteries and other dual-use, militarily relevant energy technologies.

—Joseph Webster

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Putin’s Arctic ambitions: Russia eyes natural resources and shipping routes

Bohdan Ustymenko — Wed, 09 Apr 2025 14:24:55 +0000

US President Donald Trump’s desire to acquire Greenland from Denmark has recently helped to highlight the growing geopolitical importance of the Arctic region in international affairs. As global temperatures rise and polar icecaps melt, increased access to Arctic resources and trade routes look set to make the region and major focus of international competition in the coming decades.

Since the Trump White House and the Kremlin began negotiations in February 2025 to end the Russian invasion of Ukraine, potential cooperation between the United States and Russia in the Arctic has been high on the agenda. However, the US will face stiff competition from China in this arena, with Arctic initiatives occupying an important place at the heart of the strengthening strategic relationship between Beijing and Moscow.

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Maritime strategy has long played a significant role in Russian President Vladimir Putin’s thinking as he works to expand Moscow’s influence on the international stage. In August 2024, Putin ordered the establishment of a Russian maritime collegium headed by his close personal ally and advisor Nikolai Patrushev, who formerly led Russia’s FSB security service and the country’s National Security Council.

The recent creation of a maritime collegium comes at a time when Russia is accused of engaging in a wide range of hostile naval acts including the sabotage of undersea cables in the Baltic Sea along with surveillance activities off the coast of Britain and other NATO member states. Unsurprisingly, one of the stated goals of the new collegium is to help secure Russia’s national interests in the Arctic.

Russia’s Arctic ambitions are similarly evident in the country’s current maritime doctrine. Russian control over the Northern Sea Route, which runs through Arctic waters along Russia’s northern coast and serves as the shortest shipping route between Europe and the Pacific, is vital for the Kremlin’s plans. With this in mind, Putin is currently prioritizing an enlarged and modernized military presence in the Arctic region including enhanced naval capabilities.

Moscow sees the Northern Sea Route as part of Russia’s national transport infrastructure and has sought to control access for shipping from other nations. This is particularly controversial as the Northern Sea Route covers a vast area that is expected to become increasingly navigable in the coming years due to changing environmental conditions. Some of the areas currently claimed by the Kremlin are situated well beyond the territorial waters of the Russian Federation.

Critics have argued that Russia’s efforts to restrict access to the Northern Sea Route directly violate the 1982 United Nations Convention on the Law of the Sea (UNCLOS). However, while Russia is a signatory of the convention and ratified its commitments to UNCLOS in 1997, Kremlin officials say the terms are not applicable to Russia’s maritime claims in the Arctic region.

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With Russia militarizing along the Northern Sea Route and laying claim to large parts of the Arctic maritime zone, the scope for potential future conflict is huge. Geopolitical tensions are likely to be further heightened by the deepening regional involvement of China in partnership with Russia. The two nations have identified the Arctic as a key area of cooperation, both as a trade route linking China to Europe and as a source of the natural resources that Beijing needs to fuel its economy.

In the years ahead, the ports of the Northern Sea Route could become increasingly important for the projection of Chinese and Russian naval power on the international stage, both in the Arctic region and beyond. This could allow both countries to enforce their claims to Arctic resources and overwhelm other regional nations with less powerful navies such as Canada, Denmark, and Norway. This is leading to security concerns over a number of isolated and vulnerable islands throughout the region.

Allowing Russia to gain the ascendancy in the Arctic would lead to unpredictable geopolitical consequences. Control over the oil and gas resources of the Arctic region could dramatically increase Russian state revenues. Past experience indicates that this windfall would likely be used by the Kremlin to finance military spending, potentially setting the stage for fresh acts of aggression. Limiting Russian access to the Arctic should therefore be viewed as matter of international security.

As the struggle for dominance in the Arctic heats up, it is already clear that NATO member states need to dramatically strengthen their presence and capabilities in the region. It would also make sense to call upon international bodies such as the International Court of Justice to request clarification regarding the regime that Russia has arbitrarily established in the waters of the Northern Sea Route.

Ultimately, the goal should be to conclude an international convention based on UNCLOS and the UN Charter that can prevent today’s mounting tensions from leading to armed conflict in the Arctic. Before that can happen, countries with territories that could potentially be at risk from an expansionist Russia should look to seek enhanced security agreements with the United States and other NATO members that comply with the requirements of international law.

Bohdan Ustymenko is director of Ukraine’sNational Security Institute.

Participants agreed that US President Donald Trump’s return to office has significantly altered the international order. Given its strategic geopolitical position, Turkey plays a key role in this shifting landscape, which presents Ankara with both challenges and opportunities, the participants said. Concerns were raised regarding the United States losing its status as a diplomatic reference point due to sudden foreign policy changes. Participants emphasized Turkey’s potential to become a full-fledged regional leader but warned against indecisiveness, drawing parallels to the start of the Syrian civil war in 2011, when some felt Turkey missed an opportunity to strengthen ties with the EU through its response to the migrant crisis.

Turkey’s increasing significance in the Middle East

Speakers emphasized Ankara’s evolving role in the Middle East and beyond. For example, as some participants pointed out, Turkey has managed to strengthen ties with Gulf nations while looking beyond their historical disagreements. One participant noted that Turkey has shifted from direct competition with Gulf states to a more utilitarian strategy, improving diplomatic relations across the region. Turkey’s position on Israel and regional security was also debated, with participants mentioning concerns over rising tensions since Hamas’s October 7, 2023 terrorist attacks on Israel. Additionally, Turkey’s influence in shaping the future of Syria was a critical point of discussion. Participants agreed on the difficulty of maintaining sway over the Damascus government without jeopardizing Syria’s legitimacy as an independent state.

EU-Turkey defense relations and implications for NATO

Participants welcomed signs of a more constructive EU-Turkey relationship in light of developments in Syria, cooperation in Ukraine, and the recent discussions of joint defense initiatives. However, skepticism remained regarding whether these bilateral ties can translate into broader EU-wide support for Turkey. The conversation highlighted Turkey’s strong relationships with key European nations such as Spain and Italy and also addressed the failure to leverage these relationships for more extensive regional backing. Some criticized the EU’s reluctance to deepen ties with Turkey due to Turkey’s historical tensions with France and Greece, urging Europe to recognize Turkey as an indispensable ally due to its military, geographic, and economic significance.

One participant underscored the necessity of rethinking NATO’s framework to better integrate Turkey’s interests and security concerns while addressing broader tensions between global powers. The participant reminded the roundtable that Turkey has historically been a bridge between the East and the West, and this role has only become more significant as global tensions rise. She said that Turkey has actively engaged with both Western allies and Russia, seeking to maintain a delicate balance in its foreign policy.

Turkey’s role in the new Syria

In discussing the future of Syrian refugees in Turkey, which currently hosts 3.1 million Syrians under temporary protection, participants noted how many Syrian immigrants have had opportunities in Turkey to establish their own businesses. This echoed the stories presented to the roundtable in a screening of an excerpt from the Atlantic Council Turkey Programs’ documentary, Do Seagulls Migrate?, which explores the experiences of four Syrian women refugees in Turkey.

Some speakers noted the social tensions prevalent in refugee-dense regions such as Kilis and neighborhoods in Istanbul, where the large influx of refugees has contributed to rising rents, decreased job availability, and strains on infrastructure. The discussion acknowledged that while refugees have played a significant role in certain sectors of the economy, the rapid demographic changes have also led to challenges for local populations. The women leaders emphasized the need for holistic policies to address these challenges.

Beyond economic repercussions, participants expressed caution regarding the leadership of Hayat Tahrir al-Sham, given its former ties to al-Qaeda, and acknowledged the apprehension many Syrian immigrants—especially women—feel about returning to an uncertain and potentially dangerous environment. The women leaders also raised concerns about long-term integration challenges; while many refugees have settled in Turkey and are unlikely to return to Syria, the refugees’ repatriation remains a key talking point for politicians. The discussion also highlighted the growing presence of a new generation of Syrian children raised in Turkey, underscoring the need to consider their future role and representation within Turkey’s democracy.

Trade, tariffs, and the economy

Several speakers noted that Turkey’s economic trajectory remains closely tied to Europe. One of the most critical concerns raised was the impact of US tariffs and sanctions, which can add to the pressure on Turkey’s economy. Additionally, the participants noted, new EU environmental regulations such as the Carbon Border Adjustment Mechanism could further strain Turkish exports. However, there was also a sense of cautious optimism, with some speakers pointing to the potential for increased trade volume between Turkey and the United States; in 2024, that trade volume was $32 billion. The participants argued that in the face of global economic shifts, Turkey’s ability to maintain a balanced foreign policy will be essential for safeguarding its economic stability and fostering long-term growth. Striking a careful equilibrium between the United States and Europe—and between these Western allies and regional partners—will be key in mitigating economic uncertainties and capitalizing on new trade opportunities, the participants added.

Investing in Turkey’s human capital

Speakers noted that Turkey has a strong private sector capable of cutting-edge innovation. However, they added that if Turkey wants to maintain and strengthen its relevance in an increasingly competitive global market dependent on new technologies, it should focus on developing a highly skilled workforce. Therefore, speakers at the roundtable extensively discussed the need for aligning educational initiatives with labor market demands, particularly in sectors such as digital innovation, renewable energy, and advanced manufacturing. Speakers noted that university partnerships and investments in vocational training will be crucial in ensuring the continuous development of Turkish human capital. On the other hand, concerns were also raised about the impact of brain drain on Turkey’s innovation potential, with many young professionals seeking opportunities abroad. As one speaker put it, Turkey must focus on developing a highly skilled workforce to maintain its economic relevance in an increasingly competitive global market.

Photos from the roundtable

Zeynep Egeli is the project assistant of the Atlantic Council Turkey Programs.

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Building a path toward global deployment of fusion: Nonproliferation and export considerations

Fri, 04 Apr 2025 13:07:01 +0000

Commercial fusion is on the horizon, with many experts arguing that fusion power plants could put electrons on the grid by the end of this decade. However, there are questions around the process for regulating fusion power plants.

In this Atlantic Council issue brief, authors Sachin S. Desai, Michael Y. Hua, Amy C. Roma, Jessica A. Bufford, Jacqueline E. Siebens, and J. Andrew Proffitt explore pathways to address regulation, nonproliferation, and export considerations for fusion technologies. They argue that fusion power plants should be regulated in a pathway that is separate from the regulatory pathways established for fission reactors, especially since the materials and processes involved in fusion power plants are significantly different from fission reactors.

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Profitability and power: Fixing US critical minerals supply chains

Ashley Zumwalt-Forbes — Thu, 03 Apr 2025 17:00:14 +0000

The United States is not losing the global race for critical minerals because of a lack of resources—it is losing because it lacks a financial model that ensures profitability. Despite bipartisan recognition of the strategic importance of these materials, US policies have failed to make this industry economically viable.

Without a clear pathway to sustainable profits, taxpayer and private sector investments risk becoming financial sinkholes. If the United States wants to secure a resilient supply chain, it must create a financial framework that attracts and retains capital.

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The economics of critical minerals

A functional critical minerals supply chain requires three key stages: mining, midstream processing, and downstream manufacturing. China dominates all three, not because it has better resources, but because it has a better economic strategy.

Through state-backed subsidies, China shields its companies from market forces, allowing them to endure losses in pursuit of long-term control. Meanwhile, the United States expects each player—miners, processors, and manufacturers—to be independently profitable, creating higher costs, greater risk, and systemic fragility. If one link in the chain collapses, the entire system fails.

This fractured approach discourages private investment. Unlike large, transparent markets such as oil or copper, critical minerals markets are relatively small, opaque, and highly volatile. Many key minerals trade on spot markets dominated by China, which can manipulate prices at will. If China wants to eliminate competition, it simply floods the market, driving prices down and making Western projects financially unviable.

To break free from this cycle, the United States must focus not just on developing mines, but on ensuring that the entire supply chain is profitable and attractive to investors.

A market-based strategy to compete with China

The United States has the strongest capital markets in the world. Rather than defaulting to top-down industrial planning, Washington should treat private capital as a strategic asset. With the right risk-adjusted incentives, US capital markets can outcompete China’s state-directed model. To do so, the United States should focus on four pillars: targeted supply chain construction, pricing power, investment risk reduction, and policy stability.

1. Stand up integrated supply chains through strategic funds

To accelerate development, the United States should launch government-backed, private-sector-managed funds focused on building single, vertically integrated supply chains (for example, a supply chain for antimony or gallium). These funds should be designed with strict performance conditions: they receive incentives only if they successfully stand up an end-to-end supply chain. This structure ensures quasi-vertical integration and forces offtake agreements to be part of the business model from the outset.

2. Build pricing power by raising domestic commodity prices for sensitive materials

To reduce vulnerability to China’s market manipulation, the United States must break away from artificially depressed price structures. This can be achieved through two levers: (a) targeted tariffs on mineral imports that benefit from unfair subsidies and (b) tighter domestic sourcing requirements across clean energy and defense sectors. By raising the floor on US commodity prices, these policies would insulate domestic producers and make long-term investments more financially viable.

3. Reduce investment risk via demand guarantees and price floors

Price volatility and uncertain offtake remain top deterrents to private investment. The United States should implement mechanisms to stabilize both. This could include government-backed trading houses or public-private stockpiles that establish price floors for particularly vulnerable minerals. Long-term offtake agreements, brokered through private-sector consortia, would provide stable revenue streams that investors need.

4. Ensure long-term policy certainty

The most important determinant of private investment is confidence in the rules of the game. Critical minerals development is a multi-decade endeavor. If the United States wants capital markets to play a leading role, it must offer long-term policy stability. That means preserving existing tax credits, grants, and loan programs—not just as temporary stimulus but as enduring pillars of the investment environment.

Building a market, not a monopoly

China has not just secured mineral resources—it has built a financial system that allows it to manipulate markets and suppress competition. The United States must construct an alternative, leveraging free enterprise and innovation as strengths. Identifying deposits and opening mines, though critical, is not enough. Without a financial strategy that ensures profitability, the United States will remain dependent on China for the materials that power its economy and national security.

It’s time to stop treating critical minerals as just a resource problem—and start treating them as the economic battle they truly are. The solution lies not in more short-term government intervention, but in structuring a market that incentivizes investment, ensures financial viability, and ultimately secures the United States’ position as a leader in the critical minerals race.

Ashley Zumwalt-Forbes is a former US Department of Energy deputy director for batteries and critical minerals, co-founder and former president of Black Mountain Metals and Black Mountain Exploration, and co-founder and former senior advisor of Metals Acquisition Corp.

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The future of global energy policy is abundance

Charles Hendry — Mon, 31 Mar 2025 17:19:28 +0000

After years in which the United States and Europe have been aligned in their energy policies, we are now seeing a divergence between two approaches that appear hard to reconcile.

To paraphrase US Energy Secretary Chris Wright, energy policy should be about enriching people, not making them poorer. With some of the largest gas resources in the world, the United States has shifted fundamentally to an approach which prioritizes low costs and economic growth over decarbonization.

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This pivot is having consequences around the world. European—and especially British—energy prices are now a multiple of those in the United States. The risk to Europe is that major energy users will move away from the continent if those price differentials cannot be narrowed.

But while the US narrative is that cheap energy delivers security, in the United Kingdom (UK), the government insists that decarbonized energy delivers security. Britain is still seeing the consequences of the enormous price spikes following Russia’s full-scale invasion of Ukraine. The argument is that had the UK been less reliant on gas, the price increases would have been less dramatic.

While it seems that these two approaches at loggerheads, they are in fact possible to reconcile.

For years, many have spoken about the energy trilemma: the balance between security, affordability, and sustainability. It’s time to reframe that debate—and focus instead on energy abundance.

A decade ago, when the American shale revolution was beginning, the sheer enormity of gas production, combined with an inability at that time to export significant quantities, brought prices crashing down for US businesses and consumers.

Similarly, the global rollout of solar power has enabled the cost to be brought down to under 1 percent of what it was just a few years ago.

Abundance enables costs to come down. Abundance offers energy security. And abundance helps make space to decarbonize without penalizing consumers.

Different countries are abundant in different fuel stocks or technologies, so each country needs to play to its strengths. Consumers are best served by harnessing the resources which are most abundant and most affordable, rather than endlessly pursuing costlier resources just because they happen to be around.

The United States would understandably focus on gas, but that does not mean that all countries should do so. If a country lacks significant gas resources of its own, it is foolhardy to build an energy policy that relies on imported gas, especially from a single source, as the Ukraine war has so clearly shown Europe. To paraphrase Winston Churchill, security comes from diversity, and diversity alone.

Therefore, the UK and Europe need to look at where they have the most abundant resources and allow the genius of innovators and industry to work to drive those costs down.

For the UK, that could be offshore wind, where prices have dropped by two thirds in a decade. It also makes sense to continue to use Britain’s North Sea gas resources for as long as possible, as the original investment costs have long since been recovered. While the North Sea basin is in long-term decline, the rate of decline can be reduced with sensible, pro-business policies. The UK should then be applying carbon capture technology when the gas plants are run as baseload rather than as peaking plants, which operate for only a small number of hours per year.

In sunnier countries, solar is the answer. Nuclear, too, can provide energy abundance, especially if next-generation small and advanced modular reactors (SMRs and AMRs) are developed in sufficient quantities to deliver real economies of scale. Each country needs to chart it owns course, based on the resources and skills available to it.

The first element of energy policy should be to develop abundant and affordable resources. Where that is not be sufficient to meet demand at all times (as abundance is not necessarily the same as self-sufficiency) then the policy should be to secure alternatives in the most affordable way. Interconnection can bring cheap electricity from many hundreds of miles away. Imported gas—from reliable partners and backed by sufficient levels of domestic storage—provides resilience when the wind is not blowing and the sun is not shining. And as the cost of batteries continues to fall, they can provide short-term reserves at grid scale.

Policymakers’ rhetoric suggests a large gulf between the approaches in the United States and Europe. But just as there is no one-size-fits-all approach to every country’s needs, policy approaches must reflect the unique circumstances of individual countries.

Faced with the imperative to keep costs down, governments need to be wary about open-ended commitments to provide subsidies. In the UK, the contract for difference model provides price guarantees to enable large energy infrastructure to be built. But unlike a subsidy, when the wholesale price of electricity rises, the support drops away and even becomes negative. If subsidies are used, then there must be a clear degression from the outset to make sure that they are a mechanism for driving costs down rather than keeping them artificially high.

The cooperative optimism displayed at COP26 and COP28 is long gone. The response should be to rethink how to deliver the energy security the world needs in the most affordable way. The principle of abundance should be at the heart of it. Abundance enables countries with dramatically different supply and demand conditions to find common cause. There is security in diversity—and diversity alone.

Charles Hendry is a distinguished fellow of the Atlantic Council Global Energy Center and a former UK minister of state for energy.

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Nord Stream could divide Europe yet again

Michał Kurtyka — Fri, 28 Mar 2025 16:39:35 +0000

A reset between Washington and Moscow could revive an albatross to European unity. As President Donald Trump tries to secure peace in Ukraine, reports have emerged that negotiations are taking place to open the Nord Stream 2 pipeline with the backing of US investors. The subsea pipeline was suspended by the German government on the eve of Russia’s full-scale invasion of Ukraine before it had delivered a single molecule of gas.

It’s an open question whether the United States, whose natural gas producers now rely on European liquefied natural gas (LNG) sales to boost profits and support investments, would ultimately cede that market—and the political influence that comes with it—to Russian pipeline exports. Perhaps Washington will concede its newfound dominance in Europe’s energy system as a cost of attaining peace in Ukraine—and extricating itself from the continent to focus on the Indo-Pacific theater.

But for Europe, allowing Russia back into its gas market through Nord Stream would be a costly mistake. It would furnish the Russian war machine with an additional $5 billion, open the temptation for German manufacturers to extract a 1.5 percent competitive advantage over other Europeans, and leave 100 million Europeans in geopolitical limbo.

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No reason for Nord Stream nostalgia

There is an obvious temptation for Europe to try to return to the seemingly halcyon world before COVID-19 and war in Ukraine. Elevated gas prices have threatened the continent’s long-term industrial competitiveness. In 2023—after the price spikes of 2022 subsided—industrial gas prices remained a whopping four-and-a-half times higher than in the United States. The European average in 2019, by contrast, was a modest 70 percent higher than US prices.

But Europeans should not view the pre-war status quo through rose-colored glasses. Europe was vulnerable to supply shutoffs, such as happened during Russo-Ukrainian disputes in 2006 and 2009. And supposedly cheap Russian gas proved to be very expensive in the end—mitigating the energy crisis cost Europe a historic price of nearly €700 billion just by mid 2023, on top of nearly €250 million in aid to Ukraine by 2025. All in all, the cost of dependence amounted to more than €1 trillion.

Europe can neither forget the lessons learned from Russia’s weaponization of gas supply in the lead up to and during the war; nor can it ignore the new geopolitical realities that define its relationship with Russia.

Paying off the arsonist

First, if Europe were to restore Russian pipeline imports, that would greatly increase cash flow to Gazprom. Currently, Russia is selling gas mostly to China, supplying the country with 30 billion cubic meters (bcm) of gas in 2024 and aiming to hit 38 bcm in 2025 with the opening of a new eastern pipeline. But those volumes pale in comparison to the record 179 bcm shipped by pipeline to Europe in 2019. Even the amount of gas exported via the now-destroyed Nord Stream 1 alone—which had the same nameplate capacity as its successor—totaled 58.5 bcm in 2019, far more than total Russian pipeline and LNG shipments to China in 2024.

Chinese buyers can’t make up for the loss of European markets. There exists no infrastructure to bring the gas from Russia’s massive European fields to Asian consumers. China has slow walked completion of the 50 bcm Power of Siberia 2 pipeline and appears to be hesitant about becoming too reliant on Russian gas. Losing the European market has severely hurt Gazprom, which posted a net loss of $12.9 billion in 2024—after seeing record profits of $29 billion in 2021.

This has profound implications for Russia’s ability to wage war in Ukraine—and elsewhere. If Gazprom were to attain an additional $15 billion from Nord Stream 2 sales—based on a pre-war estimate of the pipeline’s potential revenue generation—and another $15 billion from restarting the damaged Nord Stream 1 pipeline, one might assume that half would go to Russia’s state budget. Of that $15 billion, one third would go to the military, based on the proportion of Russia’s 2025 budget dedicated to defense. This would mean $5 billion more to Russia’s military, a 4 percent increase in the Russian war chest.

Distorting European competition

Moreover, making Germany the primary entry point for Russian gas into Europe would provide German industry with a temptation to take advantage over its neighbors, as was the case in the early 2000s, constantly threatening European unity at a trying time. A primary reason why other Western European countries had opposed Nord Stream 2 even before the war was fear that Germany monopolizing Russian gas flows would give it a competitive advantage over manufacturers in Italy and France.

Indeed, a 2012 investigation by the European Commission into Gazprom found that Russian gas was cheaper for Germany than it was for the average European country by at least 15 percent. Data released by Russian news agency Interfax in 2010 revealed that Gazprom was charging France 10 percent and Italy 25 percent more than Germany for gas. Further, the Commission found in 2018 that Gazprom had violated European Union (EU) antitrust rules to divide national markets, potentially allowing it to overcharge five Central European member states—countries which paid even more than France and Italy.

For the most energy-intensive sectors in Europe, energy can account for over 10 percent of manufacturing costs—so if German industry gets a 15 percent discount, the country gains up to 1.5 percent advantage in profitability over the European average.

A dagger at the heart of European unity

Last but not least, Nord Stream 2 would deliver Russian gas in a route that bypasses most of the Central European transit states, allowing Russia to leverage energy supplies to these countries separately from Western Europe and leaving 100 million Europeans in geopolitical limbo.

Whereas Moscow’s disputes with Kyiv in the 2000s over gas supply meant that cutting off Ukraine would cut off the rest of Europe, Nord Stream 2’s reopening would allow Russia to more effectively divide and conquer the continent. In a new era of full-scale war to readjudicate the political borders of Europe, this would leave substantial portions of the EUand NATO at the mercy of the Kremlin’s imperial whims.

Three numbers that should frighten Europe

Ultimately, regardless of how Washington decides to proceed on Nord Stream 2, Europe must take responsibility for its own decisions on whether to buy gas from the pipeline or not. In weighing that choice, it must remember three key numbers: $5 billion in additional money for the Russian military; 1.5 percent of additional profitability for German industry over its EU neighbors; and 100 million Europeans left vulnerable to renewed Russian aggression.

Michał Kurtyka is a distinguished fellow with the Atlantic Council Global Energy Center and was formerly Poland’s minister of energy, climate, and environment.

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Canada needs an economic statecraft strategy to address its vulnerabilities

Kimberly Donovan, Maia Nikoladze, Lize de Kruijf — Thu, 27 Mar 2025 12:00:00 +0000

Introduction

Canada is facing economic threats from China and Russia targeting its critical industries and infrastructure. The Business Council of Canada, which consists of CEOs of top Canadian companies, identified cyberattacks, theft of intellectual property, Chinese influence on Canada’s academic sector, and trade weaponization by China among the top economic threats to Canada.

More recently, a new and unexpected threat emerged from the United States, when Washington announced 25 percent tariffs on all Canadian goods except for the 10 percent tariffs on energy. To address threats from Russia and China and reduce trade overdependence on the United States, Canada’s federal government will need to consolidate economic power and devise an economic statecraft strategy that will leverage Canada’s economic tools to mitigate these economic threats and vulnerabilities. This paper covers the following topics and offers recommendations:

Economic threats to Canada’s national security
An unexpected threat: Overdependence on trade with the United States
Lack of economic power consolidation by Canada’s federal government
Mapping Canada’s economic statecraft systems: Sanctions, export controls, tariffs, and investment screening

Economic threats to Canada’s national security

Cyberattacks on Canada’s critical infrastructure

Canada’s critical infrastructure has become a target of state-sponsored cyberattacks. In 2023, Canada’s Communications Security Establishment (CSE)—a signals intelligence agency—said that Russia-backed hackers were seeking to disrupt Canada’s energy sector. Apart from accounting for 5 percent of Canada’s gross domestic product (GDP), the energy sector also keeps the rest of Canada’s critical infrastructure functioning. CSE warned that the threat to Canada’s pipelines and physical infrastructure would persist until the end of the war in Ukraine and that the objective was to weaken Canada’s support for Ukraine.

Beyond critical infrastructure, Canadian companies lost about $4.3 billion due to ransomware attacks in 2021. More recently in February 2025, Russian hacking group Seashell Blizzard was reported to have targeted energy and defense sectors in Canada, the United States, and the United Kingdom. Russia and other adversarial states will likely continue targeting Canada’s critical infrastructure and extorting ransom payments from Canadian companies.

Theft of intellectual property

Canadian companies have become targets of Chinese state-sponsored intellectual theft operations. In 2014, a Chinese state-sponsored threat actor stole more than 40,000 files from the National Research Council’s private-sector partners. The National Research Council is a primary government agency dedicated to research and development in science and technology. Apart from undermining Canadian companies, theft of Canada’s intellectual property, especially research on sensitive technologies, poses a threat to Canada’s national security.

Chinese influence on Canada’s academic sector

Adversarial states have taken advantage of Canada’s academic sector to advance their own strategic and military capabilities. For example, from 2018 to 2023, Canada’s top universities published more than 240 joint papers on quantum cryptography, space science, and other advanced research topics along with Chinese scientists working for China’s top military institutions. In January 2024, Canada’s federal government named more than one hundred institutions in China, Russia, and Iran that pose a threat to Canada’s national security. Apart from calling out specific institutions, the federal government also identified “sensitive research areas.” Universities or researchers who decide to work with the listed institutions on listed sensitive topics will not be eligible for federal grants.

Trade weaponization by China

Trade weaponization by China has undermined the economic welfare of Canadians and posed a threat to the secure functioning of Canada’s critical infrastructure. For example, between 2019 and 2020, China targeted Canada’s canola sector with 100 percent tariffs, restricting these imports and costing Canadian farmers more than $2.35 billion in lost exports and price pressure. In Canada’s 2024 Fall Economic Statement, which outlined key measures to enhance Canadian economic security, the Ministry of Finance announced its plans to impose additional tariffs on Chinese imports to combat China’s unfair trade practices. These included tariffs on solar products and critical minerals in early 2025, and on permanent magnets, natural graphite, and semiconductors in 2026.

However, the imposition of 25 percent tariffs by Washington on both Canada and China could result in deepening trade ties between the two. Canada exported a record $2 billion in crude oil to China in 2024, accounting for half of all oil exports through the newly expanded Trans Mountain pipeline. Increased trade with China would increase Canada’s exposure to China’s coercive practices, and would be a direct consequence of US tariffs on Canada.

An unexpected threat: Overdependence on trade with the United States

A new and unexpected threat to Canada’s economic security emerged from the United States when the Trump administration threatened to impose 25 percent tariffs on all Canadian goods (except for the 10 percent tariffs on energy imports). The United States is Canada’s largest export market, receiving a staggering 76 percent of Canada’s exports in 2024. Canada relies on the United States particularly in the context of its crude oil trade, shipping 97.4 percent of its crude oil to the United States.

Canada had already started working on expansion to global markets through pipeline development even before Washington announced tariffs. It has succeeded in the expansion of the Trans Mountain pipeline in May 2024, which has enabled the export of Canadian oil to Asia. Canada is reviving talks on the canceled Energy East and Northern Gateway pipelines—the former would move oil from Alberta to Eastern Canada, and the latter would transport oil from Alberta to British Columbia for export to Asian markets.

In addition to oil trade, another area where Canada is highly dependent on the United States is in auto manufacturing. Behind oil exports, motor vehicles account for the largest share of Canadian exports to the United States, resulting in exports valued at $50.76 billion (C$72.7 billion Canadian dollars) in 2024. With 25 percent tariffs on all Canadian goods, the automotive industry is expected to take a hit, especially as components cross the border six to eight times before final assembly.

Figure 1

The United States invoked the International Emergency Economic Powers Act to impose tariffs on Canada with the stated objective to curb fentanyl flows to the United States. The measure has plunged US-Canada relations into chaos and could result in a trade war between the two long-standing allies. In response, Canada might reroute oil shipments to China through existing pipelines and increase trade with China in general. Further economic integration with China would increase Canada’s exposure to economic threats emanating from China, including trade weaponization and anti-competitive practices.

Because of US tariffs, Canada could also face challenges in strengthening the resilience of its nuclear fuel and critical mineral supply chains. In the 2024 Fall Economic Statement, Canada outlined key measures for its economic security that heavily incorporated US cooperation. This included plans to strengthen nuclear fuel supply chain resiliency away from Russian influence, with up to $500 million set aside for enriched nuclear fuel purchase contracts from the United States. Canada also aims to strengthen supply chains for responsibly produced critical minerals, following a $3.8 billion investment in its Critical Minerals Strategy, which relies on the United States as a key partner. Given the tariffs, Canada will need to diversify its partners and supply sources quickly if it wishes to maintain these economic security goals.

Could the US-Canada trade war upend defense cooperation?

Recent tariff escalation between the United States and Canada has raised questions about the future of military cooperation between the two countries. Apart from being members of the North Atlantic Treasury Organization (NATO), the United States and Canada form a unique binational command called North American Aerospace Defense Command (NORAD). NORAD’s mission is to defend North American aerospace by monitoring all aerial and maritime threats. NORAD is headquartered at Peterson Space Force Base in Colorado, has a US Commander and Canadian Deputy Commander, and has staff from both countries working side by side.

NORAD’s funding has been historically split between the United States (60 percent) and Canada (40 percent). However, the Department of Defense (DoD) does not allocate specific funding to NORAD and does not procure weapons or technology for NORAD, although NORAD uses DoD military systems once fielded. The US Congress recognized the need to allocate funding to modernize NORAD’s surveillance systems after the Chinese spy balloon incident in February 2023. While US fighter jets shot down the Chinese surveillance balloon after it was tracked above a US nuclear weapons site in Montana, the incident exposed weaknesses in NORAD’s capabilities. After the incident, former NORAD Commander Vice Admiral Mike Dumont stated that NORAD’s radar network is essentially 1970s technology and needs to be modernized.

A year before the incident, the Canadian government had committed to invest $3.6 billion in NORAD over six years from 2022 to 2028, and $28.4 billion over twenty years (2022-2042) to modernize surveillance and air weapons systems. However, Canada has fallen short on delivering on these commitments.

In March 2025, Canada’s Prime Minister Mark Carney announced that Canada made a $4.2 billion deal with Australia to develop a cutting-edge radar to detect threats to the Arctic. The radar is expected to be delivered by 2029 and will be deployed under NORAD. Canadian military officials have stated that the US military has supported the deal, signaling that the deterioration of economic relations has not (yet) had spillover effects for the defense cooperation.

However, Prime Minister Carney has also ordered the review of F-35 fighter jet purchases from US defense company Lockheed Martin, citing security overreliance on the United States. Under the $13.29 billion contract with Lockheed Martin, Canada was set to buy 88 fighter jets from the US company. While Canada’s defense ministry will purchase the first sixteen jets to meet the contract’s legal requirements, Canada is actively looking for alternative suppliers.

As the trade war continues, Canada will likely enhance defense cooperation with the European and other like-minded states, possibly to the detriment of the US defense industry and the US-Canada defense cooperation.

Figure 2: US-Canada overlapping memberships in security organizations and alliances

Source: Atlantic Council’s Economic Statecraft Initiative research

Lack of economic power consolidation by Canada’s federal government

Canada has a range of economic tools and sources of economic power to respond to emerging economic threats and mitigate vulnerabilities; however, it currently lacks economic power consolidation. Unlike the United States, where the federal government can regulate nearly all economic activity, Canada’s Constitution Act of 1867 grants provinces control over their “property and civil rights,” including natural resources. Section 92A, which was added to the constitution in 1982, further reinforced the provinces’ control over their natural resources. Meanwhile, the federal government has control over matters of international trade including trade controls. However, when international trade issues concern the natural resources of provinces, tensions and disagreements often arise between provinces and the federal government, and the lack of economic power consolidation by the federal government becomes obvious.

This issue manifested when the United States announced 25 percent tariffs on Canada in March 2025 as Canada’s federal government and the Alberta province had different reactions. Canada’s main leverage over the United States is oil exports. Refineries in the United States, particularly those in the Midwest, run exclusively on Canadian crude oil, having tailored their refineries to primarily process the heavy Canadian crude. Since 2010, Canadian oil accounted for virtually 100 percent of the oil imported by the Midwest. Threatening to hike levies on crude oil exports could have been Canada’s way of leveraging energy interdependence to respond to US tariffs. However, Alberta Premier Danielle Smith stated that Alberta, which is Canada’s largest oil producer and top exporter of crude oil to the United States, would not hike levies on oil and gas exports to the United States. Being unable to speak in one voice as a country even during a crisis is a direct consequence of Canada’s regional factionalism, characterized by each province looking out for their own interests.

The United States-Mexico-Canada (USMCA) trade agreement, which entered into force during the first Trump administration in July 2020, may have also contributed to diminishing the economic power of Canada’s federal government. Article 32.10 of USMCA requires each member of the agreement to notify other countries if it plans to negotiate a free trade agreement (FTA) with a nonmarket economy. Thus, if Canada were to sign an FTA with China, the United States and Mexico could review the agreement and withdraw from USMCA with six months’ notice. After the USMCA was signed, Canadian scholars wrote that this clause would effectively turn Canada into a vassal state of the United States, with the authority to make decisions on internal affairs but having to rely on the larger power for foreign and security policy decisions. Five years later, it looks like the USMCA has put Canada in a difficult position, being targeted by US tariffs and not having advanced trading relations with other countries.

Figure 3: US-Canada overlapping memberships in economic organizations and alliances

Source: Atlantic Council’s Economic Statecraft Initiative Research

Mapping Canada’s economic statecraft systems

To secure Canada’s critical infrastructure and leverage its natural resources to shape favorable foreign policy outcomes, Canada’s federal government has a range of economic tools and the ability to design new ones when appropriate. Canada’s economic statecraft tool kit is similar to those of the United States and the European Union and includes sanctions, export controls, tariffs, and investment screening. Canada has imposed financial sanctions and export controls against Russia along with its Group of Seven (G7) allies. It has levied tariffs on Chinese electric vehicles, in line with US policy, and recently created investment screening authorities to address concerns about adversarial capital.

Financial sanctions

Similar to the United States, Canada maintains sanctions programs covering specific countries such as Russia and Iran, as well as thematic sanctions regimes such as terrorism. Global Affairs Canada (GAC), which is Canada’s Ministry of Foreign Affairs, administers sanctions and maintains the Consolidated Canadian Autonomous Sanctions List. Canada’s Finance Ministry, the Department of Finance, is not involved in sanctions designations, implementation, or enforcement, unlike in the United States, where the Department of the Treasury is the primary administrator of sanctions.

The Parliament of Canada has enacted legislation authorizing the imposition of sanctions through three acts: the United Nations Act; the Special Economic Measures Act (SEMA); and the Justice for Victims of Corrupt Foreign Officials Act (JVCFOA).

The United Nations Act enables GAC to implement sanctions against entities or individuals sanctioned by the UN Security Council. When an act of aggression or a grave breach of international peace occurs and the UN Security Council is unable to pass a resolution, Canada implements autonomous sanctions under SEMA; this act is Canada’s primary law for imposing autonomous sanctions and includes country-based sanctions programs. It is also used to align Canada’s sanctions with those of allies. For example, GAC derived its powers from SEMA to designate Russian entities and individuals in alignment with Canada’s Western allies in 2022. Meanwhile, the JVCFOA allows GAC to impose sanctions against individuals responsible for human rights violations and significant acts of corruption, similar to the Global Magnitsky Human Rights Accountability Act in the United States, with sanctions administered by the Office of Foreign Assets Control.

Once GAC adds entities and individuals to the lists of sanctions, Canadian financial institutions comply by freezing the designated party’s assets and suspending transactions. GAC coordinates with several government agencies to enforce and enable private-sector compliance with sanctions:

FINTRAC: Canada’s financial intelligence unit (FIU)—Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)—is responsible for monitoring suspicious financial activities and collecting reporting from financial institutions on transactions that may be linked to sanctions evasion. FINTRAC is an independent agency that reports to the Minister of Finance. FINTRAC works closely with the US financial intelligence unit—Financial Crimes Enforcement Network (FinCEN)—on illicit finance investigations and when sanctions evasion includes the US financial system. For example, FinCEN and FINTRAC both monitor and share financial information related to Russian sanctions evasion and publish advisories and red flags for the financial sector in coordination with other like-minded partner FIUs.

OSFI: The Office of the Superintendent of Financial Institutions (OSFI) is a banking regulator that issues directives to financial institutions regarding compliance and instructs banks to freeze assets belonging to sanctioned individuals and entities. FINTRAC also shares financial intelligence with OSFI on sanctions evasion activity under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). OSFI shares intelligence with Royal Canadian Mounted Police (RCMP), the national police service of Canada, if there is evidence of sanctions evasion or other financial crimes.

RCMP: Once OSFI notifies RCMP about suspicious activity, RCMP investigates whether the funds are linked to sanctions evasion or other financial crimes. If it finds evidence of a violation of sanctions or criminal activity, RCMP obtains a court order to seize assets under the Criminal Code and the PCMLTFA.

CBSA: Canada Border Services Agency (CBSA) is responsible for blocking sanctioned individuals from entering Canada. CBSA also notifies OSFI if sanctioned individuals attempt to move cash or gold through border crossings.

All four agencies work with GAC and with one another on sanctions enforcement. GAC sets sanctions policy, FINTRAC analyzes financial intelligence and shares suspicious activity reports to inform law enforcement investigations, OSFI enforces compliance in banks, RCMP investigates crimes and seizes assets, and CBSA prevents sanctioned individuals from entering Canada and moving assets across borders.

While financial sanctions are part of Canada’s economic statecraft tool kit, Canadian sanctions power does not have the same reach as US sanctions. The preeminence of the US dollar and the omnipresence of major US banks allows the United States to effectively cut off sanctioned individuals and entities from the global financial system. Canadian sanctions are limited to Canadian jurisdiction and affect individuals and entities with financial ties to Canada, but they do not have the same reach as US financial sanctions.

Nevertheless, Canadian authorities have been able to leverage financial sanctions to support the G7 allies in sanctioning Russia. For example, in December 2022, under SEMA, Canadian authorities ordered Citco Bank Canada, a subsidiary of a global hedge fund headquartered in the Cayman Islands, to freeze $26 million owned directly or indirectly by Russian billionaire Roman Abramovich, who has been sanctioned by Canada and other G7 allies. In June 2023, Canadian authorities seized a Russian cargo jet at Toronto’s Pearson Airport pursuant to SEMA.

Figure 4

Export controls

Canada participates in several multilateral export control regimes, including the Wassenaar Arrangement, Nuclear Suppliers Group, Missile Technology Control Regime, and Australia Group. When multilateral regimes fall short in addressing Canada’s foreign policy needs, Canada leverages its autonomous export control list, which is administered by GAC under the Export and Import Permits Act. The Trade Controls Bureau under GAC is responsible for issuing permits and certificates for the items included on the Export Control List (ECL).

Canada Border Services Agency plays a crucial role in the enforcement of export controls. CBSA verifies that shipments match the export permit issued by GAC. It can seize or refuse exports that violate GAC export permits through ports, airports, and land borders. CBSA refers cases to the Royal Canada Mounted Police (CRMP) for prosecution if exporters attempt to bypass regulations.

Separately, FINTRAC monitors financial transactions that might be connected to the exports of controlled goods and technologies. If FINTRAC detects suspicious transactions, it shares intelligence with GAC and other relevant authorities. Canada’s method of leveraging financial intelligence for enforcing export controls is similar to that of the United States, where FinCEN has teamed up with the Commerce Department’s Bureau of Industry and Security to detect export control evasion through financial transactions.

While in the United States the export controls authority lies within the Commerce Department, Canada’s equivalent, Innovation, Science and Economic Development Canada (ISED), does not participate in administering export controls. That responsibility is fully absorbed by GAC.

While Canada has mainly used its export control authority in the context of sensitive technologies, Canadian politiciansand experts have recently been calling on the federal government to impose restrictions on mineral exports to the United States in response to US tariffs. The United States highly depends on Canada’s minerals, including uranium, aluminum, and nickel. Canada was the United States’ top supplier of metals and minerals in 2023 ($46.97 billion in US imports), followed by China ($28.32 billion) and Mexico ($28.18 billion). Notably, President Trump’s recent executive order called Unleashing American Energy instructed the director of the US Geological Survey to add uranium to the critical minerals list. Canada provides 25 percent of uranium to the United States. If Canada were to impose export controls on uranium, the US objective of building a resilient enriched uranium supply chain would be jeopardized.

However, Canada could not impose export controls on the United States without experiencing significant blowback. Export control is a powerful tool. While US tariffs would increase the price of imported Canadian goods by at least 25 percent, Canada’s export controls would completely cut off the flow of certain Canadian goods to the United States. It would be destructive for both economies, so Canada will likely reserve this tool as a last resort and perhaps work on finding alternative export destinations before pulling such a trigger.

Canada employs restrictive economic measures against Russia

In response to Russia’s unjust invasion of Ukraine in 2022, Canada imposed financial sanctions and export controls against Russia in coordination with G7 allies. To date, Global Affairs Canada has added more than 3,000 entities and individuals to its Russia and Belarus sanctions lists under SEMA. Assets of designated individuals have been frozen and Canadian persons are prohibited from dealing with them. Apart from financial sanctions, Canada imposed export controls on technology and import restrictions on Russian oil and gold. Canada also joined the G7 in capping the price of Russian crude oil at $60 per barrel and barred Russian vessels from using Canadian ports.

To enforce financial sanctions against Russia, FINTRAC joined the financial intelligence units (FIUs) of Australia, France, Germany, Italy, Japan, the Netherlands, New Zealand, the United Kingdom, and the United States to create an FIU Working Group with the mission of enhancing intelligence sharing on sanctions evasion by Russian entities and individuals. Separately, Canada Border Services Agency’s export controls enforcement efforts included the review of more than 1,500 shipments bound to Russia (as of February 2024), resulting in six seizures and fourteen fines against exporters. CBSA continues to work closely with the Five Eyes intelligence alliance to share information about export control evasion.

To disrupt the operation of Russia’s shadow fleet, Canada proposed the creation of a task force to tackle the shadow fleet in March 2025. Such a task force could be useful in addressing the various environmental problems and enforcement challenges the shadow fleet has created for the sanctioning coalition. However, the United States vetoed Canada’s proposal.

Figure 5

Tariffs

Canada’s approach to tariffs is governed primarily by the Customs Act, which outlines the procedures for assessing and collecting tariffs on imported goods, as well as the Customs Tariff legislation that sets the duty rates for specific imports (generally based on the “Harmonized System,” an internationally standardized system for classifying traded products). The Canada Border Services Agency is responsible for administering these tariffs. Additionally, the Special Import Measures Act enables Canada to protect industries from harm caused by unfair trade practices like dumping or subsidizing of imported goods, with the Canadian International Trade Tribunal determining injury and the CBSA imposing necessary duties. The minister of finance, in consultation with the minister of foreign affairs, plays a key role in proposing tariff changes or retaliatory tariffs, ensuring Canada’s trade policies align with its broader economic and diplomatic objectives.

Canada has frequently aligned with its allies on tariff issues, as demonstrated in 2024 when, following the US and EU tariffs, it imposed a 100 percent tariff on Chinese electric vehicles to protect domestic industries. However, Canada has also been proactive in responding to US tariffs, employing a combination of diplomatic negotiations, retaliatory tariffs, and reliance on dispute resolution mechanisms such as the World Trade Organization and USMCA. In the past Canada was also quick to align itself with allies such as the EU and Mexico, seeking a coordinated international response, as was the case in 2018 when the United States imposed a broad tariff on steel and aluminum.

Similar to the United States, Canada offers remission allowances to help businesses adjust to tariffs by granting relief under specific circumstances, such as the inability to source goods from nontariffed countries or preexisting contractual obligations. The Department of Finance regularly seeks input from stakeholders before introducing new tariffs. In 2024, a thirty-day consultation was launched about possible tariffs on Chinese batteries, battery parts, semiconductors, critical minerals, metals, and solar panels, though it has yet to result in any new tariffs.

Canada’s primary weakness regarding tariffs is its lack of trade diversification. The United States accounts for half of Canada’s imports and 76 percent of its exports. This dependency severely limits Canada’s ability to impose tariffs on the United States without facing significant economic repercussions. Canada’s relatively limited economic leverage on the global stage also complicates efforts to coordinate multilateral tariff responses or to negotiate favorable trade agreements. Furthermore, Canada’s lengthy public consultations and regulatory processes for implementing tariffs hinder its ability to leverage tariffs as a swift response to changing geopolitical or economic circumstances.

Figure 6

Investment screening

Canada’s investment screening is governed by the Investment Canada Act (ICA), which ensures that foreign investments do not harm national security while promoting economic prosperity. The ICA includes net benefit reviews for large investments and national security reviews for any foreign investments which pose potential security risks, such as foreign control over critical sectors like technology or infrastructure.

The review process is administered by ISED, with the minister of innovation, science, and industry overseeing the reviews in consultation with Public Safety Canada. For national security concerns, multiple agencies assess potential risks, and the Governor-in-Council (GIC) has the authority to block investments or demand divestitures.

Criticism of the ICA includes lack of transparency and consistency, particularly in national security reviews, where decisions may be influenced by political or diplomatic considerations. To better mitigate risks to security, critical infrastructure, and the transfer of sensitive technologies, experts have argued that the ICA should more effectively target malicious foreign investments by incorporating into the review process the perspectives of Canadian companies on emerging national security threats. In response to these concerns, Bill C-34 introduced key updates in 2024, including preclosing filing requirements for sensitive sectors, the possibility of interim conditions during national security reviews, broader scope covering state-owned enterprises and asset sales, consideration for intellectual property and personal data protection, and increased penalties for noncompliance. In March 2025, further amendments were made to the ICA, expanding its scope to review “opportunistic or predatory” foreign investments. These changes were introduced in response to the United States’ imposition of blanket tariffs on Canadian goods.

Figure 7

Positive economic statecraft

Apart from coercive/protective tools, Canada maintains positive economic statecraft (PES) tools such as development assistance to build economic alliances beyond North America. For example, Canada is one of the largest providers of international development assistance to African countries. After Ukraine, Nigeria, Ethiopia, Tanzania, and the Democratic Republic of the Congo were the top recipients of Canada’s international assistance. Canada’s PES tools lay the ground for the federal governments to have productive cooperation when needs arise. Canadian authorities should leverage PES tools to enhance the country’s international standing and increase economic connectivity with other regions of the world. This is especially important amid the US pause on nearly all US foreign assistance. Canada could step up to help fill the vacuum in the developing world created by the Trump administration’s radical departure from a long-standing US role in foreign aid.

Canadian authorities have already taken steps in this direction. On March 9, Canadian Minister of International Development Ahmed Hussen announced that Canada would be providing $272.1 million for foreign aid projects in Bangladesh and the Indo-Pacific region. The projects will focus on climate adaptation, empowering women in the nursing sector, advancing decent work and inclusive education and training. Earlier, on March 6, Global Affairs Canada launched its first Global Africa Strategy with the goal of deepening trade and investment relations with Africa, partnering on peace and security challenges, and advancing shared priorities on the international stage including climate change. Through this partnership, Canada plans to strengthen economic and national security by enhancing supply chain resilience and maintaining corridors for critical goods.

Conclusion

Canada’s federal government maintains a range of economic statecraft tools and authorities to address economic and national security threats. While regional factionalism and provincial equities can hinder the federal government’s ability to leverage the full force of Canada’s economic power, threats to Canada’s economic security, including tariffs from the United States, may prove to further unite and align the provinces. The federal government and provincial premiers should work together to meet this challenging moment, consolidating Canada’s sources of economic power and moving forward with a cohesive economic statecraft strategy to protect the country’s national security and economic security interests.

Canada’s leadership and engagement in international fora including the G7, NATO, Wassenaar Agreement, among others, as well as its bilateral relationships, make it well-placed to coordinate and collaborate with Western partners on economic statecraft. Information sharing, joint investigations, multilateral sanctions, and multilateral development and investment can extend the reach of Canada’s economic power while strengthening Western efforts to leverage economic statecraft to advance global security objectives and ensure the integrity of the global financial system. Canada also has a solid foundation for building economic partnerships beyond the West through development assistance and other positive economic statecraft tools.

About the authors

Staff

Kimberly Donovan

Economic Statecraft Initiative GeoEconomics Center

Digital Currencies Economic Sanctions

Staff

Maia Nikoladze

Associate Director, Economic Statecraft Initiative

Economic Statecraft Initiative GeoEconomics Center

Digital Currencies Eastern Europe

Staff

Lize de Kruijf

Program Assistant, Economic Statecraft Initiative

Economic Statecraft Initiative GeoEconomics Center

Dutch Economic Sanctions

The authors would like to thank Nazima Tursun, a young global professional at the Atlantic Council’s Economic Statecraft Initiative, for research support.

The report is part of a year-long series on economic statecraft across the G7 and China supported in part by a grant from MITRE.

Explore the program

Housed within the GeoEconomics Center, the Economic Statecraft Initiative (ESI) publishes leading-edge research and analysis on sanctions and the use of economic power to achieve foreign policy objectives and protect national security interests.

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The post Canada needs an economic statecraft strategy to address its vulnerabilities appeared first on Atlantic Council.

Bayoumi published in Foreign Policy on how US climate policy is a “win” for Russia

bgalicia — Mon, 24 Mar 2025 16:33:01 +0000

Adrienne Arsht National Security Resilience Initiative GeoStrategy Initiative

On March 24, Imran Bayoumi, associate director of the GeoStrategy Initiative in the Scowcroft Center for Strategy and Security, was published in Foreign Policy on changing US climate priorities. He argues that a “U-turn” on climate could benefit US adversaries like Russia.

Approaching climate change as an opportunity is an option, but a risky one at best. Doing so threatens to expose the U.S. as underprepared in the Arctic and limit Washington’s ability to gain influence and favor worldwide.

Imran Bayoumi

Staff

Imran Bayoumi

Associate Director

The post Bayoumi published in Foreign Policy on how US climate policy is a “win” for Russia appeared first on Atlantic Council.

Four critical questions (and expert answers) about Trump’s new critical minerals executive order

Alexis Harmon, Reed Blakemore — Fri, 21 Mar 2025 23:07:11 +0000

Rock paper signed. Invoking emergency powers on Thursday, US President Donald Trump signed an executive order intended to increase critical mineral production. The White House noted that 70 percent of US imports of rare earths come from China, and the United States must secure more sources. But in the measures it announces to increase supplies, Trump’s order goes beyond these elements and compounds to include copper, uranium, potash, gold, and potentially even coal as critical. So, what does this order mean for mineral supply chains? Two of our top experts from the Atlantic Council Global Energy Center, Alexis Harmon and Reed Blakemore, dig into the details.

1. Why is the Trump administration focused on critical minerals?

Securing US critical mineral supply chains has been a priority for the Trump administration since day one. These roughly fifty minerals serve as the building blocks of many modern technologies—think fighter jets, semiconductors, electric vehicle batteries, and cell phones. With the United States deeply reliant on foreign sources for these crucial inputs, the administration sees boosting US mineral production as a victory on two fronts: It reduces national security risks tied to dependence on China, and it promotes job creation and economic prosperity by revitalizing domestic mining and processing industries.

2. How does the executive order approach securing US critical mineral supply chains?

Trump’s new executive order, “Immediate Measures to Increase American Mineral Production,” uses emergency powers to streamline permitting and ramp up investment through several important mechanisms.

Rapid permitting: Opening up new mines and processing facilities can take decades, and arduous permitting processes are often a major hurdle. Projects sometimes spend a decade languishing in permitting processes. In this order, agencies have been given just ten days to compile a list of pending mineral production projects that could be immediately approved, plus fifteen days to nominate potential candidates for FAST-41 status, which fast-tracks approvals. Although this would be extremely effective in speeding up project timelines, critics warn of serious environmental consequences.

Improved financing: The White House is using a variety of tools here, but most important are the Defense Production Act (DPA) and the International Development Finance Corporation (DFC). The DPA is a powerful industrial-policy tool, traditionally meant to direct production according to defense needs in wartime. By giving the DPA Section 303 authority to the Department of Defense and DFC, the government has the power to directly fund domestic mining and processing projects through subsidies, loans, loan guarantees, and supply contracts. The order also calls for all agencies with loan authorities to speed up approval processes, and it provides interesting new mechanisms for offtake support through the US Export-Import Bank and coordinated bidding processes.

Other things of note: The order also calls for federal lands to prioritize mining operations over all other activity, as well as the Small Business Administration to provide support to small businesses engaged in mineral production. It also calls for increased technical assistance to mining companies (although it’s unclear that the United States has the expertise needed) and improvements to waste management.

3. What’s noteworthy about this approach?

Several additional elements of the order are important to note.

Minerals mentioned: The new order explicitly calls uranium, copper, potash, and gold critical minerals, plus it gives the National Energy Dominance Council the authority to deem any material as a qualifying mineral affected by the order. A subsequent White House fact sheet mentions coal. Although critical mineral designations vary from agency to agency, these materials have not traditionally made the list. How investments will unfold remains to be seen, but the order unleashing financing and smoothing the regulatory path for coal production and gold mining speaks to how a broad definition of what makes a mineral “critical” will be a significant part of mining policy moving forward.

Domestic focus: The order is squarely focused on boosting US production and barely mentions projects abroad. Starting with bolstering US mining is on brand for the Trump administration and a necessary part of a broad-based approach to building a resilient supply chain. US mining has largely floundered due to price volatility and a lack of incentives for long-term investment. While policy is a critical tool to unlock domestic resources, the United States is not abundant in a considerable portion of the critical minerals needed for many important technologies, such as semiconductors, meaning international cooperation will still be integral to securing US critical mineral supply chains. The brief language saying that financing could be used for projects abroad hints that the administration knows this, even if it has not identified it as a major priority in the order.

DFC pivot: Centering the DFC as a main domestic investment tool is a remarkable flexing of executive power. The DFC was created to foster economic development in emerging markets by providing financing and technical support to foreign projects that serve US strategic interests—not finance domestic projects. However, its unique loan and investment authorities inarguably make it a clever candidate for quickly creating a domestic investment body that can boost mining in the United States. With DFC reauthorization on the horizon in October 2025, Congress will be forced to choose whether to codify this huge shift and give the DFC real teeth as a strategic investment tool both at home and abroad. Should the DFC be increasingly positioned as a tool to manage national wealth (note that the order calls to create a mineral production fund for the DFC to use) and supercharged with DPA authority, it may increasingly lay the groundwork for a possible full-fledged sovereign wealth fund.

Offtake support: Providing financing is important, but investment will only flow if companies are confident about the sustainability of their operations. Although the language is vague, the order does float possible offtake agreements at home and abroad. Such offtake agreements could make producers more willing to invest by establishing long-term contracts between a buyer and a seller that give producers confidence that their product will have a steady market at a fair price.

4. Will it be effective in achieving the administration’s goals?

The order is likely the first step of many. However, its success depends on whether investments—and mines and processing facilities—actually materialize. Many fear that in such an uncertain pricing environment, concessional financing won’t be enough to draw out broad private sector interest. Others highlight the United States’ inability to secure supply chains independently, since no authorities are powerful enough to change where mineral deposits are located.

Ultimately, robust supply chain diplomacy and close partnerships with allies and partners will be critical to US mineral security. Future executive orders must address this challenge, likely by also relying heavily on the DFC and other levers for commercial diplomacy to get strategic investments flowing. Notably, this isn’t the first time that a US administration has used DPA authority to try to boost critical mineral production in recent years. Trump tried it in 2020 to reduce dependence on Chinese rare earths, and the Biden administration followed suit in 2022 for electric vehicle minerals. Neither effort was particularly effective, though it’s worth noting that the long timelines for setting up mines and processing facilities make it hard to assess success too quickly. This points to a major limit to executive power here: Given the relatively short-term nature of four-year presidencies, companies remain hesitant to make multi-decade investments with uncertain returns. Just last week, Trump’s revocation of Biden-era DPA designations on green energy technology such as solar panels highlighted the instability of these support systems.

The post Four critical questions (and expert answers) about Trump’s new critical minerals executive order appeared first on Atlantic Council.

Plitsas quoted in the New York Post on the potential of Trump seeking to secure interests in Ukraine’s energy sector

Atlantic Council — Tue, 11 Mar 2025 17:40:48 +0000

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The US can reduce Russia’s nuclear energy—and geopolitical—influence

Marina Lorenzini — Fri, 07 Mar 2025 17:31:23 +0000

As the second Donald Trump administration settles in, at least one energy priority will remain consistent: bipartisan efforts to position the US nuclear energy industry for a greater share in the global marketplace. In early February, Secretary Chris Wright emphasized Trump’s priority for the United States: to “lead the commercialization of affordable and abundant nuclear energy” amid surging global energy demand. This opportunity will lead not only to economic growth and improved energy security in the United States, but also the chance to reduce Russian influence on nuclear energy markets in Europe—and the geopolitical leverage it affords.

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For the past two decades, Russia has wielded its nuclear energy technologies—through its state-owned conglomerate Rosatom—as a strategic export to exert geopolitical leverage. Rosatom has been a dependable, cost-effective, and technically competent partner for stakeholders around the world, enabling its dominant market position.

Substantial up-front project finance and loans have contributed to Rosatom’s international success. Bangladesh, Belarus, Egypt, Hungary, and Turkey have benefitted from multibillion-dollar loans from Russia’s State Bank for Development and Foreign Economic Affairs (Vnesheconombank). State sponsorship allows Rosatom to offer favorable loan terms—such as a 3 percent interest rate—that competitors cannot match. Meanwhile, any analogous form of concessional loans for infrastructure projects has not been a part of the development strategy among Rosatom’s competitors.

However, some countries that previously embraced the vision of energy integration with Russia continue to shift investments away from Russian partners. Countries tied to Rosatom for their nuclear supplies are keen to diversify—if not extract themselves entirely—from energy dependence on Russia. Additionally, Vnesheconombank‘s SWIFT ban and US sanctions designation increases risks for loan recipients.

The United States—and allies with nuclear industries such as France and South Korea—could further convert the commercial interest for non-Russian products into strategic wins by focusing on countries with Soviet-era reactors. Countries and utilities often cite project finance as the primary barrier for building, but the new political momentum in the United States could galvanize both sufficient funds and new models across the public and private sectors.

Bulgaria seeks two new reactors at Soviet-era site

Bulgaria’s Kozloduy nuclear power plant operates two Soviet-era VVER-1000 reactors which supply one third of the country’s electricity. But in February 2024, Bulgaria signed an intergovernmental agreement with the United States to contribute to Bulgaria’s civil nuclear program, including the design, construction, and commissioning of two Westinghouse AP-1000 reactors at Kozloduy at a cost of $14 billion. Bulgaria’s energy minister said that the two reactors will be built entirely with public funds: either the Bulgarian treasury or the state plant owner will finance up to 30 percent of the project costs, and a loan will cover the remaining costs.

In early February, the Bulgarian energy minister met with officials from the US Export-Import Bank (EXIM) to advance a $8.6 billion (more than 60 percent of the estimated cost) letter of interest for the two new reactors. For the remaining amount, the Bulgarian treasury or Kozloduy’s owner has several options. Bulgaria may also have access to debt or equity financing from the world’s largest multilateral development lender, the European Investment Bank. Additionally, as the World Bank considers how to incorporate nuclear power into their offerings, any steps toward engagement would encourage other lenders to do the same. If further capital is required, Bulgaria—with its relatively healthy domestic economy—could issue dollar-denominated bonds to raise funds, or the Kozloduy owner could issue green bonds similar to Canada’s Bruce Power.

Bulgaria’s ability—and that of any potential lenders—to overcome financing hurdles will determine the success of such agreements. But if the agreement leads to new nuclear power generation, it bodes well for similar economies to undertake new reactor builds.

Soviet reactor reaches end of life in Armenia

Russia dominates Armenia’s energy system, but Armenian foreign policy has shifted dramatically away from Moscow in the past year, in part due to the lack of Russian military assistance to Armenia when Azerbaijan seized Nagorno-Karabakh.

The policy change will not immediately impact Armenia’s Soviet-era VVER-440 nuclear reactor at Metsamor, which has received several upgrades and lifetime extensions—the latest, with Rosatom’s support, will sustain the remaining operational reactor until 2036. However, preparations must be made in the coming years to: extend the operational lifetime (a highly unlikely outcome due to the reactor’s age); build new light-water reactors (whether from China, Russia, South Korea, or the United States); or invest in small modular reactors (SMRs). Armenia may seek to build an SMR rather than a traditional reactor due to limited financing options and low power consumption.

To build a new reactor, Armenia might want to follow Romania’s blended model for financing its SMR deal with NuScale. The EXIM and US International Development Finance Corporation offered Romania tentative financial support totaling $4 billion. Public and private partners then formed a coalition of stakeholders from Japan, South Korea, the United Arab Emirates, and the United States to finance the SMR project up to $275 million. If further capital is needed, private financial institutions have also recently announced their plans to support the nuclear industry. Whether and when construction begins for the reactor in Romania will demonstrate feasibility, but so far, the financial structure has shown promise.

A great nuclear power balance

In partnership with allies, the United States should advance financial and commercial solutions to help countries dependent on Russian nuclear energy diversify their domestic power programs. The United States is well positioned to do so. Trump, and Biden before him, have supported nuclear energy domestically, which, in turn, can result in the export of US technologies and expertise. Strong bipartisan appropriations from multiple administrations will reinforce Trump’s vision and the domestic nuclear energy industry. In 2019, during Trump’s first administration, the Nuclear Energy Innovation and Modernization Act became law, paving the way for a streamlined advanced reactor licensing process. Under the Biden administration, the multibillion-dollar appropriations from the Infrastructure Investment and Jobs Act and the Inflation Reduction Act bolstered the US nuclear energy industry. Further, the 2023 Nuclear Fuel Security Act and the 2024 ADVANCE Act enjoyed bipartisan support on Capitol Hill.

Building on these domestic advances, Trump’s embrace of financial vehicles, such as the EXIM Bank or DFC, that bridge public and private sectors, will facilitate investments in multi-billion dollar infrastructure projects outside of the United States and bolster US energy-related exports, including from its domestic nuclear energy industry. These factors bode well for the United States to substantially weaken Russia’s share of global nuclear markets and its geopolitical influence.

Marina Lorenzini is the research program coordinator at the Middle East Initiative at the Belfer Center for Science and International Affairs at Harvard University’s John F. Kennedy School of Government.

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How shifting political leadership, war, and generative AI are shaping the energy outlook: Insights from the 2025 Global Energy Agenda

Landon Derentz, Christine Suh, Bailee Mathews — Thu, 06 Mar 2025 16:16:59 +0000

Amid conflict, electoral transformations, and the emergence of generative AI, the Atlantic Council launched its annual flagship report, the Global Energy Agenda, chronicling changes, challenges, and opportunities in the energy system through leadership perspectives and a survey of more than 1,000 energy professionals across more than 100 countries. Collectively, these views provide a valuable roadmap for building a more secure, sustainable, and resilient energy system.

Read the full report here.

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On balancing competing pressures

In recognition of the complexity of the energy system, rising energy demand, and that every energy source has tradeoffs, Rick Muncrief, who just retired as CEO of Devon Energy, sums up the realities facing the sector this way: “We cannot prioritize clean energy over reliability and affordability, we cannot pursue reliability and affordability at the expense of the environment, and we cannot develop energy policies and systems that do not account for geopolitical risks domestically and abroad.”

These geopolitical risks feature strongly in our survey results, with respondents citing conflict in the Middle East and Russia’s unjust war in Ukraine as the biggest concerns. These risks raised the alarm over the use of energy for geopolitical leverage and renewed determination among US business leaders and policymakers to ramp up innovation and manufacturing domestically.

What will be the biggest risk in energy geopolitics in the coming year?

On seeking common ground

But amid this competitive spirit, policymakers know that they cannot secure their respective energy systems alone. Dan Jørgensen, European Commissioner of energy and housing, identifies key areas, including supply chains, cybersecurity, liquefied natural gas, and nuclear energy, where US-EU partnership is critical for both to achieve energy security, writing: “In the face of challenges to come, it will be essential to find and reinforce our common connections, wherever they exist.”

On advancing the energy transition

Energy leaders also make clear in our Agenda that the momentum of the energy transition has taken on a life of its own. Andrés Rebolledo Smitmans, executive secretary of the Latin America Energy Organization (OLADE), notes that in Latin America and the Caribbean “the share of renewable energy in electricity generation increased from 53 percent to 68 percent in the past ten years, while greenhouse gas emissions were reduced by 26 percent.” Ramping up progress will “require investments in unprecedented volumes of materials, which must flow and materialize in relatively short periods.”

This unprecedented amount of investment is perhaps why, out of all sectors we surveyed, those who work in finance predict the longest runway for reaching net-zero emissions.

Median year estimated for achieving net zero (by sector and region/country)

However, progress toward advanced nuclear energy and greater regional cooperation will continue to move the world toward both decarbonization and development.

As Lassina Zerbo, chair of the Rwanda Atomic Energy Board, writes, “Nuclear energy—and in particular small modular and micro reactors (SMRs)—can revolutionize the African energy landscape and promote sustainable development.” In Southeast Asia, Kok Keong Puah, chief executive of Singapore’s Energy Market Authority, emphasizes that interconnections are key to regional decarbonization, but also that a “stable, prosperous, and decarbonized Southeast Asia will not only benefit the region but also strengthen global supply chains, promote economic growth, and contribute to climate stability.”

And one of the most intriguing advancements to watch in 2025 will be the promise of generative AI, which could lead to a game-changing acceleration toward net-zero targets. 

While acknowledging that energy demand for AI is currently growing, Josh Parker, senior director of corporate sustainability at Nvidia, writes, “AI is also proving to be a powerful tool for finding ways to save energy and may very well become the best tool we have for advancing sustainability worldwide.”

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Andrei Covatariu: The EU’s decarbonization goals are technically achievable—but are Europeans able to pay for them?

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Can the EU’s Clean Industrial Deal cut carbon and restore competitiveness?

Andrea Clabough, Andrei Covatariu, Elena Benaim, Carol Schaeffer — Thu, 27 Feb 2025 15:09:01 +0000

The European Commission has introduced the EU Clean Industrial Deal (CID) to align climate ambitions with industrial competitiveness. Building on previous EU energy policies like the REPowerEU Plan, CID focuses on ensuring affordable energy to consumers through streamlining market integration, harmonizing financial and regulatory frameworks, providing clean energy investment incentives, digitalizing the grid, and reducing permitting bottlenecks, and alleviating regulatory burdens on natural gas markets. By integrating industrial, economic, and trade policies, the deal aims to provide a predictable framework for innovation and investment in clean technologies.

However, as geopolitical pressures mount and Europe faces growing competition in global markets, questions remain over whether these measures will be implemented swiftly enough to prevent further industrial decline. Below, Atlantic Council experts share their analysis on the EU’s new industrial policy, its implications for European energy security, and how key partners may respond to the bloc’s evolving regulatory landscape.

Click to jump to an expert analysis:

Andrea Clabough: Europe goes all in on industrial policy—with or without the US

Elena Benaim: The Clean Industrial Deal Needs a Clear Strategy on Clean Energy Supply Chains

Carol Schaeffer: The CID is more industrial than it is clean. But Europe needs to be both.

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The EU’s decarbonization goals are technically achievable—but are Europeans able to pay for them?

Listed first among the critical elements for a “thriving new European industrial ecosystem of growth and prosperity” is affordable energy, as Europe’s energy prices are significantly higher than those of its main trading competitors. For this reason, the Clean Industrial Deal strategy issued by the European Commission is accompanied by an additional, even lengthier document—the Action Plan for Affordable Energy—aimed at finding energy policy solutions to restore economic competitiveness while keeping the EU on track to meet its decarbonization goals.

To achieve this, the Clean Industrial Deal sets a target of a 32 percent electrification rate by 2030, representing a more than 50 percent increase compared to today (21.3 percent). While flexibility is seen as a major contributor to both increasing electrification and reducing system costs, achieving such a rapid electrification rate would require massive investments in power grids—otherwise a critical foundation for the energy transition process—within less than five years. Given that Europe has some of the highest lead times globally for deploying new distribution and transmission lines, fast-tracking permitting is cited as a necessary solution. Although these ambitious targets are technically achievable, ensuring affordability at the same time—as repeatedly emphasized in the Commission’s proposal—is simply aspirational.

While acknowledging that Europe has the most integrated grid globally, the Action Plan for Affordable Energy also recognizes the need for further progress. It proposes making electricity bills more affordable, including by reducing network charges. However, while these costs may be removed from final energy bills, they will still be indirectly paid by end users through domestic or EU budgets, exacerbating existing budget deficits or inflation-related issues, especially in the short run.

Although ambitious targets may foster short-term social and political cohesion, failing to meet them will have political repercussions in the next EU elections in 2029—just months before the 2030 milestone.

Still, the goal of reducing net greenhouse gas emissions by 90 percent by 2040 is still attainable through other energy policy measures listed in the document, most of which have already been talked about in previous years. These include more long-term contracts, faster permitting for clean power projects, creating a Gas Market Task Force to ensure fair competition, fully integrating energy markets, and providing more funding for energy efficiency solutions.

In summary, the EU requires more than €570 billion per year between 2021 and 2030, as well as €690 billion per year between 2031 and 2040, to stay on track to meet its climate neutrality mission, according to the Action Plan for Affordable Energy. These figures include solar, wind and biomass, energy efficiency and grid capacity, but do not cover investments in nuclear energy (including fusion), enhanced geothermal, solid-state batteries, or capacity refurbishment, which the Commission will assess and foster. It is a bold—if old—plan, with the same unresolved question of how the EU will pay for it.

Andrei Covatatiu is a nonresident fellow with the Atlantic Council Global Energy Center

Europe goes all in on industrial policy—with or without the US

The Clean Industrial Deal hardly emerged in a vacuum, and it is perhaps impossible to analyze apart from the sea change the last month has brought to US-EU relations. The CID reveals determination in Europe to build its own future and (re)emerge as a global industrial competitor—looking not just at China, but also the United States. Some of the announcements will be appreciated in Washington, such as delayed implementation of the EU’s Carbon Border Adjustment Mechanism (CBAM), narrowing its application to a smaller group of importers, and more tailored environment, sustainability, and governance requirements in corporate sustainability and due diligence reporting.

But other components point to a “Made in Europe” industrial policy that retains characteristic focus on decarbonization. New Clean Trade and Investment Partnerships and additional free trade agreements are intended to “better manage strategic dependencies” but are almost certainly a response to the protectionist mindset and tariff threats coming from Washington. Likewise, a critical raw materials demand aggregation and matchmaking mechanism will facilitate joint purchases within hotly competitive markets for minerals and other commodities—a focus of the Trump administration’s recent diplomacy to secure such access for the United States. A revision in the Public Procurement Framework next year will “make European preference criteria a structural feature of EU public procurement in strategic sectors.” The Affordable Energy Action Plan, meanwhile, emphasizes further diversification of liquefied natural gas (LNG) suppliers from existing and future LNG projects, likely to include but perhaps look beyond reliance on US LNG.

Through the CID, the EU Commission is arguing that the costs of energy transition can be mitigated while the social and economic opportunities are fully maximized—a marked contrast to the attitude in Washington. These and other elements suggest the EU wants its own rules of the road to be proactive (rather than continually react) to whatever pathways the United States and China pursue. With serious questions surrounding the transatlantic alliance and the reliability of the United States as an economic and geostrategic partner, this gear shift in the European approach comes not a moment too soon.

Andrea Clabough is a nonresident fellow with the Atlantic Council Global Energy Center.

The Clean Industrial Deal Needs a Clear Strategy on Clean Energy Supply Chains

The European Commission’s Clean Industrial Deal outlines a welcome and necessary framework, as it positions climate action as the driver for creating a compelling business case for industrial decarbonization.

While the framework includes a series of forthcoming initiatives that could—at least in principle—strengthen the competitiveness and decarbonization nexus, there is a lack of clarity when it comes to the role of international trade.

Under the “Global Markets and International Partnership” pillar, the Commission rightly points out that “the EU cannot realise its clean industrialisation objectives without partnerships on the global stage.” Clean Trade and Investment Partnerships (CTIPs) are introduced as a tool that will complement free trade agreements to offer a “more targeted approach, tailored to the concrete business interests of the EU.”

For the EU to successfully achieve its clean industrial objectives, a well-defined strategy for clean technology supply chains is essential. This requires, on one hand, a comprehensive analysis of the EU’s current manufacturing capacity in clean technology supply chain segments necessary to reach net zero, and on the other, a thorough assessment of existing trade agreements with global partners to identify where external supply chains can complement gaps in the EU ‘s capacity.

Without such an analysis, there is a risk that CTIPs may fall short of delivering, ultimately undermining the EU’s goals. At a time of geopolitical turmoil and a reassessment of strategic partnerships, fully integrating this evaluation into a joint roadmap for decarbonization and competitiveness is of fundamental importance.

Elena Benaim is a nonresident fellow with the Atlantic Council Global Energy Center.

The CID is more industrial than it is clean. But Europe needs to be both.

With the introduction of the Clean Industrial Deal, the European Commission correctly acknowledges that competitiveness and climate policy are intertwined. But as Carbon Market Watch put it, although the deal is “certainly industrial, it is far from clean.” While the CID is an important step to solidify the green transition as part of a strategy for economic competitiveness, it falls short in bringing Europe closer to meeting the goals of the Paris Agreement.

One example is the CID’s heavy reliance on carbon capture, utilization and storage (CCUS), which is its main strategy to address emissions from key sectors of European economy, such as steel, cement, and chemicals. But CCUS can only count as carbon removal if that removal is permanent. While a revision of the Emissions Trading System (ETS) aims to incentivize permanent storage—which has enormous long-term logistical challenges—relying on carbon capture to manage emissions after they are produced is a more precarious way to decarbonize than reducing the emissions in the first place.

It is important to remember that cutting emissions is itself a competitiveness measure—the long-term damage to supply chains and infrastructure from increasingly severe climate impacts is as great a threat to Europe’s economy as any tariff. But despite the shortcomings of the CID, the good news is that it clearly signals Europe’s commitment to doubling down on the green transition amid profound economic challenges.

The CID may be more industrial than it is clean—but that may be in service of the climate fight in the long run. Europe cannot be a leader in the green transition if it collapses under competitive pressures from the United States, Russia, and China. But if the CID is about Europe fighting for its survival in a rapidly shifting geopolitical landscape, then it should not forget that the climate crisis remains the continent’s greatest long-term threat.

Carol Schaeffer is a nonresident senior fellow with the Atlantic Council Europe Center.

EnergySource

New Atlanticist Feb 19, 2025

Make Europe more energy secure by reforming EU regulations

By Olga Khakova

Streamlining the European Union’s regulatory environment could help ensure energy security throughout the bloc.

Energy & Environment Energy Markets & Governance

EnergySource Oct 8, 2024

A new European Commission faces three key issues at the heart of the clean energy transition

By Michał Kurtyka

As the European Commission takes shape, it faces three critical issues that it must address to meet energy demand and restore Europe’s climate credibility: inadequate funding for the green transition, dependence on foreign energy imports, and declining economic competitiveness. The EU must take bold action to survive in a changing world.

Energy & Environment Europe & Eurasia

EnergySource Nov 14, 2024

Europe’s new industrial plan faces formidable obstacles

By Andrei Covatariu

European Commission President Ursula von der Leyen has promised to put forth in her second term a new Clean Industrial Deal to mobilize investment in infrastructure and industry, and reduce dependence on energy imports. But energy supply challenges and geopolitical hurdles risk undermining plans to restore Europe’s industrial competitiveness.

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Zaaimi quoted in MEES on Morocco’s push for renewables in Western Sahara

Atlantic Council — Tue, 25 Feb 2025 18:15:41 +0000

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Plitsas quoted in the New York Post on why Trump wants Greenland

Atlantic Council — Tue, 25 Feb 2025 18:13:56 +0000

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Plitsas quoted in Harici on Trump’s reasons behind annexing Greenland

Atlantic Council — Tue, 25 Feb 2025 18:13:55 +0000

Deputy Director, European Energy Security

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US energy dominance is Putin’s worst nightmare as Russia enters its fourth year of war crimes

Olga Khakova, Haley Nelson — Mon, 24 Feb 2025 19:50:34 +0000

Three years of Russia’s senseless aggression in Ukraine have caused monumental, unnecessary human suffering but also an irreversible impact on Russia’s energy sector. The war has diminished giants like Gazprom—once a massive revenue crutch for Moscow—into historic economic losers. Now, Vladimir Putin’s narrow path to regaining European gas market share is through liquefied natural gas (LNG)—a modern Trojan Horse of energy influence. Unstopped, he may succeed, as growing LNG exports to European consumers sent €7 billion to Russia in 2024.

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After ending the remaining pipeline exports through Ukraine, Europe is ready to take the leap to address Russia’s LNG leakage into the market, if competitive deals can be reached with alternative suppliers. The EU is welcoming more US LNG to fill these capacities and is also considering investments in LNG projects abroad to boost diversification and security of supply.

President Donald Trump fulfilled his promise to roll back former President Joe Biden’s pause on additional LNG project permits—a vital step to unleash future development. However, permitting is not the only driver for additional LNG capacity. Markets make the final call. Any opportunity to create certainty in a turbulent world would reduce risk for potential investors. Choking off Russian LNG on the global market through sanctions is the surest way to signal a new tangible demand trajectory for Europe and beyond.

But what’s the insurance policy against a resurgence of Russian gas? Unconstrained by the pipeline networks, LNG has the fungibility to reach buyers around the world—often lured in by the highest bidder Because of LNG’s ability to navigate through the global markets, the lasting curtailment of Russian LNG calls for a more comprehensive approach than just an EU ban. Sanctioning LNG where it’s sourced, rather than piecemeal at ports or through a national approach is the most effective way to prevent future supply blackmail from Moscow. The Arctic 2 LNG project sanctions, for example, are a roadmap to impactful project curtailments. Such efforts must be expanded to Russia’s Yamal and Sakhalin-2 LNG project—two significant LNG facilities that have been spared from sanctions to date.

The Trump administration has left the door open for additional sanctions on the Kremlin, if Putin fails to negotiate a peace deal in good faith. Thousands of rockets attacking Ukrainian civilians, including children, and critical infrastructure clearly signal that Moscow is undermining the United States and seeks to continue its brutalities against the most vulnerable populations.

By sanctioning Russia’s biggest remaining LNG projects, the United States and Europe can secure a triple win: stimulate domestic gas production and exports, while applying pressure on Moscow and strengthening transatlantic trade relations.

Olga Khakova is the deputy director for European energy security at the Atlantic Council’s Global Energy Center (GEC).

Haley Nelson is assistant director for European energy security at the Atlantic Council’s Global Energy Center.

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Wald on Bloomberg Surveilance: “Fed, Markets, & Apple”

Ellen Wald — Fri, 21 Feb 2025 16:37:21 +0000

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Energy realities require pragmatic solutions

Rick Muncrief — Thu, 20 Feb 2025 14:00:00 +0000

Rick Muncrief is the president and CEO of Devon Energy. This essay is part of the Global Energy Agenda.

Energy is the lifeblood of modern civilization, enhancing the lives of billions of people around the world. It is fundamental to human health, economic opportunity and prosperity, and global security.

With over four decades of experience in the oil and natural gas industry, I am excited by the opportunity that is in front of us: how to grow the energy system, while making it cleaner and more resilient. As we look to the future, in a world that is becoming increasingly fragmented, it’s crucial to address the energy realities we collectively face.

The world needs more energy, not less.

The first reality is that the world needs exceedingly more energy, not less. According to the US Energy Information Administration, global energy demand is projected to grow more than 30 percent by 2050. This surge in demand is fueled not only by the meteoric rise of artificial intelligence and data centers, but also growth in manufacturing and transportation. In emerging economies, energy demand will continue to rise as populations grow and incomes increase, enabling billions of people to drive, access new goods and services, and power their homes.

Despite significant progress in expanding energy access in the past decades, over one billion people still live in energy poverty, lacking reliable, affordable, productive power. More than two billion people still do not have access to clean cooking fuels or technologies, like natural gas or electricity. Every human being deserves access to the energy they need to thrive—the privileges that so many of us enjoy every day.

Energy security underpins global security.

The second reality is that energy security, economic security, and global security are intertwined and interdependent. Diverse, resilient energy systems are necessary to avoid economic disruptions, geopolitical instability, and the likelihood of conflict around the world. The European Union’s (EU) previous reliance on oil and natural gas supplies from Russia highlights the dangers of overweighted dependencies on rogue nations that have the power to weaponize energy to serve as political leverage or tools of coercion in foreign affairs. The devastating invasion of Ukraine and resulting energy supply constraints in the EU also highlight the importance of global energy leadership and international cooperation, as Russian gas supplies were replaced with other sources of energy, including liquefied natural gas (LNG) from the United States.

Nations with access to diverse, reliable, and affordable energy sources and supply chain inputs—either domestically produced or sourced from exporting international allies around the world—can ensure their people and economies thrive.

All sources of energy have tradeoffs.

The third reality is that just as each source of energy has life-changing, transformative benefits that fuel human prosperity, each source also has tradeoffs and negative externalities that should be acknowledged and appropriately balanced in the development of sound public policy and in business.

To meet growing global demand, we need to produce more energy from traditional and non-traditional sources—and we must produce it more responsibly tomorrow than we do today. For oil and natural gas development, this means committing to reducing carbon and methane emissions. For wind, solar, and battery development, this means minimizing land-use impact and diversifying supply chains. For all energy development, this means ensuring we keep our people and communities safe. We must also be reasonable about the pace, magnitude, and time required to scale new energy resources and enhance existing resources— and the tradeoffs for doing so.

We cannot prioritize clean energy over reliability and affordability, we cannot pursue reliability and affordability at the expense of the environment, and we cannot develop energy policies and systems that do not account for geopolitical risks domestically and abroad.

Clear eyes are critical to simultaneously growing energy systems without sacrificing reliability, affordability, or the environment.

Energy has become a politically polarized flashpoint. It has become “good” versus “bad” and “you” versus “them,” at a time when we should all be coming together to solve the challenges and opportunities in front of us. Now more than ever, we need a pragmatic approach to removing barriers that prevent us from providing the energy access and security the world needs. This includes building infrastructure to move energy where it’s needed most—from oil and natural gas pipelines to transmission lines to LNG terminals to geothermal wells to carbon capture systems and everything in between. In the United States, we need common-sense policies to address meaningful permitting reform that unlocks our vast energy resources and bolsters not only our nation’s energy and economic security, but also those of our allies. While globalism may be receding, energy systems and markets should continue to be highly integrated. We must continue to invest in economic partnerships and trade policies that minimize supply chain disruptions, distort trade flows, slow growth, raise energy costs, and accelerate fragmentation.

Energy is essential to the technological revolutions unfolding before our eyes and to bringing billions of people into a higher standard of living across the globe. Let us seize this moment to come together in the pursuit of pragmatic and durable policy, technology, and market solutions that grow our collective energy resources to meet the needs of today—and tomorrow.

Devon Energy is a sponsor of the Global Energy Center.

All essays

Ushering the auto industry into a new energy era

By Jim Farley

Ukraine can unleash energy investment even amid war

By Volodymyr Kudrytskyi

The US must assure its energy-secure future

By Meredith Berger

The importance of US LNG for economic growth and the global energy transition

By Daniel Yergin and Madeline Jowdy

Southeast Asia aims for sustainability through connectivity

By Kok Keong Puah

Energy realities require pragmatic solutions

By Rick Muncrief

Tech and power sector partnerships can accelerate the energy transition

By Arshad Mansoor

Forging stronger transatlantic energy cooperation

By Dan Jørgensen

Latin America and the Caribbean are leading the green energy transition

By Andrés Rebolledo Smitmans

Busting the top myths about AI and energy efficiency 

By Josh Parker

The small reactor revolution can transform African energy systems

By Lassina Zerbo

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The 2025 Global Energy Agenda

Landon Derentz, Christine Suh, Paul Kielstra, Bailee Mathews (Editors) — Thu, 20 Feb 2025 14:00:00 +0000

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The scale of political transformation that took place throughout the democratic world in 2024 will be evident when the Group of Seven (G7) convenes under new Canadian leadership later this year. Ultimately, elections last year led to a notable political shift to the right, laying the foundation for a new international energy and climate architecture.

Global affairs are only part of the story, however. The release of generative artificial intelligence (AI) models like ChatGPT and OpenAI illustrate the emergence of novel challenges with global consequences on par with those stemming from foreign affairs. For a world still largely pursuing a net-zero future, its leaders must now also contend with yet another competitive race between the United States and China, this time for dominance over key aspects of the development, deployment, and governance of a technology central to global military and economic primacy.

It’s with this backdrop that the Atlantic Council is pleased to present its fifth Global Energy Agenda. To illuminate this period of profound democratic transition, where the urgent need to secure reliable and sustainable energy systems remains a defining issue, this year’s publication shares the insights from leading industry, civil society, and government voices. As in prior years, this collection of essays is complemented by our in-depth analysis of the results of the Atlantic Council Global Energy Center’s annual global energy survey.

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Global Energy Agenda

Feb 20, 2025

Global Energy Agenda full survey results

In the fall of 2024, the Atlantic Council’s Global Energy Center surveyed global energy and climate experts to take the community’s pulse on the outlook for geopolitical energy risks, a global energy market in transition, and prospects for the net-zero imperative.

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Essays

Ushering the auto industry into a new energy era

By Jim Farley

Ukraine can unleash energy investment even amid war

By Volodymyr Kudrytskyi

The US must assure its energy-secure future

By Meredith Berger

The importance of US LNG for economic growth and the global energy transition

By Daniel Yergin and Madeline Jowdy

Southeast Asia aims for sustainability through connectivity

By Kok Keong Puah

Energy realities require pragmatic solutions

By Rick Muncrief

Tech and power sector partnerships can accelerate the energy transition

By Arshad Mansoor

Forging stronger transatlantic energy cooperation

By Dan Jørgensen

Latin America and the Caribbean are leading the green energy transition

By Andrés Rebolledo Smitmans

Busting the top myths about AI and energy efficiency 

By Josh Parker

The small reactor revolution can transform African energy systems

By Lassina Zerbo

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Setting the Global Energy Agenda for 2025

The Global Energy Center hosts a discussion to launch this year’s edition of the Center’s annual flagship report, the Global Energy Agenda.

Climate Change & Climate Action Energy & Environment Energy Transitions Geopolitics & Energy Security

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Global Energy Agenda

Nov 30, 2023

The 2024 Global Energy Agenda

By Landon Derentz, Christine Suh, Paul Kielstra (Editors)

The fourth edition of the Global Energy Agenda kicks off with a collection of essays by energy leaders that are rolling out during COP28. Rounding out the Agenda in early 2024, the Atlantic Council Global Energy Center will release the results of its annual survey of experts that takes the pulse on the geopolitical risks affecting energy markets, the future of fossil fuels, and the transition to clean energy.

Energy & Environment Geopolitics & Energy Security

Editors

Landon Derentz is senior director at the Atlantic Council Global Energy Center; Christine Suh is the managing editor for the Atlantic Council Global Energy Center; Paul Kielstra is a freelance editor, analyst, and writer based outside of London; and Bailee Mathews is a program assistant for the Atlantic Council Global Energy Center.

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Landon Derentz

Senior Director

Managing Editor, Global Energy Center

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Christine Suh

Energy & Environment French

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Bailee Mathews

Program Assistant

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The ninth Atlantic Council Global Energy Forum will be held June 17 and 18 in Washington, DC. Please check back regularly for updates on our programming.

The post The 2025 Global Energy Agenda appeared first on Atlantic Council.

Global Energy Agenda full survey results

Andrea Ratiu — Thu, 20 Feb 2025 14:00:00 +0000

Global Energy Agenda full survey results

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Ukraine can unleash energy investment even amid war

Volodymyr Kudrytskyi — Thu, 20 Feb 2025 14:00:00 +0000

Volodymyr Kudrytskyi is the former CEO of Ukrenergo, Ukraine’s transmission system operator. This essay is part of the Global Energy Agenda.

A key energy security objective for Ukraine is to create stability for investors to finance the deployment of new, decentralized generation in the country. How to ensure that investments can hurdle over obstacles in a profoundly challenging environment is the crucial challenge that Ukraine must solve in 2025.

The Ukrainian power system is in the midst of one of the greatest trials in human history. It has already survived thirty-one Russian onslaughts since February 2022. Of this unprecedented number, thirteen missile and drone attacks took place in 2024. According to officials, more than 2,000 missiles and countless drones have targeted Ukrainian power plants and high-voltage substations since the beginning of full-scale war.

Russia’s strategic goal is clear: to devastate the Ukrainian power grid to benefit Russian troops on the battlefield. The tactics of this Russian energy terrorism are also obvious: to destroy the grid’s ability to deliver power to consumers and to remove balancing capacity from the system. While nuclear generation still covers most baseload consumption, Ukraine has already lost more than 10 gigawatts (GW) of balancing power plants—mostly thermal and hydropower—which play a crucial role in meeting peak demand.

After the integration of Ukraine’s power system into the European continental grid in March 2022, the national grid operator, Ukrenergo, discovered how to defend and recover transmission capabilities of Ukraine’s high-voltage infrastructure. With the help of US and European Union (EU) financing, we built unique passive engineering protection for critical elements of the grid. Ukrenergo has accumulated one of the largest stocks of high-voltage equipment in the world. There are 1,500 trained and highly qualified specialists on Ukrenergo’s restoration teams, working 24/7 to keep the lights on for the Ukrainian people. Of course, without adequate air-defense systems, this will not suffice. The high-voltage grid remains a primary target for the adversary’s aerial attacks, but the Ukrainian transmission operator is gaining experience in quick recoveries after massive shelling and is strengthening its ability to balance the grid in wartime.

As the grid becomes more resilient with time, the traditional electricity generation base is being deteriorated. Big power plants are also trying to restore capacity, but sometimes take on irreversible damage or require years to be brought back online. Therefore, the main strategic task for Ukraine to achieve in 2025 and beyond is to rebuild its balancing generation capacity to compensate for the power shortages caused by Russian missile attacks on thermal and hydropower plants.

Building back better the Ukrainian way means rolling out hundreds of new generation facilities of up to 10 megawatts (MW) each, instead of dozens of larger plants that could be exhausted with Russia’s latest assault. At Ukrenergo, we determined that the Ukrainian power system will need 12 to 13 GW of new generation capacity in the next three to five years. This means adding more wind and solar plants, high-maneuverability gas peakers, biomass plants, and battery storage. Such technologies should be spread throughout the country to deprive Russia of the ability to knock out large amounts of power capacity with one strike.

To roll out this decentralized generation, Ukraine would require around €10 billion in investments. Such a volume could be effectively deployed only by the private sector—the public sector doesn’t have the money, and it is impossible to decentralize generation in a centralized way.

The interest of Ukrainian and foreign investors in reshaping the country’s energy system was demonstrated in August 2024, when Ukrenergo provided special auctions for the ancillary service market. In two auctions, we received nearly 1,000 bids from different businesses, which were ready to roll out nearly 1 GW of new generation to receive five-year-term offtake contracts with Ukrenergo for the provision of grid-balancing services.

It was like a gunshot at the start of a big race. But to get across the finish line, these pioneers in deploying decentralized generation still face three key obstacles.

1. Uncertainty in regulation and market debts

The current price for electricity on the Ukrainian market determines the whole process. Price on the Ukrainian wholesale electricity market is measured by regulated price-caps. In the periods of highest demand, these price caps are not relevant to the prices on the EU market, which is regulated only by supply and demand without any political interference. This difference impacts trade between the EU and Ukraine, and investors’ ability to finance new generation capacity. So, investors need assurances that price depends on supply and demand, and not the wishes of politicians to manually control it through administrative measures like price caps.

It is critical that Ukrainian regulators exercise fully independent judgement and decision-making. Wise decisions would include setting cost-reflective tariffs for natural monopolies (including Ukrenergo) and taking measures against customers who consume energy without paying for it. This would eliminate market debts, which currently do not allow businesses to achieve their full market potential and make returns on investment less certain.

2. Access to finance

The Ukrainian energy sector could be injected into the power system. However, access to financing remains one of the main problems for potential investors.

A state program offers low interest rates for businesses willing to build new generation facilities, but a typical efficient energy project investment far exceeds the program cap, disqualifying many projects from accessing these loans.

Moreover, Ukrainian businesses don’t have access to liquidity from international financial institutions and multinational banks, which require at least five-year offtake contracts and have extensive pledge requirements to secure credit lines.

To roll out up to 13 GW of new generation in Ukraine, we must connect businesses and financial institutions so that they can cooperate effectively. Unused donor money could be leveraged to create financial instruments like insurance, guarantees, and extra collateral to make investments more attractive for banks. This would effectively multiply the generation capacity that every donated euro can pay for.

3. Coordinating between communities and businesses

Installing new generation facilities requires finding land and securing permits, both of which fall under the responsibility of local communities. These communities are interested in technologies that will benefit their local area, not the whole system. Better communication and cooperation are needed between the private businesses that are able and willing to roll out new generation and the local communities that need it.

Unleash the private sector

Rolling out decentralized balancing capacity along with renewables would not only make the Ukrainian power system resilient to Russian attacks, it would also enable Ukraine to virtually complete the clean transition of its power system, as the new electricity mix would be about 90 percent carbon free. Moreover, the new power system would be cheaper to run than the current one, because of the domination of nuclear and renewable generation with lower marginal cost than the Soviet-era coal-fired power plants.

Ukraine has unique starting parameters to achieve this quickly: strong nuclear and hydropower, good solar and wind potential, and a sharp deficit of electricity, which supports high market prices and quick payback on energy projects. The main priority of Ukrainian energy strategy for the next five years should be to remove the stumbling blocks and let private initiative do the job—it always does.

All essays

Ushering the auto industry into a new energy era

By Jim Farley

Ukraine can unleash energy investment even amid war

By Volodymyr Kudrytskyi

The US must assure its energy-secure future

By Meredith Berger

The importance of US LNG for economic growth and the global energy transition

By Daniel Yergin and Madeline Jowdy

Southeast Asia aims for sustainability through connectivity

By Kok Keong Puah

Energy realities require pragmatic solutions

By Rick Muncrief

Tech and power sector partnerships can accelerate the energy transition

By Arshad Mansoor

Forging stronger transatlantic energy cooperation

By Dan Jørgensen

Latin America and the Caribbean are leading the green energy transition

By Andrés Rebolledo Smitmans

Busting the top myths about AI and energy efficiency 

By Josh Parker

The small reactor revolution can transform African energy systems

By Lassina Zerbo

Explore the program

The post Ukraine can unleash energy investment even amid war appeared first on Atlantic Council.

The US must assure its energy-secure future

Meredith Berger — Thu, 20 Feb 2025 14:00:00 +0000

Meredith Berger is the former assistant secretary of the US Department of the Navy for energy, installations, and environment. This essay is part of the Global Energy Agenda.

Energy is both a tool and a weapon. At the US Department of the Navy, energy security is mission assurance, and unless we meet this critical requirement, we cannot protect our national interests. It is the responsibility of the Navy and Marine Corps, and the civilians who serve the department, to make sure that we are ready—that we have what we need for whatever comes our way, regardless of time or task, to defend our nation.

Our 2022 National Security Strategy acknowledges and prioritizes this energy requirement, calling upon the country to start an energy revolution: to accelerate our diversified, reliable, redundant, independent energy portfolio; to advance technology and talent; and to generate renewable and clean energy sources that reduce climate threat and conflict, as well as emissions and waste. Energy security provides warfighting advantage, deterrence, economic benefit, a healthy, safe environment, and geopolitical stability. Our sailors and Marines are the world’s first responders; dangerous changes to the physical environment put them at heightened risk.

During my tenure as assistant secretary of the Navy for energy, installations, and environment, I have focused on energy security as a critical driver of mission success: a catalyst for climate action, a defense for critical infrastructure, and a source of resilience for our communities, our homeland.

On climate action

Reliable, clean, resilient, independent energy allows us to keep mission first, so we are prepared to fight and win in any environment. Climate change generates extremes: floods, droughts, temperatures, stronger storms, and fewer resources. These are the conflict generators that make the world a more volatile place.

A more volatile world increases exponentially the demands on the Navy and Marine Corps, while simultaneously decreasing their ability to respond to those demands. In the Department of the Navy, climate readiness is mission readiness, and energy reliability and resilience are critical to mission success. Reliable, resilient energy ensures that our forces are trained, equipped, and ready so that at a moment’s notice, they can launch, fight, and win. As we focus on this decisive decade, we are mindful of the pacing threat that shapes our mission, and the climate threat that shapes how we operate and execute our mission. By advancing and diversifying our energy sources, technology, and supplies, we reduce our emissions, logistics tails and vulnerabilities, and increase readiness and adaptability.

On critical infrastructure

The means to our ends—our ports, roads, runways, depots, barracks, and utilities—they connect us, sustain us, prepare us, and ultimately, they protect us. Our installations in the United States and abroad are essential platforms from which we project our military power, and we need reliable, uninterruptable energy to assure physical and cyber protection of this infrastructure. As we confront the new truth that the homeland is no longer a sanctuary, we must continue to defend against a key vulnerability: inadequately protected, aging energy infrastructure that often lacks redundancy, leaving military mission, commerce, health, safety, livelihood, and lives at risk.

On communities

This is our homeland: shared spaces between installations and town halls, not divided by a fence line, but instead united by values, traditions, and resources. They are the ecosystems that allow us to thrive, succeed, and achieve. Communities are also connected by vulnerabilities, and when it comes to utilities such as energy, single sources and dependencies yield a comprehensive threat, whether it is the Department of the Navy’s national security mission or the community mission of health, safety, and welfare.

Energy is life or death: We learned that lesson the hard way in the Department of the Navy. During a three-month period in Afghanistan in early 2010, the United States suffered a Marine casualty for every fifty convoys of fuel. Seven years earlier, then-Major General James Mattis, while serving as commanding general of the First Marine Division in Iraq, and who later served as Secretary of Defense, pleaded with leadership to “unleash us from the tether of fuel.” He knew that single reliance is a single point of failure, and, despite his warning, we saw the cost of inaction paid in young Marines’ lives.

As we execute our energy future, we cannot afford a single point of failure, and we cannot compromise our own position. My job every day has been to make sure that when Marines and sailors raise their hands and volunteer for our defense, willing to make the ultimate sacrifice for our nation, values, and freedoms, I take on every known threat, prepare for every contingency, and clear a path toward mission success. For energy security, we have done that at the Department of the Navy through integrated, advanced investments in renewable, reliable energy; we’ve taken actions that question the status quo, and increase mission success and quality of life for our forces, bases, and surrounding communities. The US needs to take that same approach for the nation: build an energy portfolio for the future we anticipate and defend against the threats we know so that we can face the ones we don’t see coming. Energy is a matter where everyone has a strong stake in our collective security: defense, finance, environment, climate, health, and safety. Through our energy revolution, we must be ready as a nation to assure our most critical missions no matter what form they take.

All essays

Ushering the auto industry into a new energy era

By Jim Farley

Ukraine can unleash energy investment even amid war

By Volodymyr Kudrytskyi

The US must assure its energy-secure future

By Meredith Berger

The importance of US LNG for economic growth and the global energy transition

By Daniel Yergin and Madeline Jowdy

Southeast Asia aims for sustainability through connectivity

By Kok Keong Puah

Energy realities require pragmatic solutions

By Rick Muncrief

Tech and power sector partnerships can accelerate the energy transition

By Arshad Mansoor

Forging stronger transatlantic energy cooperation

By Dan Jørgensen

Latin America and the Caribbean are leading the green energy transition

By Andrés Rebolledo Smitmans

Busting the top myths about AI and energy efficiency 

By Josh Parker

The small reactor revolution can transform African energy systems

By Lassina Zerbo

Explore the program

The post The US must assure its energy-secure future appeared first on Atlantic Council.

The importance of US LNG for economic growth and the global energy transition

Daniel Yergin and Madeline Jowdy — Thu, 20 Feb 2025 14:00:00 +0000

Daniel Yergin is vice chairman of S&P Global, and author of The Prize and The New Map.

Madeline Jowdy is head of Global LNG Consulting at S&P Global.

Both are among co-authors of A Major New U.S. Export Industry at a Crossroads. conducted with the US Chamber of Commerce. This essay is part of the Global Energy Agenda.

The emergence of US liquefied natural gas (LNG) is a remarkable story. In less than a decade, the United States has gone from zero exports to being the world’s largest exporter. Moreover, US LNG is at the nexus of the global energy transition, providing affordable and freely traded gas in a global market of some fifty importing countries. This flow promotes security of supply for regions such as Europe and East Asia, supports trade balances with China and India, and serves as a substitute for higher carbon-intensive energy sources in Southeast Asia and elsewhere.

The geopolitical importance and strategic urgency of the industry were demonstrated when Vladimir Putin cut pipeline gas to Europe in an effort to undermine the European economy and shatter the coalition supporting Ukraine. He miscalculated, failing to recognize the potential of US LNG to play a significant role in filling the gap. US LNG replaced 40 percent of the missing Russian pipeline gas. And the Trump administration is looking to US LNG exports to help rebalance trade with other countries.

The critical role of US LNG is significant both for the domestic economy and on the international stage. For the continued growth of US LNG exports, it is essential that the United States demonstrate, day in and day out, that it is a supplier on which other countries can rely. As US exports are projected to double in the coming decade, the influence of US LNG is expected to grow. However, despite a more favorable policy climate with the new administration, further success is not guaranteed due to substantial federal and state regulatory, political, and environmental challenges facing the industry, which will need to be addressed.

As the US LNG sector re-emerges after a year of stagnation caused by the Biden administration’s pause on LNG export authorizations, it is important to recognize the industry’s overall contribution to US GDP, economic influence, and global LNG trade innovation. In our new study Major New US Industry at a Crossroads: A US LNG Impact Study, conducted with the US Chamber of Commerce, we found that the US LNG industry is valued at $34 billion and has contributed more than $400 billion to US GDP since 2016, when the first LNG cargoes were shipped from Sabine Pass, Louisiana.¹ The industry has created an average of 273,000 skilled jobs annually since 2016. Its impact penetrates deep into the heartland where gas is produced and transported, and supports supply chain and manufacturing communities in the Northeast, Midwest, and Southeast. What really brings home the industry’s impact is its comparison with other US industries. The value of LNG exports is more than that of soya beans and double those of Hollywood and entertainment exports. It is currently half that of semiconductors, but within a few years, could equal the value of all semiconductor exports.

What has made this unprecedented growth possible is the vast resource base developed during the US shale revolution, compounded by entrepreneurial energy, infrastructure, and industrial skill. Despite a 13 billion cubic feet per day (Bcf/d) growth in LNG feedgas requirements since 2016, domestic wholesale gas prices have continued their downward trend, with only temporary interruptions due to rapid post-COVID growth and geopolitical events such as Russia’s full-scale invasion of Ukraine in 2022.

While US LNG exports account for only 12 percent of the domestic gas market, they supply nearly a quarter of global LNG supplies, making the United States the world’s largest LNG supplier. This outsized role in the international gas market is supported by the flexibility and reliability of US LNG, which is traded with fewer restrictions on destinations, volumes, or pricing compared to much of the global LNG market. Additionally, US LNG has significantly contributed to emissions reductions in countries that have replaced more carbon-intensive coal and fuel oil with LNG.

In terms of trade, US LNG helps offset trade deficits with both Europe and China. In Europe, US LNG is viewed as a reliable and strategic supply mechanism, while in China, it helps mitigate the United States’ largest single trade deficit. US LNG exports to Japan, South Korea, and Taiwan also support energy security for these key allies.

Growth projections for US LNG, as analyzed by S&P Global, align with a global energy system transitioning to lower carbon-intensive modes of production and consumption. With more favorable conditions under the new administration, US LNG exports are forecast to double by 2030, with projects currently under construction accounting for approximately 60 percent of that projected growth.

With this anticipated growth, our LNG study projects that US LNG industry is poised to contribute approximately $1.3 trillion to GDP by 2040 and create an annual average of 500,000 jobs. On the global front, the US share of the LNG market is expected to exceed one quarter by 2040, supporting a large and liquid gas market that might not exist otherwise.²

However, there is a big “if”: if domestic regulatory, legal, and environmental barriers persist, the United States risks losing over 100,000 jobs annually and more than $250 billion in GDP. Moreover, it appears that 85 percent of the resulting energy gap in the rest of the world would be filled by fossil fuels sourced from outside of the United States. This jeopardizes US geopolitical influence and its reputation as a reliable and affordable energy supplier to allies and trading partners.

As the global energy transition progresses, US LNG will have a crucial role in reducing carbon emissions. The transition from coal to natural gas in the US power sector has already driven a 40 percent reduction in carbon emissions since 2000. In the medium term, US LNG will be a vital substitute for higher carbon-intensive coal and oil products, especially in the developing world. Long term, it will support reliable and resilient energy systems as renewable energy sources become more prevalent.

This is not a one-way street; the United States needs the commitment of its allies and other global trading partners to secure long-term supplies of US LNG and avoid an extended halt in development. This nascent industry was advanced over the last decade in part by financial commitments by Japan and other allies. Future growth will likely rely on a diverse array of European and Asian partners, compensating for lost Russian pipeline gas and LNG, while benefiting from this important new export industry that enables the United States to deliver a clean, reliable supply of natural gas to the global economy.

All essays

Ushering the auto industry into a new energy era

By Jim Farley

Ukraine can unleash energy investment even amid war

By Volodymyr Kudrytskyi

The US must assure its energy-secure future

By Meredith Berger

The importance of US LNG for economic growth and the global energy transition

By Daniel Yergin and Madeline Jowdy

Southeast Asia aims for sustainability through connectivity

By Kok Keong Puah

Energy realities require pragmatic solutions

By Rick Muncrief

Tech and power sector partnerships can accelerate the energy transition

By Arshad Mansoor

Forging stronger transatlantic energy cooperation

By Dan Jørgensen

Latin America and the Caribbean are leading the green energy transition

By Andrés Rebolledo Smitmans

Busting the top myths about AI and energy efficiency 

By Josh Parker

The small reactor revolution can transform African energy systems

By Lassina Zerbo

Explore the program

1 Major New US Industry at a Crossroads: A US LNG Impact Study – Phase 1, S&P Global, December 17, 2024, https://www.spglobal.com/en/research-insights/special-reports/major-new-us-idustry-at-a-crossroads-us-lng-impact-study-phase-1.

2 Major New US Industry at a Crossroads

The post The importance of US LNG for economic growth and the global energy transition appeared first on Atlantic Council.

Southeast Asia aims for sustainability through connectivity

Kok Keong Puah — Thu, 20 Feb 2025 14:00:00 +0000

Kok Keong Puah is the chief executive of Singapore’s Energy Market Authority.

Southeast Asia’s energy transition stands at an inflection point. As the region’s energy demand accelerates—spurred by both rapid economic growth and a growing population—the stakes are higher than ever. The ASEAN Centre for Energy (ACE) estimates that Southeast Asia’s energy demand will more than double from 2022 levels by 2050. By that year, the International Energy Agency predicts that the region’s energy demand will surpass the European Union’s.

This growth presents an enormous challenge: How can we ensure energy security, meet climate ambitions, and address the needs of a growing population at the same time? Yet there is a silver lining: Southeast Asia has the potential to lead the way in the global energy transition.

ACE estimates suggest that renewable energy could meet more than two-thirds of the region’s energy needs by 2050. However, unlocking this potential is far from straightforward. Large upfront capital investments, profitability concerns, and a lack of adequate grid infrastructure all stand in the way.

The solution? A more connected Southeast Asia.

Regional interconnectivity is key to unlocking Southeast Asia’s decarbonized future. The ASEAN Power Grid (APG) vision aims to connect power grids, creating a borderless network throughout Southeast Asia that links regions rich in renewable energy to demand centers. A connected system would lay the foundation for a robust and integrated regional energy market. It would allow countries to diversify their energy sources and strengthen resilience by drawing upon mutual support from neighboring nations.

Through the APG, countries could establish long-term power purchase agreements for renewable energy projects that improve project bankability and attract high-quality investments. For example, The Business Times in Singapore reported that planned electricity export projects from Indonesia to Singapore could bring as much as $20 billion in investments to Indonesia. The APG would also increase access to electricity in exporting countries as domestic grid infrastructure is strengthened to support cross-border trade. Domestic manufacturing and related economic activities would likely see an uptick as developers source parts and services locally.

Southeast Asia is already taking strides toward realizing the APG vision. Pathfinding projects, such as the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project, have proven the feasibility of multilateral cross-border power trade among multiple Southeast Asian countries. Its success has paved the way for further initiatives such as the Brunei-Indonesia-Malaysia-Philippines Power Integration Project.

These efforts are laying the groundwork for an interconnected regional grid. But significant investment and infrastructure development are still needed.

Singapore is supporting projects from Australia, Cambodia, Indonesia, and Vietnam to provide a total of 7.35 gigawatts of low-carbon electricity imports to Singapore. Doing so has allowed us to kick-start discussions within the region on how we can collaborate to realize the APG vision.

Collaboration beyond the Association of Southeast Asian Nations (ASEAN) is essential. No one country can realize the APG alone. ASEAN has collaborated with dialogue partners such as Australia, Japan, and the United States on renewable energy technologies and regional power integration. These partnerships not only bring financial support, but also a wealth of expertise to accelerate the sustainable energy transition.

An example of such collaboration is the joint feasibility study between Singapore and the United States on regional energy connectivity. The first phase demonstrated the technical feasibility and socioeconomic benefits of regional connectivity, while the second phase will focus on studying the necessary legal and financial frameworks to support it.

Southeast Asia’s renewable energy resources make the region an ideal testing ground for emerging low-carbon technologies. Hydrogen, geothermal energy, and carbon capture and storage (CCS) hold immense potential. Singapore, in collaboration with ExxonMobil and Shell through the S Hub consortium, is studying cross-border CCS projects to enhance the region’s climate resilience.

The inaugural Singapore-US Forum, co-hosted with the US Department of Commerce at the 2024 Singapore International Energy Week (SIEW), brought together government and industry leaders to discuss strategies to accelerate the development of hydrogen in Asia. These partnerships are critical for driving innovation and ensuring that Southeast Asia remains at the forefront of the global energy transition.

Similarly, organizations like the Atlantic Council play a key role in driving the region’s decarbonization by facilitating important discussions that shape energy transition narratives. As our strategic insights partner for SIEW, the Atlantic Council’s advocacy efforts on energy security have helped to build mindshare among participants on the benefits of regional interconnectivity, renewables, and low-carbon energy technologies.

The energy transition in Southeast Asia has global implications. A stable, prosperous, and decarbonized Southeast Asia will not only benefit the region but also strengthen global supply chains, promote economic growth, and contribute to climate stability. Through our continued partnerships with the United States and other global partners, we will build a connected and sustainable world for all.

All essays

Ushering the auto industry into a new energy era

By Jim Farley

Ukraine can unleash energy investment even amid war

By Volodymyr Kudrytskyi

The US must assure its energy-secure future

By Meredith Berger

The importance of US LNG for economic growth and the global energy transition

By Daniel Yergin and Madeline Jowdy

Southeast Asia aims for sustainability through connectivity

By Kok Keong Puah

Energy realities require pragmatic solutions

By Rick Muncrief

Tech and power sector partnerships can accelerate the energy transition

By Arshad Mansoor

Forging stronger transatlantic energy cooperation

By Dan Jørgensen

Latin America and the Caribbean are leading the green energy transition

By Andrés Rebolledo Smitmans

Busting the top myths about AI and energy efficiency 

By Josh Parker

The small reactor revolution can transform African energy systems

By Lassina Zerbo

Explore the program

Public Event Thu, February 20, 2025 • 10:00 am ET

The post Southeast Asia aims for sustainability through connectivity appeared first on Atlantic Council.

Make Europe more energy secure by reforming EU regulations

Olga Khakova — Wed, 19 Feb 2025 22:35:45 +0000

MUNICH—At the Munich Security Conference (MSC) this past weekend, it was nearly impossible to find a session or speech that did not mention energy security. Russia’s full-scale invasion of Ukraine nearly three years ago triggered a major energy crisis on the continent. While the peak of the crisis, driven by Russian President Vladimir Putin, has subsided, Europe’s energy problems are far from resolved. In Munich, leaders and policymakers worried that the continuing energy crisis is weighing heavily on European defense capabilities, economic development, and geopolitical relations.

Unlike in 2022, when Russia manufactured an abrupt gas supply shortage, today’s energy threats are more gradual in nature. For example, undersea electricity and energy cables are being cut, and the suspected vessels are often part of Russia’s shadow fleet. Such attacks should still be taken seriously by the European Union (EU) and its partners both for the real damage they cause and because Russia could ramp up such attacks on short notice. In addition, kinetic and cyberattacks on the electricity grid, remaining gas supply issues and chokepoints, and high energy prices compound the danger.

However, it is possible for Europeans to address these threats to their energy security and mitigate potential damage to their societies and economies. It is reassuring, too, that the message that came out of Munich was one of unity and a desire to act. But now that leaders and policymakers have decamped from the Bavarian capital and returned home, what will happen next? Will Europeans sleep through these issues or take action? What should Europe do, and should member states or the EU take the reins?

Brussels and beyond

Over the past several decades, EU funding has enabled a massive build-out of grid and pipeline infrastructure on the continent. Considering the cross-border nature, risk, and scale of these projects, EU engagement was vital. It was also vital during the 2022 energy crisis, during which the EU increased its work on energy security. Today, too, current threats would be partially curtailed by the EU building additional infrastructure. However, as the European energy system goes through unprecedented transformation—electrification, digitalization, market interconnection, artificial intelligence integration, and further supply diversification—Brussels should not act alone. A multi-pronged approach is required to create and secure the energy system of tomorrow.

One reason a multi-pronged approach is needed is because of because of budget constraints. The COVID-19 pandemic and Russia’s intentional energy blackmail scheme, which cost Europe one trillion dollars, has left the EU coffers and many national budgets in a tight spot. There is still no vision around a shared borrowing scheme. European countries and other allies are rightfully prioritizing borrowing money to provide Ukraine with a significant influx of military support. This is especially the case following recent remarks from US President Donald Trump and Vice President JD Vance that suggest the United States will decrease its support for Ukraine and, potentially, for Europe as a whole.

However, the lack of funding is not the only barrier. Another frequently mentioned concern at the MSC was the challenging regulatory environment in Europe, as some member states take a more stringent approach to interpreting EU regulations at the national level. This difficulty is further compounded by geopolitical uncertainty. Thousands of companies operating in Europe are impacted by the sweeping environmental and societal disclosure mandates from the Corporate Sustainability Reporting Directive, the Corporate Sustainability Due Diligence Directive, and methane regulations.

All aboard the omnibus

The new EU leadership should be commended for responding to these calls by focusing on the promising omnibus legislation and sending a strong message with its competitiveness compass—a roadmap for boosting European competitiveness. The European Commission is expected to unveil the omnibus, intended to streamline the EU’s sustainability reporting, in late February or March.

There is plenty of irony in reducing regulations by rolling out another regulation, but the omnibus a tangible, timely, and thoughtful solution. If done right, it could provide needed certainty for investors and developers. The EU could accomplish this by outlining the scope of the existing and incoming regulations and by reducing costs for non-value-added certification, measurements, and verifications. Most important, the EU should make it easier for the private sector to reach common-sense objectives in a reasonable timeline, with eyes on the end goals rather than on processes and paperwork. This could also help create a more coordinated regulatory environment across the EU member states.

By simplifying its rules, the EU could encourage member states to harmonize their implementation of the regulations. Differences in implementation can create confusion and additional expenses for companies looking to deploy projects across multiple EU countries.

Reducing regulatory burdens by getting rid of non-value-added bureaucratic steps could also invite more US private sector partnerships, while transatlantic geopolitical and trade tensions settle. The European Commission’s new leadership does not need to sacrifice its carbon emissions reduction and environmental integrity efforts to address incoming energy sector threats. The omnibus could be the first step—and an impactful one.

Olga Khakova is the deputy director for European energy security at the Atlantic Council’s Global Energy Center.

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Unlocking America’s untapped energy potential through enhanced geothermal systems

Chase Thalheimer, Reed Blakemore — Wed, 19 Feb 2025 19:10:23 +0000

Geothermal energy has the potential to support environmental sustainability and economic competitiveness imperatives while bolstering energy security. As such, it stands at the nexus of a unique opportunity to meet bipartisan energy and foreign policy objectives.

The potential for geothermal energy in particular to seize this opportunity has greatly improved due to advancements in geothermal systems. While conventional geothermal and hydrothermal systems have historically faced opposition for their limited geographical accessibility and high upfront costs, the emergence of enhanced systems has significantly augmented the viability of widescale geothermal deployment to support a cleaner, more affordable, and strategically advantageous energy sector. Enhanced geothermal systems (EGS) use directional drilling tools and technologies developed by the oil and gas industry as well as hydraulic fracturing to overcome geographic barriers and reduce costs. EGS thus unlocks the potential for widespread deployment across the United States, offering a cleaner, more affordable, and strategically advantageous energy solution.

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Governor Jared Polis of Colorado and a panel of experts discuss opportunities to advance US energy security and economic competitiveness through next-generation geothermal energy.

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EGS offers a myriad of additional benefits, ranging from environmental sustainability to economic competitiveness. Not only does it provide emissions-free electricity generation, it also enhances energy security by offering a reliable 24/7 clean power alternative for emissions-heavy sectors. Coupled with reduced operational costs over time and increased scalability, this positions EGS as a key driver for US decarbonization efforts while maintaining productivity and global competitiveness.

Despite its promise, EGS faces obstacles in attracting investment and achieving widespread commercialization. Efforts to address these barriers must focus on streamlining permitting processes, mitigating upfront capital costs, and creating a conducive political and business environment. Government support through legislation and funding, coupled with industry-led initiatives such as joint ventures and community engagement, will be crucial in accelerating the adoption of EGS and unlocking its full potential in the United States’ energy landscape.

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Webster in The Diplomat: “To Outcompete China, the US Must Automate Maritime Supply Chains”

Joseph Webster — Wed, 19 Feb 2025 16:33:19 +0000

The post Webster in The Diplomat: “To Outcompete China, the US Must Automate Maritime Supply Chains” appeared first on Atlantic Council.

Transatlantic alliance enters most challenging period since Suez crisis

Edward Verona — Tue, 18 Feb 2025 22:36:42 +0000

The conclusion that many observers are drawing from the 2025 Munich Security Conference is that the United States, at least during the Trump presidency, is no longer willing to guarantee European security. Whether this is actually the case, as opposed to being simply a tactic to motivate increased European defense spending, matters less than the fact that for the first time, doubt has been cast on the cohesion of the NATO alliance.

Until now, NATO’s deterrent power has been largely based on an article of faith, or more precisely on Article 5 of the alliance’s charter document, the “all for one and one for all” commitment to mutual defense. Americans would do well to remember that Article 5 has only ever been invoked once in the alliance’s history, by the United States in response to the 9/11 terrorist attacks. NATO members responded on that occasion by giving their unanimous support, with many member countries sending troops to fight alongside the United States in Afghanistan.

French President Emmanuel Macron responded to last week’s US statements by hosting an emergency meeting of his European colleagues in Paris. While this impromptu summit did not produce any major decisions, participants did agree on the need for the continent to take far greater responsibility for its own security. If US President Donald Trump’s objective is to ensure bigger European defense budgets, his approach may be working.

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The recent change in tone from across the Atlantic has certainly jolted many European leaders out of their complacency, but awareness of the need for Europe to transition from trading bloc to military and geopolitical power has actually been growing for some time.

Russia’s invasion of Georgia in 2008 and annexation of Crimea in 2014 galvanized the nations of Eastern Europe and the Nordic region, but did not dissuade other European countries from increasing their dependence on Russian oil and gas. It was only after the full-scale invasion of Ukraine in 2022 that the European political establishment finally heard the alarm bells and begin to take concrete action, at least in the economic sphere. However, despite an overall rise in European defense spending over the past three years, the continent has remained largely dependent on the United States for its security.

Coming to terms with a new reality and doing something about it are two very different things, of course. Europe now appears to acknowledge its own vulnerability in the face of the threat posed by a revanchist and expansionist Russia, and recognizes the need to act in response to the apparent US foreign policy pivot away from Europe toward Asia. However, the questions raised by that epiphany are manifold.

Are Europeans really willing to vote for larger defense budgets at the expense of the social safety nets that so many rely on? Are European leaders ready to consolidate their defense manufacturing industries and eliminate wasteful redundancy in weapons programs by forming EU-wide consortia? Indeed, will any new collective European defense strategy be structured around the EU, with its notoriously cumbersome decision-making processes, or would it be more efficient to form some kind of new grouping specifically for military-related matters? The answers to these questions will provide an indication of Europe’s true commitment to defending itself.

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Europe’s leaders are not the only ones who must answer tough questions. US policymakers should also carefully consider the implications of a new European security strategy. The United States, Britain, Germany, and most of the new NATO members in Eastern Europe have long opposed calls for a more autonomous European defense capability. Their reasoning has typically been that a separate European command would undermine NATO guarantees, dilute available military resources, and create a top-heavy bureaucratic structure that would add nothing to the continent’s security. Many in Europe now believe those arguments have been rendered moot by the stance of the new Trump administration.

How comfortable would the United States be with an independent European security policy? The US usually calls the shots within NATO, with European armies generally acquiescing to American weapons standardization. Could European defense manufacturing pose a challenge to US dominance? How would Washington react if an autonomous European military force chose to act independently in a regional crisis, such as in 2020 when France sent warships to back up Greece and Cyprus against Turkey over Aegean gas field discoveries?

The last major example of European powers acting independently of the United States was the 1956 Suez Canal Crisis, which illustrated the potential costs of a weakening in the transatlantic partnership. US President Dwight Eisenhower demanded the withdrawal of Anglo-French forces from Egypt, leading to the humiliation and resignation of British Prime Minister Anthony Eden. While the Suez crisis was underway the Soviet Union invaded Hungary, putting down a popular revolt against the country’s Kremlin-installed communist leadership. The divided West did nothing to support the Hungarian freedom fighters.

Edward Verona is a nonresident senior fellow at the Atlantic Council’s Eurasia Center covering Russia, Ukraine, and Eastern Europe.

Olga Khakova — Wed, 12 Feb 2025 15:22:26 +0000

1. The specter of world war

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Global Foresight 2025

Andrea Ratiu — Wed, 12 Feb 2025 11:00:00 +0000

Global Foresight 2025

The authoritative forecast for the decade ahead

Welcome to the fourth edition of Global Foresight from the Atlantic Council’s Scowcroft Center for Strategy and Security, home for the last decade to one of the world’s premier strategic foresight shops.

In this year’s installment, which is part of the Atlantic Council Strategy Papers series, our experts present exclusive findings from our survey of leading strategists and experts around the world on how human affairs could unfold over the next ten years across geopolitics, the global economy, climate change, technological disruption, and more. Our next-generation foresight team spots six “snow leopards”—under-the-radar phenomena that could have major unexpected impacts, for better or worse, in 2025 and beyond. And our foresight practitioners imagine three scenarios for how the world could transform over the next decade as a result of China’s ascendance, worsening climate change, and an evolving international order.

Welcome to 2035

What the world could look like in ten years, according to more than 350 experts

To survey the future, we polled global strategists and foresight gurus on our most burning questions about the biggest drivers of change over the next decade. Check out their forecasts on everything from the likelihood of another world war to the outcome of Russia’s war against Ukraine.

Six snow leopards to watch in 2025

The underappreciated phenomena that could have outsize global impact

Because it receives relatively little attention in the press, the “snow leopard” does not appear significant enough to warrant much scrutiny as a driver of change and shaper of the future. Yet just like the real cat in the wild, the figurative snow leopard is something that could sneak up and vividly remind us of its power.

Three worlds in 2035

Imagining scenarios for how global affairs could be transformed over the next decade

The Atlantic Council’s foresight team brought their globe-spanning expertise to the task of envisioning three potential future paths for humanity.

Full survey results

Atlantic Council Strategy Paper Series

Feb 12, 2025

The Global Foresight 2025 survey: Full results

In the fall of 2024 after the outcome of the US presidential election, the Atlantic Council’s Scowcroft Center for Strategy and Security surveyed the future, asking leading global strategists and foresight practitioners around the world to answer our most burning questions about the biggest drivers of change over the next ten years. Here are the full results.

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Global Foresight 2024

In this year’s Global Foresight edition, our experts identify the top risks and opportunities for 2024. Our foresight team spots “snow leopards” that could have major unexpected impacts in 2024 and beyond. And we share findings from our survey of global strategists and foresight practitioners on how human affairs could unfold over the next decade.

Atlantic Council Strategy Paper Series Dec 21, 2022

Global Foresight 2023

In this year’s Global Foresight edition, our experts identify the top risks and opportunities for 2023. Our foresight team spots “snow leopards” that could have major unexpected impacts in 2023 and beyond. And we share findings from our survey of global strategists and foresight practitioners on how human affairs could unfold over the next decade.

Atlantic Council Strategy Paper Series Dec 21, 2021

Global Foresight 2022

The inaugural edition of a new annual report from the Atlantic Council’s Scowcroft Center for Strategy and Security, home for the last decade to one of the world’s premier strategic foresight shops.

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The Global Foresight 2025 survey: Full results

Andrea Ratiu — Wed, 12 Feb 2025 11:00:00 +0000

The Global Foresight 2025 survey

Full results

This survey was conducted from November 15, 2024 through December 2, 2024.

Demographic data

Survey questions

Global Foresight 2025

In this year’s Global Foresight edition, our experts share findings from our survey of global strategists on how human affairs could unfold over the next decade. Our team of next-generation scholars spot “snow leopards” that could have major unexpected impacts in 2025 and beyond. And our foresight practitioners imagine three different scenarios for the next decade.

Learn More Full Survey

Atlantic Council Strategy Paper Series Feb 12, 2025

Welcome to 2035: What the world could look like in ten years, according to more than 350 experts

Atlantic Council Strategy Paper Series Feb 12, 2025

Six ‘snow leopards’ to watch for in 2025

By Emily Milliken, Imran Bayoumi, Ginger Matchett, Srujan Palkar, Sydney Sherry

Atlantic Council foresight experts spot the underappreciated phenomena that could have outsized impact on the world, driving global change and shaping the future.

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Atlantic Council Strategy Paper Series Feb 12, 2025

Three worlds in 2035: Imagining scenarios for how the world could be transformed over the next decade

2024 was marked by increased climate shocks and collaboration of autocratic adversaries. What will the world look like in the next decade? The Atlantic Council’s top experts brought their globe-spanning expertise to the task of forecasting three different scenarios for the future.

Africa China

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Six ‘snow leopards’ to watch for in 2025

Emily Milliken, Imran Bayoumi, Ginger Matchett, Srujan Palkar, Sydney Sherry — Wed, 12 Feb 2025 11:00:00 +0000

Six ‘snow leopards’ to watch for in 2025

Consider the snow leopard. Panthera uncia sports some of the most effective camouflage in the animal kingdom, its white coat with gray and black spots blending in perfectly with the rocky, snowy Himalayan landscape it inhabits. It’s known as “the ghost of the mountains,” seeming to appear out of thin air on the rare occasions it is seen in the wild.

There’s an equivalent phenomenon in global affairs: under-the-radar trends and events that elude even the most seasoned observer. When their effect on world affairs eventually becomes apparent, they may seem to have come out of nowhere. But these “snow leopards” were there all along. Trends slowly gathering momentum while the crisis du jour dominates headlines, technological developments whose real-world application is still theoretical, known but underrated risks—all of these phenomena have the power to reshape the future. Some already are.

Any forecast of the future needs to account for these snow leopards. As we brought together experts across the Atlantic Council for our annual look into the future, our next-generation staff took on the challenge of spotting the hard to spot. They surveyed the world around them for overlooked risks, trawled scientific journals and the websites of obscure government departments, and came up with a list of potentially world-changing trends and developments.

In the year to come and beyond, keep an eye on these six snow leopards.

The terrorist threat that could sever global connections

When you send a message on WhatsApp to a friend in Colombia or share a video call with family in India, the data—images, text, and video—gets broken down into packets and travels along undersea cables that connect continents in fractions of a second. Nearly 99 percent of international data passes through these cables, including terabytes of sensitive data sent by the US military to command posts overseas as well as an estimated ten trillion dollars transferred every day through the global financial system. In an increasingly interconnected world, nonstate actors pose a serious threat to this critical digital infrastructure, which often lies in shallow waters where it is vulnerable to everything from cyber threats to explosive devices to dragging anchors.

It doesn’t take advanced equipment like submarines to damage these undersea cables. In 2013, for instance, Egyptian authorities arrested three divers who had used underwater explosives to slice through the South East Asia-Middle East-West Europe 4 internet cable, which runs for 12,500 miles and connects three continents. This incident came five years after a similar attack on the same cables and three years after terrorists in the Philippines successfully cut cable lines near the Filipino city of Cagayan de Oro. While the possible involvement of China and Russia in recent cord-cutting incidents has drawn international scrutiny, these prior incidents indicate that nonstate actors also perceive these cables as an opportune target.

In late 2023, a Telegram channel affiliated with Yemen’s Houthi rebels threatened this vital underwater infrastructure by posting a map showing the subsea communications cables in the Mediterranean Sea, the Red Sea, the Arabian Sea, and the Persian Gulf. An ominous message accompanied the map: “There are maps of international cables connecting all regions of the world through the sea. It seems that Yemen is in a strategic location, as internet lines that connect entire continents—not only countries—pass near it.” Of note, the Houthis possess an arsenal of underwater mines, and Houthi militants have reportedly undergone combat diver training in the Red Sea.

The Houthis’ bold assertion could inspire other nonstate actors to put undersea cables in their crosshairs, expanding the threat to this vital infrastructure beyond the region. The same day the Telegram post appeared, a Hezbollah-affiliated Telegram channel shared a similar message and questioned whether the Houthi statement was a “veiled message to the Western coalition.”

Since these cables facilitate financial transactions and are the only hardware capable of accommodating the huge volumes of military sensor data that inform ongoing operations, terrorist groups may see them as high-value targets that can be attacked at a relatively low cost. Furthermore, non-state actors with growing cyber capabilities could exploit vulnerabilities in these networks, potentially disrupting services or stealing sensitive data. This confluence of high-tech and low-tech threats should sound alarms about the future security of global communication networks.

Emily Milliken is an analyst focusing on Gulf security issues, and the associate director of media and communications for the N7 Initiative at the Atlantic Council’s Middle East Programs.

The low-carbon energy source that could power nearly half of US homes

In 2023, the United States produced more oil in a single year than any other country in history—largely due to fracking, which injects fluid under high pressure into rocks, cracking them open to access oil stored within them. The same technique can be used to draw cleaner sources of energy—such as the heat trapped in the earth’s crust—to the surface and send it out to homes across the United States. Geothermal energy harnesses that heat and constitutes a low-carbon energy source. With new technology on the horizon that could make it easier to utilize geothermal energy in more parts of the country, the United States is poised to unlock a major source of energy.

Geothermal-power extraction is currently confined to traditional hydrothermal regions, mostly in the western continental United States plus Hawaii and Alaska. In these regions, conventional geothermal systems tap into the naturally occurring hot water or steam from the earth to drive turbines that generate electricity.

Through enhanced geothermal systems (EGS), geothermal-energy production could be expanded far beyond traditional hydrothermal regions. According to the US Department of Energy, by replicating the physical dynamics present in these regions, EGS has the potential to power more than 65 million homes—a little under half of all American homes. EGS is similar to fracking in that it involves injecting fluid into the ground to create new fractures or reopen old ones, resulting in increased permeability. The hot fluid is then pumped to the surface, where it is used to generate electricity. This method works in areas where the ground is hot enough but there may not be enough naturally occurring fluid or permeability to make geothermal power viable without the addition of EGS.

Currently, the United States has utilized less than 0.7 percent of its geothermal-electricity resources, with the remaining potential expected to become available via EGS. The Department of Energy has started to recognize the potential of EGS, funding projects in Nevada, California, and Utah. The department’s Enhanced Geothermal Shot initiative seeks to reduce the cost of EGS by 90 percent by 2035 to $45 per megawatt hour. It’s an ambitious goal, but one that, if successful, would dramatically increase access to this low- or no-carbon energy source across the United States.

That could help address an urgent need. One analysis estimates that power demand in the United States will grow 4.7 percent over the next five years, outpacing the 0.5 percent growth in annual demand over the last decade. Though not a silver bullet, expanding access to geothermal power could help meet this demand in a clean, predictable, and relatively cheap way.

Imran Bayoumi is an associate director at the Scowcroft Center for Strategy and Security.

The yellow powder that cleans carbon dioxide out of the air

Given the political and technical difficulties of getting countries to reduce the amount of greenhouse gases they pump into the air, the quest for technologies that can remove these gases has grown ever more important. One such technology, direct air capture (DAC), involves pulling carbon dioxide (CO2) out of the air and permanently storing it somewhere else, usually deep underground in rock formations. Because current methods of direct air capture are costly and energy-intensive, they have made only a marginal contribution to meeting global climate goals.

Yet carbon capture might be poised for a transformation thanks to a yellow powder. DAC technologies are expensive to scale because they use substantial amounts of water and energy and are designed to capture concentrated sources of carbon such as the exhaust from a power plant. A new CO2-absorbing material called COF-999, created by a University of California at Berkeley-led team of scientists, could collect CO2 far more cheaply, using substantially less water and energy, than current DAC processes. Utilizing a covalent organic framework—involving the strongest chemical bonds in nature—the material promises to be dependable and sustainable. The powder is less likely to be damaged by humidity, reaches half its capacity in only eighteen minutes, is reusable (it can be used through one hundred cycles of the carbon-removal process, with minimal capacity loss), and might effectively pull CO2 out of the air around us, which has far lower concentrations of carbon than, for example, power-plant exhaust.

Current carbon-capture technology, according to some estimates, could account for 14 percent of the global-emissions reductions needed to meet climate targets by 2050. The market is already expected to rapidly expand, with a projected compound annual growth rate of 6.2 percent over the next five years and estimated value of four trillion dollars by 2050. The invention of COF-999 could supercharge these numbers. It could be easily implemented in existing carbon-capture systems, or scientists could experiment with ways to take advantage of its ability to clean ambient air. “We took a powder of this material, put it in a tube, and we passed Berkeley air—just outdoor air—into the material to see how it would perform … It cleaned the air entirely of CO2,” said Omar Yaghi, a Berkeley chemistry professor who worked on the study. As atmospheric CO2 levels hit record highs, and extreme heat waves, wildfires, floods, and hurricanes increase in frequency, the yellow-powder breakthrough is one example of the creative science needed to counter inaction on rising global emissions.

Ginger Matchett is a program assistant with the GeoStrategy Initiative in the Atlantic Council’s Scowcroft Center for Strategy and Security.

The return of wild land

If you have fifteen million dollars to spare, an unused ancestral estate, or even a small plot of land in need of transformation, you too can get in on the hot new trend of rewilding—or the process of rebuilding natural ecosystems on landscapes disrupted by humans. The concept represents a fundamental shift in the way governments, ecologists, and ordinary people view conservation. It focuses on restoring to health native environments—including their balance of plants and animals—rather than on trying to protect scarce undisturbed areas such as wilderness (only 3 percent of the Earth’s land surface is ecologically intact). The idea first took off in North America and has spread like kudzu, including to the estates of the ultra-wealthy. Although rewilding remains a niche solution to various conservation problems, it may be on the verge of an explosion, with major consequences for the global climate.

Some estimates already put the global total of land available for rewilding at a billion acres, which is roughly half the area of the Australian landmass—and even more is set to become available over the course of this century as a combination of factors reduce pressure for the intensive use of land. Some two-thirds of humanity is projected to live in cities by 2050, and the world’s total population (urban and rural) is expected to peak by the mid-2080s. At the same time, agricultural productivity is increasing, technology and innovation are decoupling food output from land input, and alternative proteins, which are far less land- and carbon-intensive than animal-based proteins, are becoming increasingly popular.

A 2024 study found that a quarter of land in Europe is suitable for rewilding, with Scandinavian countries, Scotland, Ireland, Spain, and Portugal at the top of the list. A lot of land is viable for rewilding beyond Europe, too, including in Japan and North America. In the United States alone, around thirty million acres of cropland has been abandoned since the 1980s.

Rewilding may help the environment by absorbing carbon and reversing biodiversity loss. Recent declines in biodiversity around the world, including a 73 percent decrease in wildlife populations over the last fifty years and one million species on the verge of extinction, are linked to accelerated climate change and the spread of infectious diseases. There could be economic benefits as well. Nature tourism is responsible for $600 billion in revenue globally and twenty-two million jobs; revitalized natural spaces and the reintroduction of large animals into them can help raise those numbers. Restoration and rewilding can also increase farming yields, the availability of water, and global fish populations, while also reducing the degradation of agricultural land. Mangroves, coastal wetlands, and coral reefs can lessen flood risk. Putting large herbivores back into their native areas can lower wildfire risk.

Just as the potential benefits of rewilding are becoming clearer, so too are its possible costs. Some experts fear that rewilding efforts may, like some net-zero carbon pledges, allow governments and industry to sidestep decarbonization efforts in favor of carbon offsets, which are unregulated and can be reversed. The reintroduction of animals and plants, particularly large predators, can also induce a public backlash, which may harm rewilding and restoration. Restoration of ecosystems might increase the risks of tick- and other vector-borne diseases as well. As the world grows hotter, it could prove difficult to reintroduce some desired species.

Nevertheless, if the land resources and financial incentives for ecological restoration combine with messaging and public sentiment in favor of individual and community action, rewilding may become a movement capable of restoring wide swathes of land to their original states. In so doing, it might open a new route to address the effects of a changing climate.

John Cookson is the editor of the Atlantic Council’s New Atlanticist.

Sydney Sherry is an assistant director with the GeoStrategy Initiative in the Atlantic Council’s Scowcroft Center for Strategy and Security.

The coming quantum leap in energy storage

In 2019, scientists Akira Yoshino, M. Stanley Whittingham, and John B. Goodenough won the Nobel Prize in chemistry for their development of the rechargeable, renewable lithium-ion battery. The committee commended the trio for having “laid the foundation of a wireless, fossil fuel-free society.” Since their debut in the 1990s, batteries have become ubiquitous in all kinds of electronics. But there’s something even better on the horizon, and not a moment too soon: quantum batteries.

These novel batteries store energy by drawing on quantum mechanics (the study of physics on a microscopic scale) and particularly quantum chemistry, which is crucial to battery research and allows scientists to understand the chemical structure and reaction of atoms at significantly quicker speeds than current models. It’s a promising emerging technology to watch amid a broader exploration of alternative battery chemistries that could offer the energy density and stability to perform better than lithium-ion batteries for certain functions.

One application is medical devices. About 26 percent of the US adult population has some type of disability that requires a medical device—such as cochlear implants or a pacemaker—and these devices rely on lithium-ion, lithium, or lithium-iodine batteries for energy. Supply of such batteries isn’t guaranteed; beginning in 2022, for instance, a lithium-ion battery shortage upended electric-vehicle and medical-device supply chains in the United States. These batteries also often require recharging or a replacement, which can necessitate additional surgeries if the medical device that uses them is implanted.

Since quantum batteries could have higher energy density, quantum devices could provide more efficient and long-lasting performance than lithium-based options, reducing the number of battery exchanges that put patients at risk. The energy stored in quantum batteries also could power medical facilities and electric vehicles, improving emergency services in vulnerable and remote areas—a crucial concern worldwide, as climate change brings stronger storms along with longer and more intense heat waves, which not only raise health risks but also strain power grids. During power outages, most hospitals today rely on fossil-fuel and battery-system generators, which often experience complications. In the future, quantum batteries could power these facilities instead. Additionally, since quantum batteries could accelerate charging times for electric vehicles from the current thirty minutes to seconds at high-speed stations (and from about ten hours to a few minutes at home), electrically powered ambulances and medical devices could be charged and ready to go in seconds—a unit of time that can make all the difference for first responders.

Tatevik Khachatryan is an assistant director for events at the Atlantic Council.

The very online generation’s susceptibility to misinformation

Picture someone falling for an online hoax. If an elderly internet user came to mind, think again. A recent study from Cambridge University revealed that the generation that grew up with the internet—and that reported in the study spending the most time online—had a hard time telling real headlines from fake ones.

Though they tend to be tech savvy and certainly are not the only generation vulnerable to inaccurate information, members of Generation Z (those born in the late 1990s and early 2000s) are more susceptible to mis- and disinformation than widely assumed. Often relying on social media as a primary news source, digital natives are vulnerable to manipulation. In the Cambridge study, as well as in research conducted by the Center for Countering Digital Hate, they demonstrated a propensity to believe in conspiracy theories. Gen Z might be conscious of the threat posed by biased feeds and manipulated media, but its members continue to scroll and share—and their amplification of mis- and disinformation will be a serious challenge in the future.

Social media is a central fact of life for the vast majority of Gen Zers in the developed world, and it has become an indispensable informational tool for those in developing countries as well. In 2024, a report surveying nearly 4,500 individuals across the United States, Canada, the United Kingdom, Ireland, and Australia found that 91 percent of Gen Z social media users are on Instagram and 86 percent are on TikTok. Gen Z is forming judgments based on the content appearing on their social media feeds—often curated by algorithms that privilege content with higher engagement levels regardless of whether it is true or false—and circulating it to their digital communities. Their decisions about who to follow on social media are not necessarily rooted in the authenticity or credibility of those figures. Instead their social media consumption is often parasocial: They tend to follow media streams and engage with the causes of individuals who they don’t know personally, be they influencers or politicians.

A generation growing up with seemingly unlimited access to information and extensive knowledge about what digital technologies like algorithms do, but with limited ability to verify that information, represents a significant sociological change. As members of Gen Z proceed in their careers and assume more powerful positions, there is a real risk that they have been left ill-prepared to navigate the overwhelming scale of online information ecosystems. The mis- and disinformation surrounding global challenges ranging from war to migration to climate change may also make Gen Zers more mistrustful of both institutions and other individuals, rendering them less capable of addressing these challenges. Collaborative efforts between Gen Z and older generations—engaging private companies, governments, and individuals—are needed to manage a transformed information landscape and prevent subsequent generations from growing up in an era of misinformation or falling for online hoaxes.

Ginger Matchett is a program assistant with the GeoStrategy Initiative in the Atlantic Council’s Scowcroft Center for Strategy and Security.

Srujan Palkar is a Global India fellow and assistant director with the Scowcroft Middle East Security Initiative in the Atlantic Council’s Middle East Programs.

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Welcome to 2035: What the world could look like in ten years, according to more than 350 experts

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Welcome to 2035: What the world could look like in ten years, according to more than 350 experts

Andrea Ratiu — Wed, 12 Feb 2025 11:00:00 +0000

Welcome to 2035

What the world could look like in ten years, according to more than 350 experts

By Mary Kate Aylward, Peter Engelke, Uri Friedman, and Paul Kielstra

Explore findings on…

2. Conflict with China and Russia

3. The China-Russia-Iran-North Korea axis

4. Nuclear proliferation and use

5. The future of US power

6. The endgame in Ukraine

7. Prospects for Israeli-Palestinian peace

8. The outlook for multilateral institutions

9. The chances of democratic depression

10. Gender and the global future

Another devastating world war, potentially bringing China and the United States into direct conflict. The spread and even the use of nuclear weapons. The wars in Ukraine and Gaza failing to ultimately produce favorable outcomes for Kyiv and Israeli-Palestinian peace. A more multipolar world without robust multilateral institutions. A democratic recession further devolving into a democratic depression.

These are just some of the future scenarios that global strategists and foresight practitioners pointed to when the Atlantic Council’s Scowcroft Center for Strategy and Security surveyed them, in late November and early December 2024 following the US elections, for its third-annual survey on how they expect the world to change over the next ten years.

Not all the projections were pessimistic. Fifty-eight percent of those who participated in our Global Foresight 2025 survey, for example, felt that artificial intelligence would, on balance, have a positive impact on global affairs over the next ten years—an increase of 7 percentage points from our Global Foresight 2024 survey. Roughly half of respondents foresaw an expansion of global cooperation on climate change.

But the grimmer forecasts were in keeping with a dark global outlook overall, with 62 percent of respondents expecting the world a decade from now to be worse off than it is today, and only 38 percent predicting that it will be better off.

The 357 survey respondents were mostly citizens of the United States (just under 55 percent of those polled), with the others spread across sixty countries and every continent but Antarctica. Respondents skewed male and older, and were dispersed across a range of fields including the private sector, nonprofits, academic or educational organizations, and government and multilateral institutions.

So what do these forecasters of the global future anticipate over the coming decade? Below are the survey’s ten biggest findings.

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The Global Foresight 2025 survey: Full results

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1. Forty percent of respondents expect a world war in the next decade—one that could go nuclear and extend to space

For the first time in our annual survey, we asked respondents whether they expected there to be another world war by 2035. We defined such a war as involving a multifront conflict among great powers. And the results were alarming, with 40 percent saying yes.

While this was a new question, our Global Foresight 2024 survey surfaced a similar concern, with nearly a quarter of respondents pointing to war between major powers as the greatest threat to global prosperity over the next ten years.

The finding tracks with worries expressed by other experts amid major wars in Europe and the Middle East, growing tensions between the United States and China, and increasing cooperation among China, Russia, North Korea, and Iran. Surveying this treacherous global landscape this past summer, for example, the historian and former US diplomat Philip Zelikow assigned a 20 to 30 percent probability to the prospect of “worldwide warfare” and warned of a “period of maximum danger” within the next one to three years.

Judging by our respondents’ answers, another world war might feature nuclear weapons. Forty-eight percent of respondents overall (and 63 percent of those predicting World War III) expected nuclear weapons to be used in the coming decade by at least one actor.

Such a conflict also may play out in outer space. Forty-five percent of respondents overall (and 60 percent of those predicting World War III) expected the next decade to include a direct military conflict fought, at least in part, in space.

And it could be devastating to the global economy. Twenty-eight percent of respondents identified war among major powers as the single biggest threat to global prosperity over the next ten years.

2. Tensions with China and Russia are potential vectors for major conflict

By definition, a world war would involve more than two belligerent nations. But across multiple questions in the survey, respondents forecast a future in which today’s strategic competition and geopolitical tensions between the United States and China in particular could sharpen into something more dangerous.

Survey respondents, for instance, were significantly more inclined than a year earlier to foresee a military conflict over Taiwan, which could draw in the United States in support of the island and against China. Sixty-five percent of all respondents somewhat or strongly agreed that China will try to retake Taiwan by force within the next decade, and only 24 percent somewhat or strongly disagreed. In our Global Foresight 2024 survey, that split was 50 percent to 30 percent. Among those predicting the breakout of another world war, the proportion was even higher: Seventy-nine percent believed China will attempt to forcibly retake Taiwan over the next ten years.

Expand to read expert insight by Markus Garlauskas

Though this year’s survey findings may seem worrisome at first because respondents see increasing risks of war, I find them reassuring. The change from last year shows a greater awareness of the nature of the threats we face in the Indo-Pacific, particularly the risk of confronting simultaneous conflicts with multiple adversaries and nuclear attacks.

That a clear majority of respondents now expect Beijing to try to take Taiwan by force in the coming decade is actually a hopeful signal to me. Chinese President Xi Jinping has been clearly building up military forces suited for offensive operations and has repeatedly stated that he will not renounce the use of force to bring Taiwan under control. Meanwhile, polls suggest that the vast majority of the people of Taiwan are disinclined to be ruled by Beijing, favoring either the status quo or outright independence.

This would seem to set Beijing and Taipei on an inevitable collision course. Yet there is also good reason to believe that China overwhelming Taiwan is not inevitable, in part because invasion would be a far more difficult operation than is commonly recognized. It will take the increasing sense of threat of force identified by the survey to prompt Taiwan and the United States to make the investments necessary to increase their preparedness for deterring and defeating such use of force.

This growing awakening on the part of the United States and its allies can become the basis for a call to action for the populations, governments, and militaries of these countries. The United States has typically waited until war was thrust upon it before preparing comprehensively. Now is the time to act, to prepare, ideally to deter such aggression, and to be ready to hold firm if deterrence fails and we face either a short, sharp war or a protracted one.

—Markus Garlauskas, director of the Indo-Pacific Security Initiative of the Atlantic Council’s Scowcroft Center for Strategy and Security

A US-China confrontation is not the only potential pathway to a multifront conflict among great powers. Forty-five percent of respondents somewhat or strongly agreed that Russia and NATO will engage in a direct military conflict within the next ten years—a significant increase from the 29 percent who felt this way in our Global Foresight 2024 survey. Among respondents expecting another world war within the next decade, 69 percent anticipated a direct clash between Russia and NATO.

3. Just under half of respondents expect China, Russia, Iran, and North Korea to be formal allies within a decade, potentially in a world featuring China- and US-aligned blocs

Other geopolitical dynamics forecast by survey respondents could serve as the kindling for whatever spark ignites a wider war or, alternatively, emerge as byproducts of such a conflict.

Forty-seven percent of respondents predicted that, by 2035, the world will largely be divided into China-aligned and US-aligned blocs; among that group, nearly 60 percent expected the China-aligned bloc to include Russia, Iran, and North Korea as formal allies, presumably with China leading the alliance.

Overall, just under half of our survey respondents (46 percent) agreed that the emerging axis of Russia, Iran, China, and North Korea will be formal allies in 2035. While this was the first time we asked this question regarding all four countries, in our Global Foresight 2024 survey 33 percent of respondents thought Russia and China would be formal allies in ten years’ time.

Many respondents appeared to associate these potential developments with the prospect of a world war. Among respondents who foresaw both the world being divided into China- and US-aligned blocs and China, Russia, Iran, and North Korea becoming formal allies, 62 percent also anticipated another world war over the next decade; among other survey respondents, that figure was far lower at 33 percent.

Expand to read expert insight by Melanie Hart

Economically, there is movement underway toward a US-and-allies versus China-aligned bloc structure, but this movement is still nascent. How far it goes will largely depend on whether the United States can overcome its domestic political reticence to actively shaping the global economic order and once again begin negotiating market-access trade deals.

Beijing seeks a global system in which other nations must abide by its wishes and there are no constraints—legal, normative, or otherwise—limiting Beijing’s own actions. Beijing is using global commerce to enforce this approach. For nations that depend on trade or investment with China, Beijing is increasingly willing to shut off the flow of goods and capital to enforce its demands in other issue areas. Beijing is also using those partners as consumption dumping grounds, exporting excess capacity across a wide array of goods (such as steel and electric vehicles) at rock-bottom prices, which addresses over-supply in the China market but drives local producers out of business. This is leading many nations to reduce their exposure and vulnerabilities to Beijing’s market interference. Many of those nations increasingly view Western, US-centric supply chains as a more attractive option.

As this shift unfolds, it could lead to new economic blocs—for example, a new multilateral trading structure in which the United States and its allies are at the center of a global trading bloc that China is not allowed to join. However, that will depend on Washington shaking off its trade malaise and figuring out how to negotiate new trade deals that create new, formal structures centered on US and allied rules of the road. China is busy creating its own options—such as the Regional Comprehensive Economic Partnership in Asia—but the United States is hanging back. Without more assertive US-led action on the trade front, the biggest risk is that China will form a new, massive global economic bloc and write the rules to benefit itself at our expense, while the United States and its allies watch from the sidelines.

As for China, Russia, Iran, and North Korea, these four nations are partners with a clear shared interest—namely, their desire to undermine the United States and the liberal international order—but they are not true allies. China’s need for integration with the global economy is likely to limit the degree to which today’s partnership evolves in the future into a more formal alliance similar to the alliance the United States enjoys with its NATO partners.

The Chinese Communist Party has staked its regime legitimacy—its pitch for the Chinese people’s continued support—largely on its ability to deliver economically. Unfortunately, the party has also decided that the reforms required to deliver next-level economic growth are too risky, as they would require the party to cede more internal political control over the nation’s economy, legal system, and society. As long as Chinese leaders are unwilling to do that, they will lag behind the West in technology innovation, and they will depend on access to Western companies, universities, and markets to help fill that gap. That dependence limits China’s willingness to sign up for a comprehensive alliance with Russia, Iran, or North Korea, because Beijing does not want to join those nations in an economic wilderness that cuts Chinese companies off from the world’s leading technology powers.

—Melanie Hart, senior director of the Atlantic Council’s Global China Hub

4. The proliferation and use of nuclear weapons is a growing risk, with nearly half of respondents expecting a nuclear weapon to be used by 2035

Since the dawn of the Atomic Age and particularly since the latter part of the Cold War, nuclear nonproliferation efforts have sought to prevent additional countries from acquiring the world’s most destructive weapons, with varying success. And after the United States did so in 1945, no country has used nuclear weapons in war. But according to our survey respondents, the coming decade could bring very concerning developments on both these fronts.

Iran is the most likely—but not the only potential—new nuclear-weapons power on the horizon

In our latest survey, 88 percent of respondents expected at least one new country to obtain nuclear weapons in the coming decade, a slight uptick from 84 percent in the Global Foresight 2024 edition. As in our previous survey, just under three quarters of respondents predicted that Iran will go beyond its current threshold status and join the nuclear-weapons club within the next ten years, making it the survey’s most-cited candidate to become a nuclear-weapons state in the future.

The coming years could bring a range of policy responses to this anticipated development, from strikes against Iran’s nuclear facilities to a new round of nuclear negotiations with Tehran. Perhaps in recognition of these scenarios, more than a third of respondents expected Israel to have engaged in a direct war with Iran by 2035.

Expand to read expert insight by Alan Pino

Is Iran’s acquisition of a nuclear weapon inevitable or at least highly likely in the next decade? Far from it. Whether Iran acquires a nuclear weapon will depend on policy choices made by Iran, Israel, and the United States regarding Tehran’s nuclear program.

Currently, Iran still officially disavows an intent to produce a nuclear weapon, but there has been much more talk among Iranian officials during the past year of the need for one as pressure on Iran has increased due to Israeli military actions against Tehran’s “resistance axis” and Iran itself.

Iran’s military and economic weaknesses have intensified an ongoing debate between moderates and hardliners in Iran over the direction of the country’s foreign and nuclear policy. Moderates want to negotiate a freeze on Iran’s nuclear program in return for the lifting of economic sanctions and an opening of trade and investment with the West and Arab Gulf states. Hardliners argue Iran must double down on its expansionist regional policies, its threshold status as a military nuclear power, its growing ties to Russia and China, and its hardline stance toward the United States and the West to rebuild deterrence and resilience.

Iranian Supreme Leader Ali Khamenei will have to make the call on which policy to pursue, and uppermost in his mind will be which approach—or mixture of the two—best ensures the survival of the Islamic Republic, his overarching priority.

Israeli officials continue to monitor Iran’s nuclear program closely and have reiterated warnings that Israel will resort to military force if Iran seeks to acquire a nuclear weapon. Israel under Prime Minister Benjamin Netanyahu has been emboldened by its military successes over the past year, including the destruction of Hamas’s and Hezbollah’s military capabilities and Iran’s air defenses, as well as the weakening of Iran’s missile-production capabilities. Senior Israeli officials probably believe conditions are ripe to destroy or set back Iran’s nuclear program without major threat of retaliation, given the Islamic Republic’s current vulnerability, but also seem to recognize that Israel would need US military support to do lasting damage.

The Trump administration is committed to restoring its previous maximum-pressure campaign of sanctions against Iran to compel it to agree to a new nuclear deal and curbs on its malign regional behavior. Trump’s transition team reportedly discussed the possibility of a preemptive attack on Iran’s nuclear facilities given that Iran now has enough highly enriched uranium for several bombs and that sanctions could take a long time to work. They may have leaked this option to frighten Iran into agreeing to negotiations, but clearly the Trump administration is signaling a willingness to go beyond sanctions and diplomacy to achieve its objectives.

With Iran’s axis of resistance shredded, and Iran itself weakened militarily and economically, the United States has an extraordinary opportunity—working with Israel, Arab allies, and European countries—to use economic and diplomatic pressure backed by the threat of military force to secure an agreement that walks Iran back from the nuclear brink and curbs its destabilizing regional policies.

—Alan Pino, former US national intelligence officer for the Near East

What is new is the jump in the percentage of respondents expecting other countries to get these weapons. In our Global Foresight 2024 survey, for example, a quarter of respondents thought South Korea would acquire nuclear weapons. In our most recent survey, that figure was 40 percent. The percentage of respondents expecting Japan—the only country ever subject to a nuclear-weapons attack, where the survivors of the Hiroshima and Nagasaki bombings are a prominent national presence—to acquire nuclear weapons also increased ten percentage points over 2024, from 19 percent to 29 percent. (Notably, while the percentage of respondents anticipating a nuclear Iran in ten years’ time remained steady year over year, so did the roughly 40 percent of respondents expecting nearby rival Saudi Arabia to acquire nuclear weapons as well.)

North Korea and Russia are considered the most likely to launch a nuclear-weapons attack

Forty-eight percent of respondents expected nuclear weapons to be used in the coming decade, up from 37 percent in our previous survey.

Expand to read expert insight by Matthew Kroenig

This finding demonstrates that nuclear weapons have returned to the center of geopolitics. For years after the end of the Cold War, many assumed that nuclear weapons were obsolete relics from the past. The Obama administration made eliminating nuclear weapons a top priority. At the time, Washington assessed that there was virtually zero chance of a nuclear war among states and the greatest nuclear threats came from terrorism or accident.

Now, nearly half of our respondents assess that nuclear weapons will be used in the coming decade. This shows that nuclear weapons are not twentieth-century curiosities but the ultimate instrument of force and essential tools of great-power competition. China is engaging in the most rapid nuclear buildup since the 1960s, Russia is issuing regular nuclear threats, North Korea’s nuclear arsenal continues to grow, and Iran’s dash time to the bomb is now measured in weeks.

This means that the United States will need to once again strengthen its strategic forces to deter adversaries and assure allies. By doing so, I hope the United States can prove our respondents wrong and ensure that the world’s most powerful weapons are never used again.

—Matthew Kroenig, vice president and senior director, Scowcroft Center for Strategy and Security

Roughly one-quarter of respondents predicted that Russia will use a nuclear weapon by 2035, with around the same percentage saying the same regarding North Korea, amid reports of near-Russian nuclear use early in its war against Ukraine and concerns about crumbling deterrence on the Korean peninsula. Both cases represent significant increases relative to our previous survey, when only 14 percent expected Russia to employ a nuke and 15 percent believed North Korea would do so.

5. The United States is still likely to be dominant militarily in 2035—but with relatively less economic, diplomatic, and soft power as it navigates a multipolar world

Three-quarters of respondents in our latest survey agreed that the world in 2035 will be multipolar, with multiple centers of power, in line with the findings in our previous survey.

A slightly smaller percentage of respondents—71 percent—expected the United States to remain the world’s dominant military power by that time. A majority (58 percent) envisioned the United States being the world’s dominant technology innovator a decade from now.

On other measures of power—economic, cultural, and diplomatic—respondents predicting US dominance in 2035 were in the minority, if only ever so slightly in the case of economic power, in which 49 percent of respondents expected the United States to be dominant.

Between our latest survey and the previous year’s, confidence in US dominance over the next decade dropped across several measures of power, particularly diplomatic and military clout. Those forecasting US dominance in ten years’ time declined from 81 percent to 71 percent for military power, 63 percent to 58 percent for technological innovation, 52 percent to 49 percent for economic power, and 32 percent to 24 percent for diplomatic power. (The Global Foresight 2024 survey did not ask about future US dominance in cultural or soft power, which 35 percent of respondents expected in our most recent survey.) Slightly more respondents (12 percent) relative to our prior survey (7 percent) forecast that the United States will be dominant in none of these areas by 2035.

A bright but more uncertain future for US alliances

While a majority of respondents (61 percent) expected the United States to maintain its security alliances and partnerships in Europe, Asia, and the Middle East in 2035, this figure was markedly down from our previous survey (79 percent), with much of the shift seeming to stem from those answering that they “don’t know” (26 percent in the Global Foresight 2025 edition relative to 12 percent in the 2024 edition).

Responses on the future of US military dominance and alliances appear correlated. Among those who expected the United States to retain such dominance by 2035, 67 percent believed that it would maintain its network of alliances. Among those who did not think the United States would be the world’s dominant military power in a decade, only 46 percent believed that the country would preserve its alliance network.

In our Global Foresight 2024 survey, just under a third of respondents expected Europe to have achieved “strategic autonomy” within the next decade by taking more responsibility for its own security and thus relying less on the United States. In our latest survey, however, almost half of respondents (48 percent) expected Europe to achieve “strategic autonomy” over the next ten years—a notable increase as President Donald Trump presses European countries to substantially increase their defense spending.

Do you agree or disagree with the following statements about the state of alliances and partnerships in 2035:

The dangers of a diminished United States

Those who anticipate a diminished United States over the next decade may link such a scenario to worse outcomes for the world. Among respondents who said that by 2035 the United States will be the dominant power in none of the domains listed in the survey, for instance, only 24 percent believed that the world will be better off in a decade’s time. Among other respondents, 40 percent expected the world to be better off ten years from now. Similarly, among those who didn’t expect US dominance in any domain of power in a decade, 62 percent envisioned a world war occurring over that timeframe. For the rest of the survey pool, 38 percent anticipated another world war.

Expand to read expert insight by Matthew Kroenig

In the United States, declinism is a national pastime with a poor track record. In the 1970s, many thought the Soviet Union was on a trajectory to overtake the United States as the world’s leading superpower. In the 1980s, economists projected that Japan would unseat the United States as the world’s leading economy. In the 2010s, many thought it was inevitable that China would become the world’s largest economic power.

All of those predictions turned out to be incorrect.

The United States is now a rising power, claiming 26 percent of global gross domestic product (GDP), its largest share in two decades. Meanwhile, China is declining; Xi Jinping’s desire to assert Chinese Communist Party control over all aspects of Chinese society is stifling Chinese growth, and his aggressive foreign policy is undercutting the global economic engagement strategy that fueled China’s rise. Europe’s share of global GDP has fallen from a quarter in the 1980s to roughly 15 percent today. Russia’s GDP is smaller than Italy’s and Spain’s. To whom then is the United States supposedly ceding all of this power?

Is the United States in decline? I wouldn’t bet on it.

—Matthew Kroenig, vice president and senior director, Scowcroft Center for Strategy and Security

6. Many respondents are pessimistic about the war in Ukraine ending on terms favorable to Ukraine

Amid a push by the incoming Trump administration to bring the war in Ukraine to an end three years after Russia’s full-scale invasion of the country, and as Ukraine and Russia each seek to secure the best possible terms in any future negotiated peace deal, respondents were split on the likely outcome of the conflict. Forty-seven percent predicted that Russia’s war against Ukraine will end on terms largely favorable to Russia and 43 percent forecast that it will result in a “frozen conflict.” Only 4 percent expected the war to end on terms largely favorable to Ukraine.

Our previous survey a year earlier, which asked a different and more detailed question about Ukraine in ten years’ time, reflected more optimism, with 48 percent of respondents predicting that Ukraine would emerge from the war as an independent, sovereign state in control of the territory it held before Russia’s escalated assault on the country in 2022.

Expand to read expert insight by John Herbst

Expectations about the future change in the wake of historic developments and perceptions of those developments. Perhaps the single most important factor in determining the outcome of Russia’s aggression in Ukraine is US policy.

Simply put, a strong US policy providing Ukraine the weapons to drive Russian forces largely out of Ukraine and rallying the political West to supply Ukraine’s economic needs would lead to a clear defeat for Russian President Vladimir Putin that would return much of occupied Ukraine to Kyiv’s control, and with a US-led effort would vouchsafe Ukraine’s security and territorial integrity via NATO membership. Alternatively, a US decision to cut off aid to Ukraine would likely lead to a disaster that would ensure Kremlin political control of the country, produce a direct threat to NATO, and encourage aggression by US adversaries in the Far and Middle East.

US President Joe Biden gave substantial support to Ukraine, but he stopped well short of giving Ukraine the arms and permission to take back most of the country. Trump has stated that he wants Ukraine to survive and would not abandon the country, but he is seeking a durable peace that requires compromise from Ukraine as well as Russia. Ukrainian President Volodymyr Zelenskyy has indicated a readiness to compromise; Putin has not. Recognizing this, Trump and his team have identified Putin as the recalcitrant party and have spoken of major economic measures—tougher sanctions, transferring the $300 billion in frozen Russian state assets to Ukraine—to persuade Russia to negotiate. Respondents to the survey pay attention to the major factors affecting this war, including the Trump angle. But respondents to surveys are not seers, and survey questions are not written to explore the insights that seers might provide.

What therefore might we expect to happen with the war this coming year? First, Trump will roll out a peace initiative that likely includes four elements already public. Two are hard for Zelenskyy: territorial concessions (at least de facto) and no NATO membership for Ukraine for twenty years minimum. And two are hard for Putin: the demilitarized zone enforced by European troops and arming Ukraine to the hilt to prevent future Russian aggression. We can expect Putin to try hard to get Trump to drop those last two points before and then during the talks. But if Putin is persuaded that Trump will arm Ukraine with far more advanced weapons if Russia is unyielding, he might agree to terms that he intends to violate. Trump’s hopes for a Nobel Peace Prize depend on him insisting that Russia compromise to the point of ensuring a viable and stable future for Ukraine, and being ready to confront the ever-treacherous Russian dictator if Putin violates an agreement whose terms would yield that outcome.

—John Herbst, senior director of the Atlantic Council’s Eurasia Center

7. Respondents are much more optimistic about a breakthrough in Israeli-Saudi relations than in Israeli-Palestinian peace

Ever since Hamas’s October 7, 2023 terrorist attacks against Israel and Israel’s ensuing war in Gaza set off transformative changes in the broader Middle East, US officials have linked reviving work on normalizing diplomatic relations between Israel and Saudi Arabia with renewing the push for a pathway to a Palestinian state as part of an eventual Israeli-Palestinian peace deal, with the Saudis insisting on the latter as a condition for the former.

But our survey respondents—who, notably, shared their views before Israel and Hamas reached their January cease-fire and hostage deal—were much more bullish about the prospects for Israeli-Saudi normalization in the coming decade than about the chances of an Israeli-Palestinian two-state solution. Fifty-six percent envisioned Israel having normalized diplomatic relations with Saudi Arabia by 2035—roughly similar to the percentage who said the same in our post-October 7, 2023, Global Foresight 2024 survey—relative to 17 percent who expected Israel to be coexisting next to a sovereign, independent Palestinian state within that timeframe. More than 60 percent of respondents predicted that when it comes to the Israeli-Palestinian conflict, today’s status quo, with occupied Palestinian territories, will persist.

Expand to read expert insight by Alan Pino

In 2035, will Israel have the status quo that exists today, with occupied Palestinian territories?

Hamas’s surprise attack on Israel on October 7, 2023 has taught us the dangers of thinking a status quo will continue indefinitely. Israeli leaders’ belief that Hamas had reconciled itself to the status quo in Gaza—in which Gazans received economic benefits in return for Hamas not attacking Israel—left them unprepared for the most devastating attack on the Jewish state since its war of independence in 1948.

And the war in Gaza that resulted from Hamas’s attack has brought further surprises: Israel’s almost complete destruction of Hamas as a military and political organization; the killing of most of Hezbollah’s military leaders and elimination of a majority of its vaunted rocket and missile arsenal; direct Iranian and Israeli attacks on each other’s territory, with Israel wiping out all of Iran’s most advanced air-defense systems; and the almost overnight collapse of the Syrian military and the regime of Syrian President Bashar al-Assad in the face of a renewed rebel offensive.

The Middle East’s geopolitical landscape has been dramatically transformed, and Iran’s image as a regional hegemon and defender of the Palestinians badly tarnished. Israeli leaders have been emboldened by Israel’s military successes and seem to believe that maintaining military dominance alone will deter the country’s enemies.

But some observers, looking ahead, ask whether the cycle of violence since October 7 is likely to repeat itself at some point if Israel doesn’t address the issue of Palestinian aspirations for independence. The Biden administration and others have called for a return to the idea of a two-state solution as necessary to forestall future cycles of Israeli-Palestinian violence.

Admittedly, the current environment is not propitious for discussion of a Palestinian state. A large majority of Israelis, still traumatized by Hamas’s horrific attack on October 7, reject the idea as posing a grave risk to Israel’s security. Israeli Prime Minister Benjamin Netanyahu has repeatedly refused calls from the United States to incorporate the concept of an eventual Palestinian state into Israel’s post-war strategy, and right-wingers in the current Israeli government want to annex a large part of the West Bank, keep long-term control of the Gaza Strip, and return Israeli settlements to Gaza.

But the Palestinian issue is not likely to go away. Anti-Israel militancy and violence by Palestinians is growing in the Israeli-occupied West Bank, and Israel hasn’t totally suppressed attacks by Hamas in Gaza after more than a year of fighting. Arab publics are seething with anger over the large number of Palestinians killed and displaced by Israeli military operations in Gaza. And world opinion has increasingly turned against Israel as Palestinian casualties have mounted.

The Palestinian issue remains a roadblock to Israel becoming fully integrated into the region, a key goal of Netanyahu’s that he hopes will put a capstone on his legacy as Israel’s longest-serving prime minister. Responding to popular sentiment, Saudi leaders have indicated that Riyadh won’t normalize relations with Israel—an essential step to create a political and security bulwark against renewed threats from Iran—unless Jerusalem endorses a clear pathway to Palestinian statehood.

New elections will probably need to take place in Israel, bringing new leadership open to the idea of a political horizon for the Palestinians, if the current status quo is to change. The United States has an important role to play here by encouraging Israeli leaders to think about how to translate their military success into a regional strategy that includes a vision for ending the Israeli-Palestinian conflict.

The odds of such a development seem long right now, but October 7 is a reminder that clinging to an unstable status quo can be riskier than seeking to change it.

—Alan Pino, former US national intelligence officer for the Near East

8. As global organizations become less capable of solving the world’s problems, regional groupings and the BRICS may rise in importance

Respondents foresaw many global institutions growing less effective over the coming decade. Seventy-five percent expected the United Nations (UN) to be less capable of solving challenges core to its mission by 2035 relative to today, compared with 9 percent who anticipated it becoming more capable of doing so. The figures for the United Nations Security Council are only slightly better, with 67 percent of respondents predicting less capability and 9 percent more capability. Sixty percent of respondents envisioned the World Trade Organization being less capable in a decade than it is today.

Respondents also may be skeptical about the UN’s capacity to tackle global-governance challenges such as climate change. Just under 40 percent of respondents predicted that greenhouse-gas emissions will have peaked and begun to decline by 2035, despite signs that this tipping point is already near. Only about half of respondents believed that renewable energy technologies will be the dominant form of electricity production globally by then, despite significant growth in demand for renewable energy.

The forecast was less dire for the World Bank, with 46 percent predicting less capability and 19 percent more capability, and International Monetary Fund (IMF), with 41 percent predicting less capability and 20 percent more capability. A similar if slightly more sanguine picture emerged regarding organizations consisting of the world’s leading powers. Forty-nine percent of respondents predicted less capability and 21 percent more capability for the Group of Seven (G7), while 38 percent expected less capability and 29 percent more capability for the Group of Twenty (G20).

But respondents seemed to hold out even more hope for regional blocs and the BRICS, which is now expanding its membership beyond Brazil, Russia, India, China, and South Africa. Forty percent of respondents predicted that the Association of Southeast Asian Nations will be more capable of fulfilling its mission by 2035, while 20 percent said the opposite. For the European Union, those figures were 40 percent and 33 percent. (Respondents from EU countries were even more optimistic, with 50 percent expecting greater capability and 22 percent less capability.) For the BRICS, the numbers were 43 percent and 31 percent.

Expand to read expert insight by Josh Lipsky

The findings show in hard data what many analysts believe—that the international financial institutions, in particular the Bretton Woods institutions, remain the most functional parts of the multilateral system. That’s because they deliver real money every day to countries around the world.

But the responses also show a growing recognition that these institutions are not self-perpetuating. The tenuous consensus that allows them to go about day-to-day business is predicated on an understanding that functioning IMF and World Bank institutions serve every country (including the United States) better than dysfunctional ones. With Donald Trump’s return to office, there are questions about whether that consensus will hold. For what it’s worth: The first time Trump was in office, it did, and Trump and his team saw the value in both institutions, even if they disagreed with some policy decisions.

The one area of the findings that seems off-target is on the BRICS. The likelihood of the BRICS succeeding in fulfilling their main goals seems vastly overstated in these findings (likely a product of media reporting on BRICS expansion during 2023 and 2024). Here’s the question that is much tougher to answer: What do the BRICS actually want to achieve? What they oppose—the Western-led system—is clear. But what is their proactive agenda? Until they answer that question, the ability of BRICS to succeed as an institution will be limited at best.  

—Josh Lipsky, senior director of the Atlantic Council’s GeoEconomics Center

9. Today’s democratic recession may deepen into a democratic depression

Overall, respondents appeared gloomy about the prospects for democracy around the world by 2035. Just under half envisioned the current “democratic recession” worsening and becoming a “democratic depression,” while only 17 percent anticipated a “democratic renaissance” instead. The remaining 37 percent expected the global state of democracy to remain much as it is today, with some encouraging progress but also considerable headwinds and backsliding.

Sixty-five percent of respondents also forecast that global press freedoms will decrease by 2035, with another quarter expecting them to stay about the same as they are today and very few anticipating those freedoms increasing over the coming decade.

Our question on the state of global democracy in our previous survey was not identical and therefore not directly comparable. Nevertheless, its results—24 percent expected more democracies a decade hence, 38 percent forecast fewer democracies, and another 37 percent foresaw stasis—presaged the dim outlook expressed in our latest survey.

10. Women are more pessimistic about the global future than men are

Women notably expressed a bleaker outlook across many questions in the survey related to conflict, their own rights, and US clout over the next decade.

For instance, 61 percent of female respondents predicted that nuclear weapons will be used in the coming decade, compared with 44 percent of male respondents who said the same. Women (54 percent) were also more likely than men (44 percent) to expect a democratic depression. Thirty-two percent of women pointed to women as the most likely group to have their rights curtailed in the coming decade—twice the proportion of men who gave the same answer. Women, moreover, were less likely than men to envision the United States as the world’s dominant military power (58 percent relative to 76 percent) and technological innovator (47 percent relative to 61 percent) in a decade’s time.

Expand to read expert insight by Nicole Goldin

The pessimism from women likely reflects persistent inequities in military, economic, and political representation and participation, as well as the disproportionate impacts of crises and shocks—whether those are economic (like inflation), security-related (from wars such as those in Ukraine or Gaza), the result of political turmoil or transition, or the product of natural disasters and climate events.

Compounding these situations are the challenges of child or family care and pay gaps, which limit the work and earnings of many women, and worsening domestic and gender-based violence, which devastates women’s lives in all dimensions. In the United States, the rollback of Roe v. Wade has left many women believing their rights and protection more broadly are at risk.

—Nicole Goldin, nonresident senior fellow with the Atlantic Council’s GeoEconomics Center and head of equitable development at United Nations University Centre for Policy Research

About the authors

Mary Kate Aylward, Publications Editor, Atlantic Council

Aylward was an editor at War on the Rocks and Army AL&T before joining the Council. She was previously a junior fellow at the Carnegie Endowment for International Peace.

Peter Engelke, Senior Fellow, GeoStrategy Initiative

Engelke is on the adjunct faculty at Georgetown University’s School of Continuing Studies and is a frequent lecturer to the US Department of State’s Foreign Service Institute. He was previously a member of the World Economic Forum’s Global Future Council on Complex Risks, an executive-in-residence at the Geneva Centre for Security Policy, a Bosch fellow with the Robert Bosch Foundation, and a visiting fellow at the Stimson Center.

Uri Friedman, Senior Editorial Director, Atlantic Council

Friedman is also a contributing writer at The Atlantic, where he writes a regular column on international affairs. He was previously a senior staff writer at The Atlantic covering national security and global affairs, the editor of The Atlantic’s Global section, and the deputy managing editor of Foreign Policy magazine.

Paul Kielstra, Freelance Analyst

Kielstra is a freelance author who has published extensively in fields including business analysis, healthcare, energy policy, fraud control, international trade, and international relations. His work regularly includes the drafting and analysis of large surveys, along with desk research, expert interviews, and scenario building. His clients have included the Atlantic Council, the Economist Group, the Financial Times Group, the World Health Organization, and Kroll. Kielstra holds a doctorate in modern history from the University of Oxford, a graduate diploma in economics from the London School of Economics, and a bachelor of arts from the University of Toronto. He is also a published historian.

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Three worlds in 2035: Imagining scenarios for how the world could be transformed over the next decade

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Three worlds in 2035: Imagining scenarios for how the world could be transformed over the next decade

Andrea Ratiu — Wed, 12 Feb 2025 11:00:00 +0000

Three worlds in 2035

Imagining scenarios for how the world could be transformed over the next decade

By Peter Engelke, Greg Lindsay, and Paul Saffo

Welcome to three possible worlds in the year 2035. As resident and non-resident senior fellows in the Atlantic Council’s foresight practice, we produced these scenarios by assessing how current trends and uncertainties across a variety of categories—including geopolitics, the economy, demography, the environment, technology, and society—might interact with one another in the years to come.

These are not forecasts or predictions of what the future will bring. Instead, these scenarios are intended to inspire imagination and spur readers to consider possible futures, including future worlds that do not align with the readers’ expectations. To paraphrase a sentiment often expressed by the physicist and futurist Herman Kahn, the point of working with future scenarios is to find out what you don’t know and should know but that you didn’t even know you didn’t know.

We invite readers to interpret these scenarios in that spirit. Consider the interplay among the cause-and-effect elements that lead to each of the potential future worlds, as well as the myriad other possible scenarios that could emerge in the years to come.

Perhaps the world of 2035 might vaguely resemble one of the three scenarios presented here, but that is not the central purpose of this exercise. The primary reason why we crafted these scenarios is to generate deeper insights into how today’s actions and inactions might create a better or worse world ten years from now.

Choose your global future

The reluctant international order

China ascendant

Climate of fear

The reluctant international order

Global governance has never been more complicated than it is in 2035. But although the problems are complex, thus far the governance landscape is proving capable of containing at least some of them, as occurred several years ago when we endured a near-miss catastrophe from a bioweapon-fueled pandemic.

We might not be experiencing the halcyon days of a revitalized multilateralism, but thankfully we’re also not inhabiting a kill-or-be-killed nihilistic hellscape. We seem to be living through what some commentators are now calling the “Reluctant International Order.”

Let’s begin with what has not happened: neither the much-feared collapse nor the much-hoped-for revitalization of what often is called the rules-based international order (we’ll use the acronym “RBIO”). Which means that neither the 1930s nor the 1990s have returned.

The international order that the United States and its allies created and maintained after 1945 delivered benefits for decades—benefits that were admittedly partial and often uneven but nonetheless real. Embedded within the RBIO are norms, such as non-aggression toward other countries and respect for human rights, that are laudable ideals. And at its core are multilateral institutions, including the United Nations (UN), World Bank, and World Health Organization (WHO), which were designed to contain conflict, assist with economic development, anticipate and then manage crises of various kinds, and provide some governance in an otherwise anarchic world. The whole order is premised on the notion that international cooperation, combined with the open exchange of ideas and goods, will lead to a better and more peaceful world.

Yet there has long been dissatisfaction with the RBIO. Today, as before, many countries are unhappy with the RBIO and seek to upend or reform it. China and Russia, the two most powerful and vocal of these states, have remained steadfast in their opposition to at least parts of this order, although it also has become clear that their ends are not identical. A decade ago, both began to join with North Korea and Iran to form a grouping that was labeled an “axis of aggressors” because of widespread concern about those countries coordinating to directly challenge the West and the international order, militarily and otherwise. Numerous other countries, often middle and emerging powers in the so-called Global South have sought, at a minimum, to modify the RBIO. These states—with India and Brazil the most prominent examples—have accused the RBIO of being unrepresentative and its defenders of being hypocritical because of their selective application of the order’s underpinning norms. Even the core group of democratic nations that historically defended the order, including the United States, often have acted against the RBIO when it suited their interests.

Resilient rules

Despite all this, the various challenges to the RBIO have never been powerful enough to destroy it. Neither the axis of aggressors nor the partnership between China and Russia ever amounted to real military alliances, reflecting weak rather than strong bonds among them. These revisionist states have acted in disjointed fashion, as a result of their divergent interests, and never staged a coordinated attempt to directly confront the West. Partly for that reason, there has been no global war and thus no wholesale shock that reset the global governance system, as occurred after World War II.

Russia emerged from its war against Ukraine (which ended in a negotiated peace in 2026) far weaker than it was when the conflict began, and it has yet to sufficiently recover to mount another similar challenge westward in Europe. China has made no overt move to seize control of Taiwan either. Evidently, Chinese President Xi Jinping has decided he does not want to gamble his country’s future in a confrontation with the United States, which after all remains a great economic and military power with a formidable nuclear deterrent. (The United States’ increased investment in defense of the Western Pacific also appears to have influenced Xi’s calculations.) It does not help China that Russia is a much-debilitated junior partner.

The case of Taiwan is important for another reason. It underscores that, so far, China and the United States have decided that coexistence is the preferable direction for their relationship, which has prevented the international system from collapsing altogether. Their rivalry has been channeled through other pathways short of war, including diplomatic efforts to curry favor abroad and support for various minilateral and multilateral institutions. And they’ve found, more than occasionally, that their interests actually intersect. In the realm of nuclear nonproliferation, for example, both China and the United States have continued working in tandem to prevent Iran from developing a nuclear weapon, albeit by utilizing very different mechanisms and forms of leverage.

But while the RBIO has not collapsed—meaning there has been no repeat of the era between World War I and World War II—it also has not been revitalized. There has been no return to a triumphalist end of history, no 1990s-style heyday wherein major and middle powers mostly work in concordance with one another toward peaceful and prosperous coexistence within what they perceive as a benign set of global norms and institutions. Hence the increasing references to a “Reluctant International Order,” if meant in jest.

What has happened instead has been an evolution rather than a revolution, characterized more by experimentation and incrementalism than by some jarring disruption. This has occurred because the world’s problems demand coordinated responses even for countries reluctant to do so and because those countries recognize that the opportunity costs of not engaging are so high.

Today, the outward institutional trappings of the RBIO remain in place. The UN continues its work as before, partially because China does not want to destroy it. (The UN’s embrace of state sovereignty, for example, appeals to China’s interests.) Global trade is still growing, despite the tariff wars of the mid-to-late 2020s, owing in part to technological developments that have continued to lower the cost of trade. And the norms underpinning the RBIO haven’t disappeared, either, since many around the world—national and sub-national governments, civil-society and non-profit organizations, grassroots groups and ordinary citizens—want to preserve them and continue to see value in cooperative approaches to transnational problems.

Trading places

Consider trade. More than a decade ago, many nations began curtailing their exposure to global trade flows out of justifiable concern that trade was having detrimental impacts on their security, economies, and societies. Yet despite extensive anti-globalization rhetoric and policies (with the tariff wars the best example), the prevailing perception is that the benefits of trade continue to outweigh the costs. China and the United States, for instance, still have one of the largest bilateral trade relationships of any two countries in the world, despite their now lengthy history of trade disputes, including tariffs and a range of trade restrictions in sensitive technologies.

The leaders of many countries have realized that they have a compelling interest in remaining engaged in trade and talks to increase trade. This has resulted in the creation, maintenance, or expansion of a number of regional free-trade agreements. Several of these efforts have proven quite successful, perhaps best illustrated by the African Continental Free Trade Area (AfCFTA). Over the past fifteen years, African states have joined with the African Union to extend and deepen AfCFTA and, in so doing, to realize several of its longer-term objectives such as the reduction of intra-continental tariffs and loosening of visa restrictions. The case of AfCFTA and others like it—for instance, strengthened trade agreements between the Gulf Cooperation Council countries and Asian countries—underscore that while global trade volume has grown since the mid-2020s, the geography of trade continues to shift.

Nonstate actors have been critical to the maintenance of this system. Multinational companies around the world have made their support for trade well-known, which has helped compel countries to continue defining their interests in pro-trade terms.

Bioweapon-inspired cooperation

Nothing underscored both the value of cooperation and the powers (positive and negative) of nonstate actors like the 2029 bioweapon scare.

That year, a shadowy, transnational doomsday cult—akin to Aum Shinrikyo, which terrorized Japan with sarin gas in 1995—used an artificial intelligence (AI)-enhanced synthetic biology (“SynBio”) process to develop a deadlier and more easily transmissible strain of smallpox. Because the cult’s plot to release it was foiled at the last minute, owing to frantic collaboration among national intelligence services and INTERPOL, the world narrowly avoided a pandemic that would have been far worse than the COVID-19 pandemic.

Horrified by this close call, most of the world’s governments—including the United States, China, and Russia—grasped for solutions. Since pandemics do not respect boundaries, world leaders recognized that there was an upper limit on how much they could protect their people on their own. In response, they quickly sought to deepen collaboration with one another and with leading multilateral public-health institutions such as the WHO, multinational corporations including companies that develop major AI platforms, and the global scientific community that sets standards and runs laboratories. The mandate was clear: Determine how to monitor and regulate the biotechnology space more effectively—or risk perhaps hundreds of millions dying in an AI-enhanced, SynBio-caused (“AIxBio”) pandemic along the lines that the doomsday cult had almost willed into existence.

One of this new coalition’s proposals, which was quickly funded and implemented, was to create an institution similar to the International Atomic Energy Agency but focused on AIxBio. Its formal membership is based on a novel multi-stakeholder model that includes national governments, big-tech firms, and scientific organizations.

The smallpox bioweapon scare vividly illustrated, even for adversarial major powers, the intolerably high risk of countries not engaging with one another through international institutions and on international norms to address the world’s greatest challenges—and on the enduring relevance and value of the RBIO ninety years after its creation. Halting progress in some areas of the international system doesn’t qualify as a renaissance. But even a Reluctant International Order is better than retreat.

China ascendant

Welcome to 2035, and a world whose center of gravity has shifted decisively toward Beijing.

China now has more influence on world affairs than does any other country, including the United States. It is ascendant on every metric of power—diplomatic, military, economic, and technological. That power has enabled Beijing to begin remaking the world to its liking. It has been busy recasting the global system, including multilateral institutions such as the United Nations (UN), in its preferred image, and is in the process of dismantling the democratic norms that have animated the international order since 1945.

China has arrived at this ascendant position in part because the United States has not done much to stand in its way. At the turn of this century, such an outcome would have been impossible to imagine. Even a decade ago, when Washington’s commitment to the rules-based international order showed initial signs of wavering, such an outcome would have been difficult to forecast. But US leaders have been consumed by the challenges of dealing with the country’s weakening economy, fraying societal bonds, and unrelentingly harsh domestic politics. These dynamics have eliminated the longstanding bipartisan consensus around defending the global order that the United States, along with its many allies and partners, had built and maintained for decades.

The result has been that the United States no longer has an unwavering commitment to its allies and partners, the core multilateral institutions at the center of the order that it built, and the norms and principles that it stood behind all those years. Instead, the United States has definitively turned inward. By nearly every metric, the United States remains a major power. But it no longer has much interest in maintaining its leadership role in the world. It has ceded that ground to others, especially to China.

Taiwan-style tipping points

The impact of the US withdrawal from global affairs is evident in various flashpoints around the world, including in Taiwan. While the prevailing fear in the 2010s and early 2020s was of a devastating clash between the United States and China over the island, the Taiwan issue was resolved without firing a shot. China subordinated Taiwan by applying intense pressure—via sabotage, cyber operations, propaganda campaigns, overt and covert influence campaigns within Taiwan, espionage, murky hybrid operations on the island and around its waters—to influence Taiwanese domestic politics toward a cross-Straits settlement with the People’s Republic of China. Its efforts to shape domestic politics within Taiwan succeeded. In 2030, Taiwan’s government agreed to (among other things) such a settlement, which included ceasing defense cooperation with foreign governments and reducing Taiwan’s direct engagement with foreign officials. The United States, which did not respond to China’s various forms of pressure against Taiwan, ultimately could not prevent the cross-Straits agreement, given the Taiwanese government’s support for it. None of China’s individual provocations were dramatic enough for an already hesitant United States to risk a direct military confrontation with China over it.

What happened in Taiwan has also played out on a global scale. There was no one exceptional event or even set of events that triggered a transformation of the international system—no explosion that China engineered to blow up the global order. Thus, there never was a single focal point for China’s rivals—especially the United States—to rally their citizens around and respond to in a coordinated and decisive way. Rather, there has been a gradual and now inexorable shift away from the US-led order and toward a Chinese-led one. This shift resulted from decisions made by both US and Chinese leaders: inward-looking in the case of the former, outward-looking in the case of the latter. It was, in short, a slow-motion fait accompli.

China has positioned itself as the world’s inevitable leader, seizing on its strengths to curry favor with other countries and on the opportunity presented by the United States’ implosion to diminish its rival. Take the performance of the two countries’ economies as an example. A decade ago, the economic outlook was bleaker for China than it was for the United States. But over the past ten years, that script has flipped. In the mid-2020s, Chinese President Xi Jinping managed to right China’s sputtering economy, stabilizing it and returning it to steady growth (if less spectacular growth than during the country’s long boom). He did so by successfully transitioning the country to what many are now calling “an innovation system with Chinese characteristics,” striking a balance of rewarding innovation and entrepreneurialism while maintaining the Chinese Communist Party’s control over the nation’s political apparatus.

All this has enabled China to return to selling itself and its economic rebound on the one hand, plus the United States’ economic stagnation (due to dysfunctional politics) on the other, as a compelling reason why the United States is both unreliable and a poor economic model for the rest of the world, and by extension why China represents a better model. That message has even more resonance around the world now than it did ten years ago.

Because of the pull of China’s growing economy, which remains integrated within global trade flows, plus the relative weakness of the US economy, foreign governments have become more willing to sign onto China’s various economic diplomacy efforts, such as the Global Development Initiative. Beijing now hosts a robust schedule of international economic forums that position it at the center of the economic universe, and thus as the destination for intergovernmental bargaining and influence on issues such as trade and investment. To outside observers, the economic pull of Beijing has eclipsed that of Washington and, for that matter, of Brussels, London, Paris, Seoul, or Tokyo.

As a result, China’s influence has grown in many parts of the world. In the Global South, lower- and middle-income countries in Africa, Latin America, and South Asia (where China remains engaged with India in a long-running contest for influence) have been even more eager to trade with and receive investment from China than they were in the 2020s. This outcome is the product of years (in some cases decades) of aggressive economic diplomacy by China and disinterest from the US government. It also stemmed from reform to China’s overseas lending and investment vehicles, which China recognized needed fine-tuning to make them more palatable abroad and deflect rising criticism of the unsustainable debt and other problems they engendered. Thus far, these policy shifts appear to have worked. China has also become the world’s largest trading nation for both imports and exports, ahead of the United States. Shifting trade in goods also has accelerated movement away from trade denominated in US dollars and toward trade denominated in renminbi—a sure sign of the relative strengths of the two economies.

For China, the advantages are enormous: more wealth at home and influence abroad. China’s diplomatic ties with major materials exporters such as Brazil (soybeans and other crops), the Gulf Cooperation Council states (oil), and the Democratic Republic of the Congo (critical minerals such as cobalt) have increased. For the United States, the reverse has been true. For the average American, wages and incomes have stagnated, and imported goods are more expensive. Abroad, US goods are less competitive in foreign markets than Chinese goods are.

Allies hedging

The United States still has numerous allies and partners, but the bonds that held them together are weaker now than they were in the past owing to the rise of China and the self-induced retreat of the United States.

In Asia, nervous US allies including Japan, South Korea, Australia, and the Philippines are hedging between China and the United States in more ways than they were in the 2020s. But now, having witnessed what happened in Taiwan, these countries are even more concerned about the security guarantee that the United States has provided to them. Both Japan and South Korea have admitted that they are exploring options to acquire nuclear weapons in order to deter China and North Korea, and most analysts expect both to become nuclear-weapons states by 2040. Various forms of US-led minilateral diplomacy in the Asia-Pacific such as the Quad have died slow deaths, the result of both US indifference and Asian countries’ doubts about the value of these efforts to counter and contain a rising China. India, for example, believes it can achieve more through its own bilateral actions to check Chinese influence than it can by working through such forums.

Also contributing to the deep unease of US allies is the growth of China’s military in size and capabilities, and its increasing forward presence in the Asia-Pacific and elsewhere around the world. China has been steadily increasing its number of basing agreements globally to the point where, just as US intelligence services feared a decade ago, China now has bases in Africa, South Asia, the Caribbean, the Middle East, and the islands in the Pacific and Indian oceans.

A similar story is playing out in Europe, albeit focused on a different threat. There, European NATO members are arming themselves rapidly, spending well above the 2 percent of gross domestic product threshold for defense spending that Washington had been requesting for decades. Although that amounts to a victory of sorts for US foreign policy, it really is a defeat because the spending is an expression of serious doubt about the United States’ commitment to NATO and the Alliance’s Article 5 collective-defense pledge should war come again to the continent. Although the previous war in Ukraine ended in a negotiated stalemate, most European observers believe that it is only a matter of time before a rearmed and resurgent Russia decides to test NATO, likely through a long-feared invasion focused on the Baltics.

In this climate, many are pinning their hopes on Beijing rather than Washington, believing that China will restrain Russia, its junior partner, from going on the offensive in Europe. Partly for this reason, and the fact that China is now Europe’s largest trading partner (having surpassed the United States in the early 2030s), European leaders have muted their criticisms of China’s record on human rights, including privacy rights, and have eased China’s access to the common market despite ongoing concerns about dumping, intellectual-property theft, and other such practices.

Institutional shifts

In part because China never has been interested in tearing down the entire international system and replacing it with something else entirely, few Western leaders have paid much attention to how China has been busy recasting these institutions in its image. And indeed, the UN system and the Bretton Woods institutions (the World Bank and International Monetary Fund) continue, with China maintaining its representation in them as it has for decades.

But there have been important changes within the UN system. Recently, for instance, China has been far more successful than it was in previous decades at getting its appointees installed within various technical standard-setting bodies such as the UN’s International Telecommunication Union—a function of China’s unrelenting focus on these specialized bureaucracies plus its rising economic, scientific, and technological prowess.

Or consider the UN’s historic role in maintaining peace and security. China was long willing to support UN peacekeeping operations around the world by providing troops and funds, at least to an extent. Yet with the United States and its democratic allies among the UN Security Council’s five permanent members—France and the United Kingdom—now far less willing to spearhead these operations, China has yet to pick up the leadership mantle. China remains willing to contribute to peacekeeping but generally not to lead large-scale efforts, whether in terms of the Security Council’s broad peacekeeping mandates or the financial, human, and technical resources necessary to build them. The result has been fewer such operations and weaker ones as well, leaving more of the world’s conflicts to devolve and even in some cases metastasize.

Perhaps the most worrisome change has to do with the norms and principles that underpin the global system—both within the UN and more generally as well. Although China expresses support for some of the system’s principles—for example, the UN’s emphasis on state sovereignty and territorial integrity—it manifestly does not support others and especially those based upon democratic values. As a result, serious emphasis on human rights and related norms, as well as global oversight of them, has collapsed within multilateral institutions, including the UN.

These developments are having real, on-the-ground impact. China has successfully built a more robust surveillance apparatus globally that includes more sophisticated cyber-espionage operations capable of tracking the communications of ordinary people around the world, along with a major expansion of China’s overseas police stations. The Chinese government claims that these stations are designed only to service the Chinese diaspora, but their true purpose seems to be to keep track of and pressure both the diaspora and China’s external critics as well.

The erosion of global human-rights enforcement speaks to a broader trend: The so-called democratic recession that has been plaguing the world since the early 2000s is now bordering on a depression. With China ascendant, the world’s autocratic leaders are acting with greater confidence at home and abroad. Midway through the 2030s, the long-running contest between democratic and authoritarian systems appears to be resolving—in favor of the latter.

Climate of fear

In 2035, the Earth’s climate is hotter and less stable than it’s ever been in human history. This instability is causing people to turn on one another—and politics to become more abrasive than it was a decade ago. Climate-driven turbulence is making nearly every other problem—be it geopolitical or conflict-related—harder to solve. These challenges transcend national boundaries and afflict every country, whether rich or poor, to the north or south. Numerous local conflicts and one tense regional standoff (in South Asia) have been fueled by the consequences of a changing climate.

These trends have produced some positive outcomes as well, but in the 2030s it’s difficult to foresee a bright future. As a result, many are looking to radical solutions to get humanity out of its predicament.

Ecological crisis

There is almost no good news to be found in the natural world. A range of climate-induced problems are all worse than they were a decade ago. Observable, on-the-ground environmental changes have consistently outpaced scientists’ predictions from twenty or even ten years ago.

The data indicates that several climate tipping points—including the drying of the Amazon rainforest, the melting of the West Antarctic ice sheet, and the ongoing slowing of the Atlantic Meridional Overturning Circulation system, which regulates temperatures and precipitation in Europe, Africa, and elsewhere—are nearer than we previously thought. Scientists’ modeling, based on real-world data in the 2030s, now points even more strongly toward one or more of these or other critical systems collapsing in the next few decades. When these systems begin to collapse, there will be no practical way back from truly horrific ecological disasters.

Even short of such disasters, the world today lacks the capacity to adjust quickly enough to the climate impacts that are here already. Chronic heat is a problem nearly everywhere in the world, with lengthy heat waves now routine on every continent—including on Antarctica, where record highs, well above freezing, are increasingly common. Most frightening is the rapid increase in “wet bulb” days in some regions near the equator, where high heat plus high humidity make it impossible for humans to survive for long outdoors. Massive storms—flash flooding in the wake of record-breaking torrential rainfall, for example, or hurricanes and cyclones that strike well inland—are commonplace now as well. Several coastal cities around the world, including Bangkok, Miami, and Jakarta, regularly flood, even more frequently than they did a decade ago. In 2029, China’s low-lying Pearl River Delta was hit by a massive typhoon that crippled the region’s manufacturing output for months, disrupting global supply chains.

These developments have numerous second- and third-order consequences. The world’s forests, for example, have become tinderboxes, which means that firefighting has become a significant part of national-security planning for an ever-lengthening list of the world’s governments.

(Geo)political upheaval

Politics and geopolitics are changing with the natural world, largely for the worse. Climate change has weakened the world’s democracies, which already had suffered through decades of decline. From Spain and Greece to South Africa, Nepal, and Panama, storms and suffocating heat waves have disrupted elections by making it harder for some voters to cast their ballots. Such events have also affected who participates in elections in the first place, given how they have influenced the outflows and inflows of people through cities and countries, and the voter registration and verification problems that have followed.

Many years ago, when climate-driven migration was first hypothesized in the scientific literature, few paid attention. Not so today, as fears about the consequences of so-called climate migrants or climate refugees have generated real policies involving real people. These fears often have been based on lurid imagination about crime and chaos rather than on facts.

In 2035, there are an estimated 150 million migrants worldwide who are either temporarily displaced or permanently on the move because of climate impacts, although no one knows the true number because migration is such a complex, multifaceted phenomenon. Yet everyone agrees that more migrants are coming.

Most climate-driven migration remains within national boundaries, often coming in the form of rural-to-urban migration into cities such as Bogotá and Karachi. Or it is intra-regional migration within areas such as Sub-Saharan Africa, the Middle East and North Africa, and South Asia. Such trends are also occurring within wealthy regions and countries such as the United States.

These migration patterns have reminded many of the Syrian crisis of the early 2010s, which was preceded by drought-stressed migrants fleeing the countryside for the cities. Although that internal migration likely was only an indirect cause of the subsequent uprising against the Assad regime—which lasted well over a decade and ultimately resulted in the regime’s overthrow—many now see repetition of that past. They point to how climate-fueled internal displacements have increased recruitment into armed nonstate groups. They note the increasing number of communities around the world where climate impacts have exacerbated preexisting vulnerabilities to cause local conflicts, too many of which have started to become deadly. And they cite the increasing number of failed and failing states resulting in part from climate-driven disasters such as intense, multi-year drought.

Governments have responded through pull-up-the-drawbridges measures—and not just in Europe or the United States, where one might expect that to happen, but around the world, including within the Global South. Border walls designed to keep migrants out were already widespread ten years ago. They are everywhere now.

India, for example, has clamped down on its borders with Bangladesh and Myanmar, heavily fortifying them with more personnel, fencing, sophisticated electronic-surveillance systems, and autonomous enforcement technologies such as drones. Numerous critics, both within India and outside of it, have voiced objections, but the Indian government insists that it is only doing what its voters want. This has led to a volatile diplomatic situation in South Asia. Pakistan, which long ago patched up its relations with Bangladesh, has joined Bangladesh and Myanmar in loudly and publicly pushing India to reverse its border policies, to no avail. The region is not at war, nor is there an immediate risk of one. But it is at a knife’s edge, with climate-driven migration having become one of the biggest sources of friction.

Turbulence-induced transformations

There are some bright spots in this otherwise discouraging picture. Renewables are now firmly established as the world’s dominant sources of energy, reflecting both their market competitiveness and the rapid electrification of the global economy. And nuclear energy has begun making a comeback in much of the world, with the latest reactor designs now seen as safely providing reliable, zero-emission electricity. (New power plants, however, remain rare.) In addition, green-technology markets are expanding rapidly across many industries such as food, water, energy, transportation, and consumer goods. Nearly a third of the world’s stock of cars and trucks is fully electric.

The challenge lies in the rate at which decarbonization is occurring—a pace that simply has not been fast enough. Although global greenhouse-gas emissions finally peaked in the late 2020s, humankind nonetheless surpassed the carbon budget required to stay within the target of keeping global warming above pre-industrial levels to 1.5 degrees Celsius, as laid out in the 2015 Paris Agreement. Scientists had prioritized staying below this target to limit the worst impacts of climate change.

One of the factors contributing to this challenge is that much of the world’s legacy energy infrastructure remains in place. Decommissioning such infrastructure, particularly coal and natural-gas plants, is expensive. Too many of the world’s high-carbon plants still exist, especially coal-fired power plants concentrated in China.

Behind all this is global energy consumption, which has continued to rise fast, consistently outstripping renewables’ capacity to fully meet the demand. (A challenge here is that interest rates for borrowing in riskier storm-affected regions have increased, constraining the expansion of capital-intensive renewables such as offshore wind farms.) There are many drivers of this increasing demand, including technological developments such as advances in artificial intelligence (AI). As was feared in the mid-2020s, the infrastructure necessary to support AI’s growth—in the form of computing power and data centers—boosted global energy demand. Although tech companies have greened their models, the problem is about scale: AI’s ubiquity translates into a massive source of energy usage. Some tech companies have become players in the nuclear-energy space for this reason.

As they navigate this turbulence, and as already foreshadowed in the 2020s, both right- and left-wing populist governments are no longer reflexively hostile to policies to combat climate change like they once were. There is renewed interest in accelerating decarbonization efforts, including revitalizing the moribund United Nations-led process for mitigating climate change.

Another response to the unsustainable status quo has been the embrace of more radical solutions. Geoengineering—and specifically solar radiation modification (SRM), which refers to atmospheric and even space-based efforts to reduce warming by reflecting sunlight back into space—has rapidly gone from a scientific curiosity to a subject of serious research. Although SRM engineering is complex, compared with other approaches it is straightforward and inexpensive. As a result, already in 2035 both state and nonstate actors are experimenting with SRM in the atmosphere. There is great fear that the implementation of these new approaches will be a nightmare, as for-profit companies, tech billionaires, and rogue states initiate their own unilateral solutions, while countries fight over the expected (but dimly understood) impacts on their regions. Although the scientific community is warning that SRM’s consequences aren’t yet sufficiently understood, there is a growing sentiment among many (though not all) politicians that it should be tried at scale. But everyone is asking whether effective geoengineering is even possible without some sort of global governance and regulatory regime.

Meanwhile, the clock is ticking and the climate is changing. Humankind’s efforts to master the natural world during the post-industrial era produced the climate crisis. Now, in 2035, the Earth increasingly seems the master of human affairs rather than the other way around.

About the authors

Peter Engelke, Senior Fellow, GeoStrategy Initiative

Greg Lindsay, Nonresident Senior Fellow, GeoStrategy Initiative

Lindsay is a nonresident senior fellow with the Scowcroft Center for Strategy and Security’s GeoStrategy Initiative, as well as a nonresident senior fellow of the Arizona State University Threatcasting Lab and the MIT Future Urban Collectives Lab.

Paul Saffo, Nonresident Senior Fellow, GeoStrategy Initiative

Saffo is a nonresident senior fellow with the Scowcroft Center for Strategy and Security’s GeoStrategy Initiative and co-editor of Futures Research Methodologies, which will be released later this year.

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Securing energy independence: The US path to resilient enriched uranium supply chain

Mikael Pir-Budagyan — Tue, 11 Feb 2025 20:48:44 +0000

Western partners have leveraged significant economic pressure against Russia in response to its invasion of Ukraine. While energy-related sanctions are in place, energy security concerns have restricted how far Western governments, including the United States, are willing and able to go. On January 20, President Trump declared a national energy emergency, stressing the need for a “reliable, diversified, and affordable supply of energy to drive [US] manufacturing, transportation, agriculture, and defense industries.”

One critical challenge for the United States in the energy security space is the sourcing of enriched uranium that fuels nuclear reactors across the country, vital for the energy transition away from fossil fuels. The United States has consistently depended on Russia for enrichment services. At the same time, the US enrichment capacity, once thriving, has dwindled, giving way to foreign imports. Nearly seventy-three percent of enriched uranium in 2023 originated abroad. Such reliance on a handful of foreign sources, and especially adversarial countries, introduces severe supply vulnerabilities. With the global demand for enriched uranium expected to rise, the United States should regain its status as a large uranium enricher capable of satisfying its domestic demand.

Russia has a consistent track record of weaponizing energy dependence to coerce other countries. Approximately twenty-seven percent of the enriched uranium used in the United States comes from Russia, which is responsible for around forty-four percent of global enrichment capacity. Although the Biden administration banned Russian uranium imports by signing the H.R.1042, Prohibiting Russian Uranium Imports Act into law, effective August 2024, the Act permits US firms to procure nuclear fuel from Russia’s state-run nuclear energy firm, Rosatom, under a waiver program until alternative suppliers are secured. These waivers, however, can only be granted until 2028 and are designed to give US energy providers sufficient time to adjust to the new conditions.

In response, in November 2024, Moscow announced “tit-for-tat” restrictions on uranium exports to the United States. According to the new rules, exemptions might be made under one-off licenses issued by the Russian Federal Service for Technical and Export Control. While it is unclear whether such licenses will be granted, this move yet again showcases the risks of relying on external fuel sources.

The pursuit of indigenous enrichment capacity is not motivated by market dynamics or elevated prices. The current price of enrichment services (measured in separative work units) is significantly lower than at any point between 2006 and 2019. Instead, the drive stems from vulnerabilities associated with overreliance on a handful of suppliers. Such concentration of supply may become vulnerable to disruptions caused by malign actors or market shocks.

Building resilient enriched uranium supply chains is a critical policy to prevent future weaponization and disruptions by malign actors. It requires more than simply halting imports from Russia. The United States should pursue a strategic policy to meet its own nuclear fuel needs while helping establish resilient and transparent supply chains to other nations. The Sapporo 5—a coalition of like-minded countries comprising Canada, Japan, France, the United Kingdom, and the United States—has pledged to collaborate on securing a reliable nuclear fuel supply chain. Achieving this objective will require a sustained increase in allied financing across all stages of the fuel cycle, including uranium enrichment.

A growing bipartisan consensus in the United States supports strengthening domestic uranium enrichment programs, even if allies and partners temporarily fill the gaps. Until recently, the United States lacked domestically owned uranium enrichment facilities. To address this, around $3.4 billion has been mobilized to jumpstart domestic enrichment efforts. These funds will benefit domestic enrichers and support firms at other fuel cycle stages, including mining.

The goal of building domestic uranium enrichment capacity to safeguard from disruptions should remain a priority. Despite the optimistic outlook, the jury is still out on whether these efforts are sustained in the long run. Such investments cannot have immediate results and require a strategic vision. Additionally, the nuclear fuel cycle, by design, is hard to sustain competitively without close public-private collaboration. Public-private partnerships and long-term demand signals to service providers are essential to building a resilient enriched uranium supply chain.

Mikael Pir-Budagyan was a Young Global Professional with the Economic Statecraft Initiative of the Atlantic Council’s GeoEconomics Center.

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Ukraine can play a key role in Europe’s future energy architecture

Nataliya Katser-Buchkovska — Thu, 06 Feb 2025 21:15:31 +0000

For the past three years, the full-scale Russian invasion of Ukraine has served to highlight the impact of energy exports and infrastructure on geopolitics. While Europe has responded to the invasion by seeking to radically reduce its energy dependence on Russia, Moscow remains a significant supplier and continues to demonstrate a readiness to leverage this status for political gain.

Russia’s invasion has highlighted the need for Europe to pursue greater energy flexibility and connectivity. With sufficient support from the country’s European partners, Ukraine can potentially make an important contribution toward achieving these goals, especially using the three Three Seas Initiative, a political, infrastructural, and commercially driven platform for improving connectivity between the Baltic, Adriatic, and Black seas.

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Europe’s energy ecosystem is currently undergoing major changes. At the start of 2025, decades of Russian gas transit through Ukraine came to an end after Kyiv chose not to renew an expiring five-year agreement with the Kremlin’s flagship energy company Gazprom. The loss of gas transit via Ukraine has had a negative impact on the Russian economy at a time when Moscow’s gas export volumes were already far below pre-war levels.

So far, the ending of gas deliveries through Ukraine’s pipeline system has not led to dramatic rises in gas prices for European consumers. Nevertheless, Kyiv’s decision to end transit has caused considerable tension with some of the country’s neighbours.

Slovakia and Hungary rely heavily on Russia for gas supplies and have voiced their displeasure over Ukraine’s stance. Both countries were given ample warning of the impending end of transit deliveries but chose not to act. In contrast, Austrian energy giant OMV used the past two years to prepare for potential supply disruptions and has therefore proved far more resilient, despite being even more dependent on Russian gas at the start of the invasion.

Since 2022, Ukraine’s efforts to limit Russian influence in the energy sphere have continued despite wartime conditions in the country. This has included decoupling the national power grid from the Russian system and joining Europe’s ENTSO-E network.

This historic move has given Ukraine more options in the energy sector and has helped the country to address the challenges created by frequent Russian attacks on the Ukrainian power grid. Ukraine has benefited from enhanced connectivity to the European network, making it possible to import more electricity from the country’s EU neighbours, while also exporting in the opposite direction during periods of power surpluses.

Kyiv has also succeeded in accessing new sources of energy. Following an intensive Russian bombing campaign targeting Ukrainian power stations in spring 2024, Ukraine was able to receive LNG from the United States for the first time via Greece. A number of European countries including Greece, Bulgaria, Romania, Hungary, Moldova, Slovakia, and Ukraine are now looking to develop a vertical gas corridor to facilitate bidirectional gas flows between Greece’s LNG terminal and Ukraine.

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While there are positive signs that Europe is responding constructively to recent developments in the energy sector, it is clear that more infrastructure innovations, flexibility, and connectivity are needed in order to prepare for possible future crises and address the rise of new energy sources. For example, the advance of green energy requires the right mix of baseload supply options to avoid imbalances and blackouts. This will require a more integrated approach to European energy security and efficiency.

In the coming years, Ukraine can play a key role in efforts to improve European energy security and connectivity. The country is thought to have the second highest gas reserves in Europe. It also has the continent’s largest gas storage facilities and an extensive pipeline system for oil and gas transit. In order to make the most of this potential, Ukraine should look to establish multifunctional energy production and transportation hubs capable of integrating with global LNG, hydrogen, and green ammonia infrastructure.

Improving the connectivity between Ukraine’s energy infrastructure and the European Union, United Kingdom, and United States would strengthen overall energy security and make the European energy system considerably more robust. Needless to say, this requires security and an end to hostilities in Ukraine. Many of the advantages a more integrated Ukraine can offer would depend on the secure passage of ships to the country’s Black Sea ports, for example, while Russia has repeatedly targeted Ukrainian gas storage facilities in the west of the country.

For now, the ongoing Russian invasion places severe limitations on Ukraine’s ability to contribute to improved European energy flexibility and connectivity. However, the country’s huge potential should be taken into consideration as European leaders prepare for the postwar period and explore options to strengthen the continent’s long-term energy resilience.

Nataliya Katser-Buchkovska is the founder of the Green Resilience Facility and a former member of the Ukrainian Parliament (2014-19).

Flipping the switch

The timely diversification of oil and electricity supply routes also allowed the Baltics to stop importing these energy sources from Russia. In terms of electricity, the Baltic states use the interconnectors Estlink 1 and Estlink 2 between Estonia and Finland, Nordbalt between Lithuania and Sweden, and LitPol Link between Lithuania and Poland for power exchanges with Europe. However, the Baltic states’ early market-level integration with their EU neighbors did not mean the immediate end of Russia’s involvement in the their electricity sectors on the system control level.

These are the last days that the Baltic states’ power grids remain a part of the Russian-controlled Integrated Power System/United Power System (IPS/UPS) grid. This effectively means that a dispatch in Moscow is still responsible for maintaining electric frequency stability in the Baltic states—bringing all the risks that such a dependency on Moscow entails. Ukraine and Moldova performed a test desynchronization from the IPS/UPS grid concurrently with the onset of Russia’s invasion of Ukraine in 2022, immediately asking for an emergency synchronization with the European grid, which was granted. Lithuania was aware of the potential need to perform an emergency synchronization, too, and thus had prepared its power grid to function in an isolated mode if needed. On February 8, Lithuania, Latvia, and Estonia will decouple from the Russian-controlled grid and conduct a joint isolated operation test before joining the European grid on February 9.

The planning for the Baltic synchronization with the European grid began as early as 2007, but—due to multiple project phases involving political, regulatory, and infrastructural components in Lithuania, Latvia, Estonia, and Poland—it has only now been finalized. The project was co-financed by the EU, which has allocated more than €1.2 billion from its Connecting Europe Facility. For the EU, the project is as important as it is for the Baltic states: only with Lithuania, Latvia, and Estonia connected to the European grid can the EU achieve its goal of a fully integrated European energy market, in which all uncontrolled third-party impacts on its member states are eliminated.

Securing critical infrastructure

Although Russia will no longer exert direct influence over the energy supply and system control of the Baltic states, Moscow may now focus on targeting their critical energy, communications, and data infrastructure. Since October 2023, at least eleven cables running under the Baltic Sea have been damaged. This includes the underwater Balticconnector gas pipeline between Estonia and Finland; communications cables linking Finland, Germany, Sweden, and Lithuania; and the Estlink 2 power cable between Estonia and Finland. A data cable between Latvia and Sweden has been damaged as recently as January 26. The Lithuanian government is responding with increased military involvement in protecting critical seaborne energy infrastructure under the Baltic Sea amid an attempted sabotage of the NordBalt power cable that connects it to Sweden.

The damage was caused by vessels dragging their anchors on the Baltic Sea’s seabed. Investigations into the circumstances of the damage are still ongoing, but the rapid increase in such incidents and the vessels involved—mostly Russia’s “shadow fleet” oil tankers—raise concerns that the damage was intentional. As a response, NATO has stepped up its presence in the Baltic Sea by launching a new military patrol mission called Baltic Sentry. This mission involves deploying frigates, maritime patrol aircraft, and naval drones to enhance the ability of littoral states to respond to destabilizing acts on their critical infrastructure. The Alliance has also established a Critical Undersea Infrastructure Network to enhance information-sharing and situational awareness and a dedicated Maritime Centre for the Security of Critical Undersea Infrastructure within NATO’s Maritime Command in Northwood, United Kingdom.

Crucial first steps have also been made to increase the protection level of the onshore LitPol Link interconnector between Lithuania and Poland, through which the Baltics are synchronizing with the European grid. Lithuania’s Public Security Service has taken over the protection of several LitPol Link sites from a private security company that had previously been assigned this role. The Baltic states and Poland, fully aware of Russia’s hybrid activities in the region, have also urged the EU to provide financial support for enhancing current security measures for the LitPol Link and other critical energy infrastructure in the region.

It’s a start, but more needs to be done, particularly in the case of Lithuania. With vital interconnectors—LitPol Link in energy and Rail Baltica in transport and military logistics—passing through the country, Lithuania is emerging as a crucial gateway connecting continental Europe to the Baltics, the Nordic region, and even the Arctic.

All these interconnections traverse the narrow land corridor between Lithuania and Poland, known as the Suwałki Gap. This notorious area borders Belarus to the east and Russia’s Kaliningrad exclave to the west.

Russia could attempt to isolate the Baltics from the rest of Europe by obstructing the Suwałki Gap from these territories. Thus, beyond the punctual tactics of strengthening the security of the LitPol Link and, later, the planned additional onshore electricity interconnector between Lithuania and Poland that is reportedly set to run along the Rail Baltica tracks, an approach of a comprehensive protection regime for this vulnerable border area is needed. An increased NATO military presence in Lithuania and regional measures, such as installing the Baltic Defense Line along the Baltic states’ borders with mainland Russia, its Kaliningrad region, and Belarus, are important steps toward a solution.

With the Baltic power systems soon operating in harmony with those in continental Europe, the regional security agenda shifts from concerns over the security of energy supply to the protection of critical energy infrastructure. The Baltic nations and their allies should further enhance their proactive efforts to deter sabotage and secure this strategically vital region.

Justina Budginaite-Froehly, PhD, is a nonresident senior fellow with the Atlantic Council’s Europe Center and Transatlantic Security Initiative in the Scowcroft Center for Strategy and Security.

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Surrounded by superpowers, Kazakhstan walks a geopolitical tightrope

Nargis Kassenova — Wed, 05 Feb 2025 14:00:00 +0000

Evolution of freedom

Evolution of prosperity

The path forward

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Evolution of freedom

The Freedom Index shows two important features of the institutional development process that Kazakhstan has followed in the last three decades. On the one hand, the overall positive trend reflects the goal, maintained throughout the period, to integrate into the global community both politically and economically in order to foster the young country’s security and prosperity. All the strategies the country has adopted over the past thirty years consistently reflect its aspiration to have an open competitive economy and be a respected international actor. The latter implied becoming a functional democracy and complying with international human rights norms. On the other hand, while the government’s commitment to economic liberalization has been fairly consistent and genuine, its record in the areas of good governance, democratization, and human rights could be characterized as patchy at best. The divergent paths of the three freedom subindexes underscore the difference in commitment.

Fluctuations observed in the Freedom Index can be explained by changes in circumstances and policies. Kazakhstan received a strong initial impulse toward liberalization thanks to the late Soviet perestroika reforms and the Washington Consensus. However, by the end of the 1990s, this impulse was subdued by the consolidation of an authoritarian regime under the country’s first president, Nursultan Nazarbayev. It was also challenged by the Asian financial crisis, which generated serious doubts about the benefits of unconstrained openness to financial and trade markets. In the early 2000s, oil revenues started to increase, and the government was clearly tempted to use the windfall to pursue interventionist and protectionist economic policies. Tensions between state-led development and free market orientations have been present ever since. Economic growth also allowed an enhancement of the social welfare system, which had been damaged by the economic crisis and neoliberal policies of the 1990s. Nazarbayev’s resignation in 2019 and comprehensive reforms laid out by president Kassym-Jomart Tokayev in the wake of the dramatic unrest and crackdown in January 2022 created a positive dynamic reflected in the upward trend of the Index.

Looking at the three freedom subindexes gives a more detailed view of developments in Kazakhstan. The economic subindex is the main contributor to the overall positive trajectory of the aggregate Index. It has been on the ascent and above the region’s average, with the exception of a sudden ten-point decrease in the 2000–04 period. Trade and investment freedom plummeted at that point due to the adoption of new legislation regulating investment, taxes, and environmental requirements. The government grew more assertive in its relations with foreign investors, introduced local content requirements, and renegotiated contracts. But the subindex quickly recovered, and since then has shown a very clear positive trend, which was helped by Kazakhstan’s accession to the World Trade Organization in 2015.

The relatively high score on women’s economic freedom is both a legacy of the Soviet modernization project and its emphasis on recruiting women into the labor force and a product of current circumstances. For many families, two incomes are needed to support a decent standard of living. A positive long-term consequence of the dramatic economic collapse of the late Soviet and early independence years is the high number of women entrepreneurs in Kazakhstan. At the time, many women quit their non-paying jobs and became shuttle traders, importing goods from China and Turkey and selling them in bazaars and small markets. This experience served as an incubator for women entrepreneurs in the country. The trend has been supported by the government and international donors, and nowadays, there is a relatively high share of female entrepreneurs running their own businesses.

The political subindex shows a sustained deterioration between 1999 and 2019, with a temporary improvement in 2006–10, and a steep rise since 2019. The relatively higher scores of the 1990s represent the ebbing of the liberalization wave started by Mikhail Gorbachev’s reforms in the mid-1980s. The super-presidential Constitution adopted in 1995 set Kazakhstan on the path of authoritarian consolidation. The trend is illustrated by the twenty-point fall in political rights of expression and association up until 2019. The situation with civil liberties during that period was better and more complex, as indicated by fluctuations on that component. The 2003, 2012, and 2016 dips are all linked to the adoption of new legislation (a 2003 law on extremism, a 2011 law on religious activities, and several legislative and legal amendments in 2016 targeting “extremism and terrorism”) which limited freedom of conscience in the name of security. However, unlike the almost linear deterioration of the political subindex, each dip was followed by a partial recovery, reflecting a certain degree of internalization of liberal values by the political elites.

The power transition in Kazakhstan, which started with Nazarbayev’s resignation in 2019 and ended with the “Bloody January” events in 2022, produced a critical juncture for the country. The first event did not change the balance of power— Nazarbayev, his family and associates remained in control, with Nazarbayev still designated “Leader of the Nation”—but it changed the mood in society. People felt that change was possible, and started demanding reforms. Tokayev and his team perceived and tried to respond to this growing demand. They developed policies around the concept of the “hearing state” and experimented with more open local elections. However, under the Nazarbayev/Tokayev duumvirate, the system—long used to a clear and rigid vertical of power—grew confused and ineffective. The citizens’ urge for change led to protests at the beginning of 2022 which, combined with what many observers see as an unsuccessful attempted coup by Nazarbayev loyalists, resulted in the “de-Nazarbayevization” of the system. Unexpectedly, President Tokayev transformed from an appointed successor into a reformist president. While the official goals of the political reforms he has been undertaking are democratization and liberalization, they seem to be primarily aimed at removing the excesses of the super-presidential political system and improving governance. The geopolitical context is a factor affecting the direction and depth of reforms. On the one hand, deepening relations with the West is even more important under the new circumstances, and therefore Western perceptions of the human rights situation in Kazakhstan matter. On the other, there are fears that political liberalization could destabilize and weaken the country, making it more vulnerable to external meddling.

The legal subindex reflects a very complex situation around the implementation of the rule of law in Kazakhstan. First, the improving quality and responsiveness of the bureaucratic apparatus is well captured by the data. The growing budget in the 2000s allowed the regime to invest in good governance, drawing on the understanding that the best way to reduce contestation and protests is to efficiently provide the population with public services through a well-functioning state. The focus has been on better training of civil servants and digitalization to improve efficiency and accountability (in line with the “hearing state” concept). Every public agency has social media accounts, and its performance assessment takes into account the public communication aspect.

Second, there is a clear lack of improvement— and even deterioration—in the judicial independence and effectiveness score. The subservience of the judicial branch to the president, introduced by the 1995 Constitution, and the systemic corruption, greatly hindered the development of the rule of law in Kazakhstan. Realizing that this reduces the country’s attractiveness to foreign investors, the government created a legal enclave, the Astana International Financial Center, in 2018. It features its own court and international arbitration center, providing a common law system and employing foreign judges. While this arrangement serves as a quick fix for investor-related issues, it makes the injustices facing the general citizenry even more apparent.

It is worth noting that President Tokayev initiated a judicial reform aimed at raising the qualifications of judges and legal personnel, “cleaning” the system of corruption, and improving processes and procedures. Over the next five years it will be possible to assess the implementation of that reform. One important positive development is the restoration of the Constitutional Court (the previous body was turned into a “toothless” Constitutional Council by the 1995 Constitution) and inviting highly professional and credible people to serve as judges.

Evolution of prosperity

Kazakhstan is a large exporter of crude oil, gold, iron ore, copper, aluminum, zinc, uranium, and other metals, bringing substantial revenues to the country. It also produces and sells high-quality durum wheat, an important commodity in international markets. Therefore, it is not surprising that its overall Prosperity Index score has been above the regional average. In addition, the government’s efforts to improve social welfare, drawing on the norms and experiences of the Soviet welfare state, also help Kazakhstan to score better in the education and minorities components of the Index.

Fluctuations of the inequality component show that economic growth does not necessarily translate into reductions in poverty and inequality, and that positive trends can be reversible. There are substantial spatial disparities in wealth and access to services between the regions and along the rural-urban divide. The two largest cities, Almaty and Astana, are better off, while the oil-producing regions of western Kazakhstan have both high income and high poverty rates and the agricultural and largely rural south ranks poorly on both counts. The government is trying to mend these regional inequalities by investing in infrastructure and changing budget allocations to incentivize regions to generate their own revenues through economic activities.

The education component of the Index places Kazakhstan within the best performers in the world. It can boast nearly universal enrollment in elementary and secondary education, and high enrollment in tertiary education. The scores, however, do not show the patchy quality of the education provided. The neoliberal reforms of the 1990s responsible for underfunding the sector and “streamlining” schools in rural areas, and the gradual dissipation of the Soviet education system, accompanied by the retirement of Soviet-trained teachers, resulted in growing inequality of access and decreasing quality of instruction in public schools. Standardized tests such as PISA show serious deficiencies in the education of Kazakhstani pupils compared to those of Western Europe or other Organisation for Economic Co-operation and Development (OECD) countries. During the Nazarbayev period, the government tried to improve education, which it viewed as a crucial component of economic growth and development, through internationalization and creation of “pockets of excellence,” most importantly the newly established Nazarbayev University and a cluster of Nazarbayev Intellectual Schools, attracting the most talented students with fully funded grants. Tokayev’s government has been working on improving the quality of public, and especially rural, education, by allocating more funding, raising the status and salary of teachers, and reforming teacher training institutions. It also promotes partnerships between established foreign universities and regional universities in Kazakhstan.

Kazakhstan’s health component has fluctuated above and below the regional average. A steep increase in life expectancy in the 2000s reflects the improvement of the socioeconomic situation and bigger investments in the healthcare system, which enabled Kazakhstan to achieve a substantial decline in infant and maternal mortality, approaching the OECD average. As with the rest of the region, Kazakhstan experienced a decline in life expectancy as a result of the COVID-19 pandemic. The stronger negative effect of the pandemic in Kazakhstan compared to the rest of the region might be the outcome of better and more honest statistics. The country’s government was very active in handling the healthcare crisis during the pandemic and carried out a mass vaccination campaign once vaccines became available. The national Healthy Nation project currently being implemented aims to increase life expectancy from the current seventy-five years to seventy-seven within five years.

Kazakhstan has scored high in the minorities component. Its Constitution outlaws any discrimination “on the grounds of origin, social, official, or property status, sex, race, nationality, language, attitude to religion, convictions, place of residence or any other circumstance.” Managing interethnic relations has been the biggest challenge. In the early days of independence, the country’s leadership crafted an approach carefully balancing the interests of its multiple ethnic groups (especially Russians) with the need to develop a nation state around the Kazakh identity. Representatives of different ethnic groups compose the Assembly of the People of Kazakhstan, a special political body, chaired by the president of the country. Five members of the Assembly are elected to the Senate.

Finally, Kazakhstan scores above the regional average in the environment component. It is not a big carbon emitter, but this is largely due to the country’s small population of 20 million people, dwarfed by its large neighbors in the broader Eurasia region. Kazakhstan’s carbon intensity, that is the amount of carbon dioxide emitted per unit of energy, is high (0.33 kg per kilowatt-hour) and exceeds those of China (0.26 kg/kWh) and India (0.28 kg/kWh). The government has an ambitious decarbonization program, aiming to reach net zero by 2060.

The path forward

Kazakhstan finds itself at an inflection point. The January 2022 events put a sudden end to the Nazarbayev era, and Russia’s full-scale invasion of Ukraine undermined the post-Soviet political and security order. The combined domestic and geopolitical shocks are causing concerns, fears, and anxieties about the present and the future. At the same time, they are creating space for change and new beginnings. Whether Kazakhstan can move toward more freedom and prosperity will be determined by choices made today and tomorrow, and shaped by the domestic dynamic of state-society relations and external incentives and pressures.

At present, Tokayev’s reform agenda points to further liberalization of the system. We can expect an improvement in the political subindex: modest improvements on the elections, political rights, and legislative constraints on the executive components; and more substantial improvements on the civil liberties component. The situation with religious freedoms might not improve, but will probably not deteriorate either, despite growing concerns about radical Islamism and terrorism. The legal subindex scores are likely to grow, particularly the judicial independence and effectiveness and bureaucracy and corruption components. There will also be improvement of prosperity scores due to active policies on women’s empowerment, inclusion of people with disabilities, and decarbonization efforts.

For the gradual liberalization agenda to work, on the domestic side, the state needs to maintain the will for reforms and capacity to implement them with a substantial degree of success, and society needs to be interested in reforms and exercise consistent pressure. If the relations between the two grow conflictual (fueled by inequalities and grievances), there is a risk that the reforms will be curtailed. There will be more clarity about the trajectory of Kazakhstan’s development by 2029, the year when president Tokayev’s single term comes to an end. It is important to keep in mind that there are anti-liberal as well as pro-liberal forces in Kazakhstan’s society. Growing social conservatism that accompanies Islamic revival could become a formidable challenge over the next ten years.

On the geopolitical side, the liberalization agenda needs to be incentivized and supported by the West. Such a partnership would be useful for both parties—but not easy for either. Kazakhstan wants deeper relations with the West in order to develop and not be overwhelmed by its giant neighbors, Russia and China. However, it needs to build those relationships gently, to avoid angering Moscow and annoying Beijing too much. For the United States, European countries, and others, the challenge is to engage in an effective manner, providing the right incentives. Unlike in the 1990s, the supremacy of the West is now being challenged, and new approaches and ways of dealing with countries like Kazakhstan are needed.

Taking into account internal and external factors, I can envisage three scenarios. The first, optimistic, scenario, “More freedom and prosperity,” hinges on the success of liberalization reforms and a benign external environment. Under this scenario, President Tokayev and his team are able to successfully implement some reforms, giving them more legitimacy, and Kazakhstani society keeps pushing for more liberalization. Tokayev ends his term in 2029, as defined by the Constitutional amendment, and there is a peaceful power transfer. Relations with the West are strong, Russia accepts the new situation, and China finds it useful for managing relations with Europe. Kazakhstan is not a liberal democracy, but it is on a promising path, gradually internalizing liberal values and norms.

The second scenario, “Prosperity at the expense of freedom,” implies limited reforms, skewed in favor of professional state and socioeconomic goals. The leadership decides that tightening control over society with the help of traditional and new (digital) surveillance means is a must, and there is no need to pay too much attention to what Western actors think and say on the matter. The aspiration is to be a functional authoritarian state, and that means accepting being a political and economic satellite of China, the new superpower.

The third scenario, “No freedom and no prosperity,” is a sad story of Kazakhstan imploding from internal tensions and/or destabilized from outside. The January 2022 events provided a glimpse of such destabilization. Transformation of a consolidated, personalized and corrupt authoritarian regime into a softer and better governed one is a way to prevent conflicts and improve the development trajectory of the country, but as with all modernizations, it can be unsettling and pregnant with risks. Russia, unhappy with Kazakhstan “drifting away,” decides to “bring it to heel” using hybrid war methods.

Nargis Kassenova is a senior fellow and director of the Program on Central Asia at the Davis Center for Russian and Eurasian Studies, Harvard University. Kassenova’s research focuses on Central Asian politics and security, Eurasian geopolitics, China’s Belt and Road Initiative, governance in Central Asia, and the history of state-making in Central Asia.

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Jonathan Wilkinson: US and Canada need to ‘walk back from the brink’ and find new ways to cooperate—including on energy

Atlantic Council — Tue, 04 Feb 2025 19:52:23 +0000

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Canadian Energy Minister Jonathan Wilkinson on US-Canada energy cooperation

Jonathan Wilkinson, the Canadian minister of energy and natural resources, discusses ways to enhance cooperation on North American energy security with a new administration at the helm in Washington.

Energy & Environment Geopolitics & Energy Security Trade and tariffs United States and Canada

Speaker

Jonathan Wilkinson
Minister of Energy and Natural Resources, Canada

Moderator

David L. Goldwyn
Nonresident Senior Fellow and Chairman, Energy Advisory Group, Global Energy Center, Atlantic Council

Event transcript

Uncorrected transcript: Check against delivery

DAVID L. GOLDWYN: Good afternoon, everyone, and welcome. I’m David Goldwyn. I’m chairman of the Atlantic Council’s Energy Advisory Group and a nonresident senior fellow here at the Atlantic Council. Thanks for joining us in person and also virtually. We’re honored today to be joined by Jonathan Wilkinson, minister of energy and natural resources of Canada, NRCan in the Canadian parlance, to talk about tariffs and energy.

You all may have seen the extreme market reaction to President Trump’s threat to impose 25 percent tariffs on Canada and Mexico and 10 percent on energy trade. And that’s because the US and Canada have probably one of the most integrated energy systems in the world. In 2023 I think we did about 198 billion [dollars] in trade. It’s two-way trade. We get 60 percent of our imported oil from Canada, heavy oil which refineries the Midwest and the Gulf Coast use and which the United States doesn’t make. We have two-way trade in electricity. Almost thirty states, I think, get electricity from Canada. We send gas and oil and products to Canada. They send it back to us. We get a quarter of our uranium from Canada for our nuclear reactors. I think we’ve got seventy pipelines across the border and maybe thirty electricity interconnections.

So that’s why it got a pretty big reaction. We are really closely, closely integrated. And the electricity grid is also really important. We get most of our major components, such as transformers and switch gear, from Canada, as well as critical minerals. So that’s why we had a big reaction. And we’re really, really fortunate to have Minister Wilkinson here to talk to us about what happens next. As you saw in the news, there’s a thirty-day pause, at least thirty days, until tariffs are reimposed, when conversations will take place between our countries. So the timing couldn’t be better. And we’re going to hear from the minister, we’re going to have a little conversation about some of the issues, and go from there.

We couldn’t have a better or more qualified person. Minister Wilkinson knows of what he speaks when it comes to energy. In addition to being the minister, and formerly a minister for climate change and environment and also for oceans, he comes from the tech world. He was chief executive officer of QuestAir Technologies and also the former BioteQ. So he knows—he knows waste to heat. He was a senior vice president with Nexterra—not Next Era, but Nexterra—the waste to heat company. And he’s a pretty smart guy too. He’s a Rhodes Scholar. So he knows this field well and he’s going to be one of the point people for talking to the US government about energy. So, Minister Wilkinson, please join us here on the stage and let’s go from here.

JONATHAN WILKINSON: Thank you. Thank you very much. And, certainly, thanks to the folks here for the invitation to be with you today, and for the flexibility. I was coming from Canada’s west coast, and that’s always a dangerous thing in the winter. It took a little longer to get here than I had anticipated. So I certainly appreciate the flexibility around the timing.

It is, as I say, a pleasure to be with you today, and certainly after what have been some tumultuous and challenging days. But I would like to focus today on the enormous economic opportunities that exist for cooperation between our respective countries. I firmly believe that collaboration is what makes this continent great. And it is what will enable our conversation to move from one about tariffs, which in my mind is a lose-lose conversation, to one about prosperity and security, which offers a win-win.

We have all, I’m sure, heard many times the adage that Canada and the United States are each other’s best friend, closest ally, and most important economic partner. And beyond friendship and our economic partnership, we have long been steadfast partners on the world stage. That is ever more important right now, given the increasingly aggressive behavior of international actors like China.

Though it may feel a little bit cliché to say those words, these statements are undeniably true, despite the difficult moment we have found ourselves in over the past few days. The administration has made clear the concerns regarding border issues, particularly illegal migration and fentanyl. I think it needs to be recognized that the scale of these issues at the Canada-US border are not particularly significant. Fentanyl from Canada represents 0.2 percent of US seizures of fentanyl at the border. And, in fact, last year American border enforcement seized just forty-three pounds of fentanyl from the Canada-US border; not a lot more than the seizures that go the other way. And while illegal migration is very low, we agree that one illegal migrant is too many. That is why we have already been cracking down with 600 percent more investigations in 2024.

I want to be very clear about this. Just like the US, Canada has no interest in illegal crossings, either of people or of substances. One illegal crossing and one pound of fentanyl crossing the border is too much. In this regard, we agree very much with President Trump. That is why, further to conversations we have been having with the administration, Canada recently announced an enhanced border plan, which included an additional investment of over a billion dollars, which will be made in areas like the deployment of additional helicopters, drones, mobile surveillance towers and officers with new K-9 teams to strengthen the border.

And yesterday, after conversations with the president, we announced additional measures. Canada will be appointing a fentanyl czar and will list cartels as terrorists. Together we will launch a Canada-US joint strike force to combat organized crime, fentanyl, and money laundering, ensuring 7/24 eyes will remain on the border. And Prime Minister Trudeau also signed a new intelligence directive on organized crime and fentanyl, which was backed with an additional $200 million.

Canada has acted on these issues, and Canada remains very open to conversations about how we can jointly do more. Productive, collaborative discussions like these are a much better route than destructive economic action that drives up prices for Americans and for Canadians.

With respect to our economic partnership, the Canada-US relationship has long been the envy of the world, keeping our supply chains secure, creating good jobs, and ensuring good prices. Our respective economies are so integrated that I would say the partnership is effectively hardwired. Nearly $2.7 billion worth of goods and services crossed the border each day in 2023. Thirty-six US states rely on Canada as their number one export market. Canadian consumers and businesses purchase more goods from the United States than China, Japan and Germany combined.

This is true in the case of many sectors; for example, the auto sector, where parts will often go back and forth across the border six, seven, eight times before a product is completed. But there is no area where the integrated nature of our economies is clearer than in energy and key resources, such as critical minerals.

For example, Canada supplies significant quantities of low-cost hydroelectricity to several US states via fixed transmission lines. Canadian electricity powers the equivalent of six million American homes. That’s more than every home in the state of Ohio. Canada and the US have an integrated oil pipeline system that supplies Americans approximately four million barrels per day, creating jobs and fostering energy security.

This oil is largely heavy crude, and US firms have invested in complex refineries to process this specific type of low-cost Canadian oil. This is by far the most affordable option for American companies and consumers, and it enables the export of US light crude to countries around the world, creating additional profit for American companies but also creating additional tools to be used in the context of geopolitics.

Canada is the US’s largest supplier of potash, meeting the demand for farmers for use as fertilizer, which means affordable food. It also allows the US to avoid purchasing potash and fertilizer from unreliable countries like Russia and Belarus.

Uranium for nuclear power is also supplied in significant quantities by Canada. In fact, Canadian uranium presently powers the equivalent of almost twenty million homes in the United States. Once again, this enables the US to reduce reliance on producers such as Russia.

And Canada supplies significant quantities of critical minerals including germanium, zinc, nickel, copper, and graphite. These are the building blocks of a range of American economic sectors including defense. In the area of critical minerals typically the alternative source of supply to Canada is China.

Let me also address concerns about a trade deficit between our two countries. If you break it down and look at nonenergy-related trade, the US in fact has a surplus of over fifty billion dollars. The United States is a net exporter to Canada of manufacturing goods, particularly motor vehicles and parts.

Hampering industries with an American trade surplus with tariffs would chiefly disrupt industries where the United States already exports more to Canada. Where I noted, as I noted, parts go back and forth often seven or eight times before a car is complete and for which there are no easy alternatives. It would make these things more expensive while simply not supporting a rebalancing of the trading relationship.

And in the case of energy, the current trade balance also already provides the US advantage by leveraging Canada’s resource abundance to obtain low-cost and secure energy and minerals that the American economy requires, especially if one wants to achieve energy affordability and energy dominance, and the US obtains these products from Canada at a low cost, allowing thousands of American workers to refine and transform them and sell at a higher price to the rest of the world.

Moving past border issues and the reality of the trade balance, it is important to recognize what tariffs would actually do and why we should continue to avoid them after this thirty-day period. They would cause financial pain for Canadian families, no doubt, but they would also significantly increase the price of energy and food for American consumers.

With a tariff on Canadian oil and gas Americans would see higher prices when filling up their gas tanks and heating their homes. Groceries would become more expensive because Canadian potash that supplies American farmers would cost farmers more, and for those who might be planning to buy a new car Wells Fargo has estimated that a 25 percent tariff on Canada would add more than two thousand dollars to the price tag of a car.

Overall, tariffs on Canada, a country that shares your goals and values more than any other country in the world, could cost an average family—American family about $1,300 per year.

As a sovereign democratic nation that must protect its own national interest, the unwarranted imposition of tariffs on Canada would necessarily necessitate a response. But this kind of damage being caused to both of our economies is truly unnecessary and it is ultimately the people of our respective countries who will pay the costs.

That is why our focus is to move beyond this conversation to one about collaboration on the border, on the scourge of illegal drugs, on our economy, and certainly on energy and critical minerals.

Which brings me to my pitch to you today. Rather than going down a path that will inevitably be lose-lose I am suggesting something entirely different. I am suggesting that we should instead build upon current success by developing a US-Canada alliance in energy and minerals.

Such an alliance would enable the United States and Canada to achieve our shared vision for affordable energy bills for families, strong and secure economies, and North America as the world’s dominant energy supplier.

Just a few examples of how we can move in the near term to create mutual benefit. In the areas of critical minerals needed for energy, defense, and aerospace applications there is, for example, an opportunity to jointly invest in a project that would enable greater germanium supply which can displace germanium the United States has been purchasing from China, which China has recently cut off.

We can collaborate on rare earth processing and the augmentation of rare earth supply, once again reducing exposure to and dependence on China. Many will not know that the one large rare earths mine that exists in the United States sends a hundred percent of its product to China presently for processing because the processing technology does not exist here.

With regard to uranium there is an opportunity to work together to build a complete North American nuclear fuel cycle, which would mean relying less on Russia and enhancing continental security. That is something that will be critically important for the ultimate deployment of small modular reactors.

On energy we can enhance the flow of Canadian crude from Alberta to assist the administration’s goal of energy dominance by working together on projects such as enhancing the capacity of the existing Enbridge mainline, enabling the export of additional energy from the US to the world.

There is much opportunity here that can benefit both countries. However, none of this will be possible if we get into this destructive tit-for-tat.

Both countries have a strong interest in the same goals and outcomes, and there is indeed enormous potential if we work together to collectively onshore production and manufacturing and ensure that access to critical energy and materials exists within our collective borders, so we cannot be held hostage by unreliable countries and actors that do not share our values—in particular, China. Rather than looking to erect barriers that will impede trade flows, increase costs for citizens on both sides of the border, and make both countries less secure, let us engage a more positive conversation, a conversation that is focused on seizing enormous economic opportunities and creating additional shared value while enhancing our security—or in other words, form a true energy and minerals alliance.

I and my government are keen to engage these positive and productive conversations to ensure that we can build together a continent that will be more prosperous, more secure moving forward.

So thank you for the invitation to speak to you today, and I look forward to the discussion to come.

DAVID L. GOLDWYN: Great, thank you. Thank you for that positive, positive vision.

I should say that this conversation today is public and on the record, and it’s streaming over YouTube, X, Facebook, and the Atlantic Council website.

So, Minister Wilkinson, you—you know, you posited a very positive potential pathway, but the imposition of the tariffs or the threat must have been a bit of a shock for Canadians. And we see in Mexico now increased talk of producing their own natural gas because they’re worried about continued dependence on the US. Most of Canada’s crude flows through US pipelines out to the gulf to markets. Strategically, do Canadians need to think about alternative routes to the east coast or the west coast as sort of a hedge on the US?

JONATHAN WILKINSON: Well, I would say it was a shock. You know, the original free trade agreement that was signed between Canada and the United States was signed way back in 1988, and the Auto Pact that ensured the free flow of products in the auto sector goes back to the 1960s. So we have looked deep in the integration over the course of the past number of decades because it was so obvious that we were both extracting mutual benefit from the trade that existed. That’s not just in energy and minerals.

And so when all of a sudden Canada is treated more like an adversary than a partner, it did shake every Canadian. And I think you saw that in some of the patriotic expressions that came out in the aftermath of the decision to impose tariffs. Canadians don’t tend to wear their patriotism on their sleeve. We are probably less patriotic overtly than Americans, but you saw it very strongly in Canada.

I think, you know, we need to hopefully walk back from the brink and find pathways through which we can actually work together. But I do think in Canada this has caused some reflection on whether perhaps in some areas we are too dependent on infrastructure in particular that flows only through the United States. We have some things that have been developed over the last number of years, including liquid natural gas facilities on the west coast, that will give us the ability to take some of the gas to Asia. But certainly in the areas like oil, we flow almost all of it this way.

DAVID L. GOLDWYN: Let’s talk about the—unpack the positive agenda a little bit. For President Trump, critical minerals seem to be important. There’s talk about Ukraine exploring critical minerals there as a condition for security support, and this Greenland talk seems to be a little bit about access to Greenland’s critical minerals. So what’s the—what’s the way that the US and Canada can cooperate in this area, either in production—you mentioned two projects earlier, but is there more there? And are you going to use the next thirty days to have this conversation with US officials?

JONATHAN WILKINSON: Yeah, I mean, I think there’s a lot of things that we can do together. Some of them relate to specific projects and some of them are a big more general. One of the challenges with some of the critical minerals has been because of the concentration that exists in Chinese hands, whether it’s in China or it’s in a number of countries like Congo and elsewhere, China has been able to at times manipulate the market. So whenever you are looking to start a project that requires hundreds of millions of dollars, all of a sudden the price goes, you know, goes down significantly and the business case actually falls away. We’ve seen that with lithium. We’ve seen it more recently with nickel, where China has used its dominance to flood the market. And so there is work that can be done between Canada and the US, and probably with Australia and a few others, to actually create some kind of a mechanism around a price floor that will give the business certainty such that you can actually attract private capital for some of these kinds of projects.

There are also some very specific projects that if we made the decision to jointly invest we can pull forward. And the germanium one is one example of that. We have done some coinvesting over the last couple years with the US Department of Defense, but there is a lot more that we could do. And that would help to alleviate the strategic vulnerability, which is a huge strategic vulnerability for the United States in critical minerals, because virtually all of them right now are coming from China.

DAVID L. GOLDWYN: And there’s been talk of a strategic minerals reserve, either on the US or the Canadian side, which could probably help support that price floor. One of the reasons we don’t have as many of those critical minerals produced or processed in the US is—you know, is the challenge of regulation and permitting, and also stakeholder considerations. So deregulation is a big agenda for President Trump. Is there something that can be done on the harmonization of permitting and regulatory decisions that would expedite either critical minerals or pipelines?

JONATHAN WILKINSON: I think there is. Certainly, we’ve done a lot of work to try to figure out how to optimize existing regulatory and permitting processes. As you folks—we’re both federal states—have, the complexity is also some of those reside at the federal level and some of them reside at the state level. And part of it is trying to better align the federal standards with state standards. And to the extent that you can get states to try to harmonize some of their requirements, it certainly would make that conversation easier. We have been working individually with every province to try to actually better align the federal and the provincial.

But certainly, I think there are things that we can both learn from each other. And ideally we can actually find ways to jointly streamline in similar ways, such that you can actually expedite these things. But I mean, clearly, it’s a challenge on both sides of the border. It takes a long time to get mines permitted in Canada. It needs to be much shorter than it is. And we are focused on that. In the United States—and I say this with great respect—but it’s even harder to get a mine permitted in the United States than it is in Canada. But we have been talking a lot, not just to you folks but also to the Australians, and the Chileans, and others who are also thinking exactly about these issues, so.

DAVID L. GOLDWYN: North American energy cooperation used to be a staple. We sort of invented this. You all were going to host the North American Leaders Summit last year, and that got postponed. And I think these tariffs have thrown the viability that concept into a—you know, a little bit into question. Mexico, I think, is concerned as well. But there would seem to be a lot of areas that we could cooperate on, if we were to revive that process. Nuclear is an area of commonality, electricity, regional planning, because we trade so much across the border. Do you think, you know, North America, as a concept, exists? And can you talk a little bit about what you think a positive agenda for a trilateral discussion might be?

JONATHAN WILKINSON: Well, I do—I mean, I think a lot of the elements of it already exist. But there certainly are areas where I think we could push the collaboration for outcomes that would actually be beneficial for both of us and, in some cases, with Mexico as well. Nuclear is a great example. The first small modular reactor—it’s a large one, it’s three hundred megawatts—will be running at an Ontario site adjacent to a very large-scale nuclear reactor in 2027/2028. It’s a GE-Hitachi design. It’s an American-Japanese collaboration that actually produced the technology.

Eventually, as we build out more of these small modular reactors—and everybody’s seen, you know, a lot of the tech firms now getting into this game of this is how they’re going to generate their own—their own electricity—you’re going to need enriched fuel. You need uranium from Canada. You need the conversion of that, but you actually need the enrichment. And United States has enrichment. Canada doesn’t have enrichment. And doesn’t really want to do enrichment because of nonproliferation kinds of issues. But there’s a perfect marriage that we could actually work on together to ensure that we actually can enable the development and the deployment of these technologies as expeditiously as possible.

And Mexico. We saw the handshake, you know, sort of, you know, between the Mexican president and Prime Minister Trudeau. So is there—how do we bring Mexico into that—into that discussion?

JONATHAN WILKINSON: Well, I mean, look, Mexico is blessed with the same—similar resources to what the United States and Canada have, right? Lots of oil. They do have an ability to go after the gas. They have deployed renewables on a relatively large-scale basis. There have been some issues there in terms of Canadian companies and American companies investing, and how that was treated. But I think, you know, there’s lots of learnings. And even on the regulatory and permitting side there’s lots of learnings about what it is that different groups are doing that can actually enable you to go faster.

So I do think, you know, between the three of us we have more than what we need to both build and to power the economy. And we have the ability to actually produce much of what the world needs. And that has value in a world that is going to need more energy—energy of all kinds. You know, and I think, you know, whether you call it energy dominance, or you call it something else, there is an opportunity to use that in a constructive way in a world where, you know, some actors, like Russia, have been using it in a less-than-constructive way.

DAVID L. GOLDWYN: Very helpful. I know you’re not the trade minister, but we’ve got the conversations on USMCA, or whichever national acronym people want to use, coming up. So there will be a conversation. Just in terms of the energy piece, of which the tariffs would be a violation, I guess, of this agreement. But putting that aside, what’s your perspective on Canada’s position on energy and USMCA? Is it sort of, it’s not broke, don’t fix it? Or is there more to be done that would deepen the energy cooperation between the three countries?

JONATHAN WILKINSON: Yeah. I mean, I do think that there’s more that can be done. It needs to be part of an overall agreement around—that the tariffs aren’t coming back, right? You know, at the end of the day we need to actually have a pathway that allows us to deepen the collaboration, if we agree that that’s a good thing, without thinking six months from now we’re back into the same conversation that we were in the last few days. But I do. Some of the projects that I talked about there are things that would actually help to deepen the collaboration.

Like, why does the United States purchase so much uranium and potash from Russia? You don’t need to. If we actually work together, you can be completely secure. Why are so many critical minerals being purchased from China? You don’t need to. If we work together and we actually pull forward some of these projects—you know, the same thing is true, as I said, with oil and gas. So I do think that there’s lots that we can do. Starting with some very specific projects but looking more generally down the road, creating joint tools that can allow us to actually make joint investments. I do think that there is a real scope for those kinds of conversations. But it starts with—it starts with, you know, us agreeing that collaboration and deepening that relationship is the right way to go.

DAVID L. GOLDWYN: Let me ask you a question about Liberal Party politics, if I can. You all are facing an interesting political season in Canada.

JONATHAN WILKINSON: Yeah.

DAVID L. GOLDWYN: You’ve got two candidates now up for consideration, Chrystia Freeland and Mark Carney, who are well known around the world, and they’ve talked—both talked about pulling back the carbon tax on consumers, leaving the carbon tax on the industrial sector in place. Can you just paint us—what’s the future of sort of energy and climate policy for the Liberal Party going forward?

JONATHAN WILKINSON: Well, you’re asking somebody who got into politics because of climate change. And I had the great privilege of serving as Canada’s environment and climate change minister for three of four years and brought into place the first climate plan Canada’s ever had that showed how we would not only beat a target, but we would raise the target because we would exceed that. So I am committed to the fight against climate change. It’s a science issue. It shouldn’t be a partisan issue. It is a science issue.

But we need to do that in a manner that is thoughtful, that addresses concerns—legitimate concerns people have about affordability, and does so in a manner that actually ideally enhances our own energy security. This government, whether it’s Mr. Carney or Ms. Freeland who ultimately lead the Liberal Party and become the next prime minister of Canada, are committed to the fight against climate change, but they want to do so in a manner that actually also is going to help us to build a strong and prosperous economy. I don’t think you are going to see a lot of fundamental changes.

The consumer carbon price, I mean, 80 percent of the value of carbon pricing comes from the industrial price, where you’re actually going after the large emitters. Twenty percent comes from the consumer carbon price. I’m still a believer in the consumer carbon price in the sense that it is the most economically efficient way to actually reduce emissions, that incents innovation. And 99.9 percent of economists will tell you the same thing. It’s a market mechanism. But it became very divisive in Canada, especially regionally, and both of the candidates have made the decision that they will remove the consumer part of the carbon price, not the industrial price.

And the other thing that they have been very clear on is that they will find the megatons that would have been found through the consumer price in a different way. They are not abandoning the fight on climate change.

DAVID L. GOLDWYN: That’s great. Thank you.

Well, unfortunately, our time today has come to a close. Thank you, Minister Wilkinson, for your candor and for painting this positive vision of US-Canadian energy—of the energy relationship.

As a reminder, the recording of the event will be available on the Atlantic Council website and on our YouTube page, and we hope you’ll join us for future events. Thank you.

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The green gold rush: Why renewable energy is Egypt’s next big opportunity

Jonathan R. Cohen, Racha Helwa — Mon, 03 Feb 2025 17:30:31 +0000

Economist David Ricardo once argued that trading comparatively competitive goods across countries optimizes economic efficiency and maximizes profits. In the twenty-first century, the trade of renewable energy has redefined comparative advantage, offering resource-rich nations such as Egypt a unique opportunity.

Historically, Egypt’s exports have been dominated by petroleum products, cotton, textiles, and chemicals. However, as the global energy landscape evolves, Egypt stands on the brink of transformation. The country is on the cusp of harnessing its renewable energy potential to meet domestic demand, reduce its reliance on fossil fuels, and emerge as a leader in clean energy exports.

For Egypt to achieve this, however, it must first address critical internal challenges, such as its dependence on natural gas for electricity generation and its underdeveloped renewable energy infrastructure. Achieving energy self-sufficiency is a necessary precursor to realizing the country’s green energy export ambitions.

Tapping into endless sunshine

Egypt is endowed with abundant sunshine. It boasts some of the highest solar irradiance levels in the world, ranging from 2,000 to 3,200 kilowatt hours (kWh) per square meter annually. With more than 3,500 hours of sunshine per year and ample open space, regions such as the Western Desert and Upper Egypt hold vast, untapped potential for solar energy development.

Several projects already in the works highlight this potential. The Benban Solar Park, one of the world’s largest solar installations, currently has a capacity of 1.8 gigawatts (GW), with plans for significant expansion. Upcoming developments include AMEA Power’s additional 2 GW project with 900 megawatt hours (mWh) of battery storage, and the Masdar/Hassan Allam Utilities/Infinity consortium’s planned 300 MW expansion at Benban alongside a 900 MW project at Dakhla Oasis (1.2 GW in total). Elsewhere, Abydos Kom Ombo Solar PV Park will host a 500 MW facility, and the Masdar consortium signed another significant deal with over 6 GW of new solar capacity, 4 GW of new solar manufacturing capacity, and 2 GW of new battery manufacturing capacity.

Harnessing wind power in the Gulf of Suez

Wind energy is another cornerstone of Egypt’s renewable energy strategy. The Gulf of Suez and the Nile Valley offer high wind speeds, averaging 8–10 meters per second. Vision 2030, a strategy launched by the Egyptian government nine years ago, targets 14 GW of wind capacity by the close of this decade, with several large-scale projects already underway.

Notable developments include AMEA’s 5 GW wind farm in the Gulf of Suez, expected to be operational by early 2026, Hassan Allam/ACWA Power’s 1.1 GW wind farm, and Orascom Construction Consortium’s 650 MW project at Ras Ghareb. Additionally, the Masdar consortium, in partnership with Infinity Power and Hassan Allam Utilities, is developing a 10 GW onshore wind farm, which will rank among the largest globally. The project is projected to reduce carbon emissions by 23.8 million tons annually, accounting for approximately 9 percent of Egypt’s total current emissions. Other smaller but significant initiatives include Alcazar’s 2 GW wind farm and Taqa Arabia/Voltalia’s combined wind and solar facilities (1 GW and 2.1 GW, respectively).

The promise—and dilemma—of green hydrogen

Egypt is positioning itself as a leader in green hydrogen production, which is based on renewable resources including solar and wind. According to the International Energy Agency, Egypt could produce green hydrogen for under two dollars per kilogram by 2030. The Suez Canal Economic Zone has been identified as a hub for green hydrogen development, with Siemens and Scatec working on a facility capable of producing one million tons annually by 2035.

However, green hydrogen presents a dilemma. Diverting renewable energy to hydrogen production reduces the energy available for the domestic grid, where natural gas remains dominant. To make green hydrogen a viable export commodity, Egypt must first stabilize its domestic energy supply and reduce its reliance on fossil fuels for electricity generation.

The potential roadblocks ahead

Egypt has significant renewable energy potential, but its true impact lies in effective implementation. The country’s ability to harness this potential will be key to achieving its sustainability goals and driving long-term energy transformation. Currently, Egypt’s energy ambitions face a range of structural and economic challenges that hinder its progress toward becoming a clean energy leader.

One major obstacle lies in the country’s electrical grid, which is currently incapable of integrating large-scale renewable energy projects. Despite ongoing investments, present renewable capacity has stagnated at under 12 percent of Egypt’s total 60 GW capacity, emphasizing the urgent need for grid upgrades and energy storage systems to support future expansion.

Additionally, regulatory barriers continue to stifle progress. The fragmented oversight of the energy sector, coupled with protracted permitting processes and systemic inefficiencies, discourages investments and delays project timelines.

Financial constraints further compound these issues. With high public debt and limited fiscal space, funding renewable energy projects is difficult. While frameworks established in 2017 by the Green Climate Fund and the European Bank for Reconstruction and Development aim to attract private capital, financial roadblocks persist.

Most pressing, however, is that Egypt’s energy mix is still overwhelmingly dependent on fossil fuels, with approximately 80 percent of electricity generated from natural gas and oil. This reliance exposes the country to the risks of price volatility and supply disruptions, and it also undermines efforts to transition toward sustainable energy. Furthermore, dependence on gas for the domestic grid undermines Egypt’s ability to maximize liquefied natural gas (LNG) export earnings while tackling domestic challenges, such as summer blackouts and increasing gas imports due to declining production at the offshore Zohr field.

Finally, fuel subsidies from the Egyptian government—estimated at seven billion dollars annually—distort energy markets and make renewables less competitive compared to fossil fuels.

Addressing these interconnected challenges is critical for Egypt to unlock its significant renewable energy potential and solidify its position as a global clean energy leader.

A balanced path to global leadership

Egypt stands on the verge of a renewable energy revolution, uniquely positioned to lead in clean energy generation and, eventually, exports. Its abundant solar irradiance, strong wind corridors, and significant potential for cost-effective green hydrogen production give the country a competitive edge in the global renewable energy landscape.

This potential is reflected in Egypt’s Vision 2030, which targets 42 percent of electricity generation from renewables by 2030. The Egyptian government has said that it wants renewable energy to account for 60 percent of the energy mix, including 40 billion dollars’ worth of green hydrogen investments. Through its Nexus of Water, Food, and Energy program, the government also aims to add 10 GW of renewable capacity by the end of this year with an investment of ten billion dollars.

These goals are ambitious, to say the least. To achieve its aims, Egypt must first secure energy self-sufficiency via rapid growth in renewable energy generation. Directing most or all renewable production to the domestic grid to replace natural gas gradually is an important first step. Maximizing LNG exports while transitioning renewables into the energy mix could generate the foreign exchange earnings needed to fund infrastructure development for renewables and other projects.

With smart, forward-looking policies and strategic investments from the Egyptian government, combined with robust international partnerships, Egypt can become a global clean energy hub. By harnessing its vast renewable resources, it can not only light up its own future but also contribute to powering the world—both literally and figuratively.

Jonathan Cohen is the former US ambassador to Egypt and the United Nations.

Racha Helwa is the director of the empowerME Initiative at the Atlantic Council’s Rafik Hariri Center for the Middle East.

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Can increased energy sector sanctions pressure Putin into peace talks?

Aura Sabadus — Wed, 29 Jan 2025 20:20:24 +0000

US President Donald Trump has warned Russia that he will impose economic measures including taxes, tariffs, and sanctions unless Russian President Vladimir Putin agrees to end the war in Ukraine. While it is far from clear whether economic pressure alone can bring Putin to the negotiating table, Russia’s oil and gas industry looks to be the most vulnerable sector of his wartime economy.

United States sanctions on Russia’s energy industry have already been tightened in the first weeks of 2025. Just before leaving the White House, outgoing US President Joe Biden fired a parting salvo of comprehensive new sanctions on Russian oil producers, intermediaries, tankers, traders, and ports handling both oil and liquefied natural gas (LNG).

This package was widely seen as one of the most aggressive since the start of Russia’s full-scale invasion. The impact is already being felt globally. Some banks in India, which currently takes around 40 percent of all Russian oil supplied to international markets, are reportedly blocking payments for Russian oil imports. Meanwhile, fleet capacity to service Russian crude exports is expected to shrink significantly due to the latest restrictions.

With oil sanctions also targeting major producers such as Surgutneftegaz and Gazprom Neft as well as more than 180 vessels in the Russian oil fleet, some observers are now predicting that the Kremlin could lose up to $24 billion during the coming year. This would be equal to around one percent of the country’s projected GDP.

These latest sanctions come as Moscow is already adjusting to the end of gas transit through Ukraine, after Kyiv refused to extend a five-year deal that expired at the start of the current year. With the termination of this gas transit agreement, Russia has lost another sizable chunk of the European market.

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Trump vowed during his January 20 inaugural address to “drill, baby, drill.” Since then, initial steps in support of the United States fossil fuels sector have included lifting the Biden administration’s freeze on export permits for LNG projects.

Many now expect to see more LNG being exported from the United States to Europe, potentially replacing remaining Russian gas deliveries. Increasing US exports at a time when the Russian gas industry is already facing growing obstacles would place Trump in a strong position ahead of negotiations over a possible settlement of the war in Ukraine.

Trump could potentially increase the pressure on Putin by urging the Ukrainian authorities to ban the transit of Russian crude via Ukraine to Hungary. There is currently a bill in the Ukrainian parliament calling on the government to stop oil transit and deprive the Kremlin of up to $6 billion in sales to European buyers. Additional options include a lower price cap, further sanctions on remaining shipments, and expanded secondary sanctions.

The United States may have fewer options in terms of gas-related sanctions. With demand from key LNG importers such as China and India projected to recover in 2025, US exports may be diverted to Asia, leaving Europe more reliant on Russian LNG and pipeline gas. Additional LNG production from Canada’s western coast could create greater supply options later this year, but that may not be enough to satisfy European consumers or address concerns over rising energy bills.

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While Trump’s efforts to undermine Russia economically will face a range of practical challenges, there is no question that Putin’s energy empire is looking increasingly fragile.

Russia’s Gazprom in particular appears to be in a difficult position. The Kremlin’s flagship energy company has reported multi-billion dollar losses in the past two years, with this trend likely to worsen in 2025 due to the end of Ukrainian gas transit. The outlook for Gazprom is currently so troubled that the company is reportedly seeking to increase domestic gas prices.

The new United States administration has been quick to signal that it sees the Russian economy as the Putin regime’s most vulnerable point. Trump clearly aims to exploit this weakness in order to end the war in Ukraine. US efforts are likely to focus on the energy industry, which serves as the engine of the Russian war machine.

Ideally, the United States will work closely with the EU and UK in the coming months to expand current sanctions on the Russian energy sector while also working to tighten up the implementation of existing measures. This would send an unambiguous message to Moscow that Russia’s current economic woes will only worsen if Putin rejects a negotiated settlement and refuses to end the invasion of Ukraine.

Dr. Aura Sabadus is a senior energy journalist who writes about Eastern Europe, Turkey, and Ukraine for Independent Commodity Intelligence Services (ICIS), a London-based global energy and petrochemicals news and market data provider. Her views are her own.

To be sure, following Russia’s full-scale invasion of Ukraine in 2022, gas volumes along this pipeline route had already plummeted to a fraction of their historic levels. But the expiration of the transit deal has allowed Ukraine to finally shut off one of the few remaining connections between the European Union (EU) and Russia’s gas sector—and put further economic pressure on the regime of Russian President Vladimir Putin to end the war.

Before the 2022 invasion, Russia’s share of the European gas market stood at more than 40 percent. Since then, it has fallen to less than 15 percent, and the expiration of the Ukraine transit deal will move the EU closer to its 2027 goal of ending all Russian gas imports.

This is an astonishing achievement, both in technical and economic terms. It would not have been possible without close coordination between members of the North Atlantic Treaty Organization, which was originally formed in 1949 to defend against Russian expansion during the Cold War.

In particular, two founding members of NATO—the United States and Norway—answered the call to defend Europe against Russian energy aggression. The United States surged exports of liquefied natural gas (LNG) and Norway ramped up pipeline shipments at a dramatic pace. Barely 18 months after the Russian invasion, the United States was providing almost 20 percent of the EU’s gas imports from across the Atlantic Ocean and Norway was providing more than 30 percent.

The speed and determination of this effort was reminiscent of the 1948 Berlin Airlift, but on a much larger scale. Instead of supporting a single city after it was blockaded by the Soviet Union, the United States, Norway, and other gas-producing nations came to the aid of an entire continent of 450 million people.

This has not been easy or cheap for the economies of Europe. But the data show it could have been much worse—without the US shale revolution, Europe could have been at Russia’s mercy and a very different geopolitical map might have emerged.

A few months into the conflict, European natural gas prices climbed to record levels, roughly five times the price recorded at the start of 2022. But thanks to a surge of imports from NATO allies and conservation measures that limited demand, the wholesale price of gas in Europe had returned to pre-invasion levels by early 2023. Today, European gas prices are 80–90 percent lower than their record levels.

For this reason, European Commission President Ursula von der Leyen recently called for continued growth in US LNG shipments to Europe. American LNG is “cheaper” than other sources of natural gas and “brings down our energy prices,” von der Leyen said in November after a call with incoming US President Donald Trump.

Another major benefit of the move away from Russian natural gas is connected to climate change. 

Natural gas produces roughly half the carbon dioxide of coal when burned to generate electricity. But the climate benefits of natural gas can be eroded by fugitive emissions of methane during production, processing, transportation, and other points along the supply chain.

In North America, there are strong environmental regulations, efficient production practices, and a series of technologies to detect and reduce fugitive methane emissions. Those technologies include ground-level monitors; drone surveys; aircraft sensors; satellites; vapor-recovery units; low- and zero-emission pneumatic controllers; and real-time autonomous systems that can detect potential methane releases, throttle back production, and alert field crews to investigate.

By comparison, Russia’s oil and natural gas infrastructure is notoriously leaky, producing around 50 percent more fugitive methane than the United States per unit of gas produced, according to data from the International Energy Agency (IEA). Norway’s gas is even cleaner, with virtually no fugitive methane emissions, says the IEA.

When the full-scale war in Ukraine began, Russian President Vladimir Putin believed he could use energy as a weapon to threaten Europe and NATO. Instead, in less than three years, Europe pivoted to cleaner and more secure energy sources, strengthening the transatlantic alliance and benefiting the climate.

Make no mistake, many challenges remain and there is much work to be done. But this moment in geopolitics, energy security and environmental progress—which was unthinkable just a few years ago—deserves to be celebrated.

Morgan Bazilian is the director of the Payne Institute for Public Policy at the Colorado School of Mines and a former lead energy specialist at the World Bank.

Greg Clough is the institute’s deputy director.

Simon Lomax is the director of the institute’s Accelerated Methane Reduction Initiative.

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Blakemore and Wald quoted by US News and World Report on Trump’s executive orders

Ellen Wald, Reed Blakemore — Fri, 24 Jan 2025 16:48:00 +0000

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Webster in ChinaTalk: “Deepseek Meets Li Qiang, Data Labeling Subsidies, Taiwan’s Debt, Automation Optimism”

Joseph Webster — Fri, 24 Jan 2025 16:39:00 +0000

Former Assistant Director

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‘Maximum pressure’ sanctions on Venezuela help US adversaries, hurt Venezuelans

William Tobin — Thu, 23 Jan 2025 14:33:08 +0000

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The “maximum pressure” strategy employed from 2018 to 2022 against the illegitimate Nicolás Maduro regime in Venezuela did not serve US interests. Stringent oil sanctions imposed on Venezuela forced the retreat of Western oil firms from the country, principally benefitting adversaries. During the maximum pressure campaign, Venezuela’s oil production was rerouted to China at discounted prices, Iran supplied the diluent Venezuela required for oil production, and Russian investors became more critical amid a dearth on Western investment.

A democratic transition remained elusive while repression and human rights violations continued. Venezuelans suffered, US adversaries expanded their influence, and Maduro remained.

The current system of issuing specific licenses for Western oil producers to operate in Venezuela has yielded superior results. The benefits of this policy have been the following:

Venezuelan oil exports have been diverted to friendly nations.
Treasury has increased visibility on all oil-related transactions, decreasing the clandestine shipment of oil through shadow tanker fleets operated by the Chinese defense establishment, Iran, or PDVSA.
Compensation to the regime is limited to taxes and royalties, which are required by Venezuelan law.
The system has enabled the return or reemployment of qualified engineers and technicians to restore production from degraded oilfield infrastructure.

The incoming US administration should prioritize inflicting more harm on the regime and its enablers than the Venezuelan people—or US interests.

To do so, sanctions must be linked to clear objectives. An uncalibrated reapplication of maximum pressure would cede influence to China, Russia, and Iran, while doing little to loosen the regime’s grip on power. Instead, the existing system of specific licenses should be maintained and expanded. To punish Maduro, the administration should continue to target individuals who enable his illegitimate rule, adding to the 180 individuals already sanctioned by the Treasury. A targeted sanctions policy—not maximum pressure—is the only way to ensure that US actions to confront the Maduro regime impose their desired effect, and do not play into the hands of Beijing, Moscow, or Tehran.

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Seven questions (and expert answers) about Trump’s first actions to transform US energy

Atlantic Council experts — Wed, 22 Jan 2025 19:35:16 +0000

Call it a power play. On his first day back in the White House, US President Donald Trump issued a slew of statements and executive orders affecting US energy policy. In his inaugural address, Trump promised to declare a “national energy emergency” and use the powers of his office to bring down energy prices, fill US strategic reserves, and export US energy all over the world. The speed and scope of Trump’s directives and announcements so far indicate his emphasis on transforming US energy—including undoing many of his predecessor’s efforts to boost clean energy and curb greenhouse gas emissions. Below, Atlantic Council experts answer seven pressing questions about Trump’s energy agenda.

1. What impact will Trump’s first-day executive orders likely have on energy?

As expected, Trump’s return to the Oval Office quickly underscored that enabling energy production is a central pillar of his mandate to manage inflation and advance US national security priorities via energy markets.

For now, Trump’s plan to “drill, baby, drill” is still in its nascency. An executive order declaring a national energy emergency sets the stage to fast-track energy permitting and infrastructure, but not before a period of study and scoping from the relevant agency authorities. Once this period is complete, how the oil and gas sector balances a more permissive policy environment with its commitments to capital returns, which have been a dominant thread in the shale patch for the past several years, will bear significantly on the pathway to energy dominance. As a result, it’s possible that the immediate impact of the executive order will be seen in expanded exploration rather than a boom in production. Similarly, Trump’s decision to lift the Department of Energy’s pause on liquefied natural gas (LNG) export license approvals has been received with enthusiasm from international partners such as Japan, but it will take time to produce tangible results in the market.

The most important space to watch remains how these efforts intersect with wider foreign policy and trade initiatives yet to be solidified by the Trump administration. The widely anticipated rollout of tariffs against key US trading partners, including Canada, Mexico, China, and the European Union, has been given some room to breathe (possibly until February 1), as opposed to the “day one” tariffs that were promised on the campaign trail. The final makeup of these policies could have a strong effect on Trump’s energy agenda, from securing supply chains and growing domestic manufacturing to expanding energy exports. How the Trump administration chooses to approach sanctions against Iran, Russia, and Venezuela will also shape the global energy market.

But even with these other currently unknown factors, Trump’s first day in office made clear a commitment to maximize energy policy’s contributions to US economic and national security priorities. Trump’s initial steps toward energy dominance should be taken seriously by US partners, allies, and rivals insomuch as they intersect with the rest of the president’s agenda. By the same token, as a president who only has four years left in the White House, the most unpredictable variables may be his patience to see a return on these policy investments and whether a doubling down is on the horizon.

—Reed Blakemore is a director with the Atlantic Council Global Energy Center.

2. Is the US experiencing a national energy emergency? What does that mean?

The declaration of a national energy emergency, and the lengthy executive order implementing it, are a powerful statement of the Trump administration’s intentions to promote fossil energy and mineral development, as well as to punish renewable energy and climate mitigation initiatives to the maximum extent possible. It is important, however, to understand this declaration as intention not action. The process of revising or rescinding regulations will take time and be subject to legal challenge. The desire to increase investment in oil and gas production will be driven by demand and potential returns on new investment, which will in turn be challenged by the economic growth of the United States’ primary markets and threatened new tariffs.

Decisions on investment and renewable energy will be driven by state-level policy, utility economics, and consumer expectations. US foreign policy—from the expected maximum pressure sanctions on Iran, to the fate of the current licensing system for Venezuela, to the implementation of sanctions on Russia—will play an outsize role in the price formation for gasoline for US consumers. The new administration’s expected policies have driven those prices up, not down. These are early days and only a handful of the officials responsible for developing and implementing the executive orders’ aspirations are in their seats. Headlines come fast, but change comes more slowly.

—David Goldwyn is president of Goldwyn Global Strategies, LLC, an international energy advisory consultancy, and chairman of the Atlantic Council Global Energy Center’s Energy Advisory Group.

***

This week, the Trump administration declared a national energy emergency, showcasing its emphasis on “energy dominance” as core to its domestic and foreign policy. The declaration is grounded in three assertions: that high energy prices impair national security, that US allies benefit from exports of abundant US energy, and that “[e]nergy security is an increasingly crucial theater of global competition.” Each of these assertions is valid, although the appropriate policy implications may be in the eye of the beholder. The Trump administration seeks to eliminate as much permitting red tape at the federal level as possible and reduce restrictions for both on- and offshore energy production. Notably, though, the administration removed most renewable energies from its official “energy” definitions, prioritizing conventional fuels such as oil and gas.

It is unclear, however, whether these specific actions will address the “emergency” at hand. The federal government has historically been able to do little to expedite permitting without legislative action from Congress. Likewise, state governments and local stakeholders retain vast powers under the US Constitution and existing laws to set their own energy agendas. While analysts may argue over whether the United States is in an energy emergency, the Trump administration’s available toolset to address one remains limited with or without an official declaration.

—Andrea Clabough is an associate at Goldwyn Global Strategies, LLC, and a nonresident fellow with the Atlantic Council Global Energy Center.

3. What does Trump’s energy agenda mean for competition with China?

Trump’s legacy will likely be defined by geopolitical competition with China, with energy playing a key role. Three issues stand out: US energy exports, artificial intelligence (AI), and advanced batteries.

Trump seeks to gain geopolitical leverage by boosting oil and gas exports, enabling higher US economic growth and strengthening the energy security of key US allies and partners. Trump’s policies seem focused on raising domestic hydrocarbon production rather than curbing demand—although both steps taken in tandem would more powerfully grow exports. Nearly doubling US LNG export capacity by 2028 will complicate the already-complex relationship with China, the world’s largest LNG importer.

AI, which holds massive economic, strategic, and military potential, may prove to be the most consequential factor shaping the US-China competition. AI requires electricity-intensive data centers, but the aging US grid is strained by surging demand even as permitting red tape constrains new supply. Trump’s ability to reform transmission policy and ensure a diverse, low-cost energy mix may determine if the United States has sufficient electricity to outcompete China in AI.

Finally, advanced batteries are not only commercially important—they also have substantial (if underappreciated) military applications across unmanned systems, submarines, and electronic warfare systems. For instance, the Department of Defense recently designated Chinese battery maker CATL as a Chinese military company, possibly because of potential collaboration with the Chinese navy on lithium-ion battery-powered submarines. Trump’s energy legacy will be determined, in part, by the United States’ ability to outcompete China on advanced batteries, a technology with profound commercial and military applications.

—Joseph Webster is a senior fellow at the Atlantic Council’s Global Energy Center and Indo-Pacific Security Initiative; he also edits the independent China-Russia Report.

4. What are the likely implications of Trump’s orders to boost oil and gas production and end the pause on LNG terminal approvals?

Former US President Joe Biden’s halting of new export permits caused significant damage to the United States’ reputation as a reliable energy supplier. This greatly affected the planned access to gas of US allies, especially in Asia and Germany. In response, Japan sought to increase LNG imports from Qatar and other Middle Eastern producers. Gas importers look for long-term reliable supplies, and the flip-flopping of US energy policies with each election cycle projects undependability. Thus, Trump’s cancellation of this halt is not enough to restore confidence in gas buyers that future exports won’t just be halted again by a different administration.

Trump’s planned canceling of special taxes on methane and removal of layers of bureaucracy that were imposed on natural gas production will lead to increased investments in natural gas. The two main factors in inflation are government spending and energy costs (which reverberate onto the cost of every good). Increased natural gas production is essential to Trump’s plan to lower US inflation, since it will lower the price of natural gas, electricity, and almost every produced good.

—Brenda Shaffer is a nonresident senior fellow at the Atlantic Council Global Energy Center.

***

It will take some time for global energy markets to experience the effects of the energy-related executive orders Trump signed on his first day in office. The LNG industry and its investors are enthused by the directive to resume the permitting process for new LNG facilities, but because of the time lag in permitting and construction, markets won’t feel the impact for several years. The US automotive industry is most directly impacted by Trump’s decision to scrap the Environmental Protection Agency’s new tailpipe emission regulations that would have effectively imposed electric vehicle (EV) mandates on new car sales in the future. Automakers that were in the process of shifting to EVs and retiring internal combustion engine models will need to reconsider these plans in light of consumer preference since government regulations effectively mandating EV sales cannot be depended on to push demand.

Ultimately, the most influential executive orders will likely be those speeding the permitting process for pipelines, power plants, and energy transmission. We need more pipelines to bring natural gas to areas of the country experiencing growth in power demand, more power plants to convert fuel to energy, and better ways to transmit electricity across distances. More and better infrastructure will spur fuel production, help bring down prices for consumers, and power economic growth. While US oil and gas production is not likely to change dramatically this year as a result of Trump’s recent executive orders, domestic and global markets will feel the impacts in the years to come, especially if these changes are cemented through legislation. Executive orders are rescinded as easily as they are issued, and most energy and infrastructure projects take longer than a four-year presidential administration to come to fruition. If the Trump administration is truly committed to its energy agenda, it must find a way to make these regulatory policies last longer than Trump’s tenure in office.

—Ellen R. Wald is a nonresident senior fellow with the Atlantic Council Global Energy Center and the president of Transversal Consulting.

5. What should we expect from Trump on nuclear energy?

The Trump administration is likely to be bullish on nuclear energy, viewing it as a tool to unleash US energy dominance. Trump will most likely wish to compete in the global market against Russian and Chinese civil nuclear exports, and the new administration will probably wish to meet demand from like-minded countries for US nuclear energy technologies, including large light-water reactors and next generation technologies such as small modular reactors and micro reactors.

Trump has already named several nuclear energy supporters to key roles: Chris Wright, Trump’s choice for US secretary of energy, is best known for his role as chief executive officer of Liberty Energy, a natural gas company, but he has also served on the board of advanced reactor company Oklo and, in 2023, Wright signed a letter supporting nuclear energy.

Other administration picks include Wells Griffith for under secretary of energy at the Department of Energy. During Trump’s first administration, Griffith served as senior advisor to the chief executive officer of the US International Development Finance Corporation (DFC), where he played a role in lifting the DFC’s ban on nuclear project finance. Trump has selected former Congressman Brandon Williams to be the administrator of the National Nuclear Security Administration; Williams began his career by serving in the nuclear Navy, and he introduced nuclear energy legislation during his time in Congress.

—Jennifer T. Gordon is the director for the Nuclear Energy Policy Initiative at the Atlantic Council’s Global Energy Center.

6. What could be the domestic and global impact of the United States rolling back clean energy initiatives?

During Trump’s first two days in office, he quickly began his attack on climate policies and the Bipartisan Infrastructure Act (BIA) and Inflation Reduction Act (IRA), passed during the Biden administration. He has shifted the focus of US energy policy from renewable development to increasing oil and gas exploration, production, and export, declaring a national energy emergency. In addition to withdrawing (again) from the Paris Climate Agreement, Trump is aiming to scrap programs that advance EVs and offshore wind development.

In promoting investments in AI and recognizing the surge in demand resulting from data centers, he has indicated the need to increase electricity generation; but utilities have been looking to renewable energy with storage, as well as gas and nuclear power to meet this demand growth. The full dimensions of Trump’s efforts, and their impact on government funding, tax credits, and regulations for specific energy technology areas, will emerge in time and will no doubt be subject to many legal challenges. By executive order, he has put a pause on disbursements under both the BIA and the IRA and required federal agencies to report to the National Economic Council on priorities within ninety days.

Even these early actions send a signal to the rest of the world that the US government’s commitment to cooperation in the global clean energy transition is changing and likely weakening. Actions to impose tariffs are likely to follow and will further increase strains in relations. In November, nations agreed at the 2024 United Nations Climate Conference, also known as COP29, to boost support for developing countries in their climate mitigation and adaptation efforts. But this week, Trump and Secretary of State Marco Rubio put a ninety-day freeze on the disbursement of US assistance funds, which include significant support for the clean energy transition (i.e., about $1.2 billion in fiscal year 2023), not to mention for Ukraine and other strategically important nations. Even this temporary pause will open more space for China to assert leadership in responding to nations’ interest in climate and clean energy development and reduce US government support for US private industry in-country clean energy investment and trade efforts.

—Robert F. Ichord, Jr. is a nonresident senior fellow at the Atlantic Council’s Global Energy Center where he is authoring a policy series on power sector transformation in developing countries and supporting the Council’s work on US nuclear leadership and US national security.

***

The Trump administration’s rollback of clean energy initiatives marks a significant shift that could reshape global energy dynamics and climate action. By prioritizing fossil fuel expansion through policies like expedited drilling permits and LNG export approvals, the United States is poised to become an even more dominant oil and gas producer. While this shift may boost domestic energy production and exports, enhancing energy security—particularly for Europe—it comes at a critical juncture and could be costly to the United States’ clean technology leadership.

Pausing wind energy development, revoking EV targets, and freezing climate law funding will likely stall US progress in developing domestic clean energy supply chains and manufacturing capacity. This opens the door for China to further cement its dominance in clean technology manufacturing and critical minerals processing. The United States risks ceding ground in emerging industries such as green hydrogen, carbon capture, and advanced batteries, which are crucial for a decarbonized global economy.

While state and corporate climate initiatives may help maintain some momentum, reduced US leadership threatens to slow global decarbonization. Ultimately, the lack of coordinated federal action is likely to undermine international cooperation and technology transfer, vital for building climate resilience both at home and abroad. With extreme weather events already reaching century-high costs nationwide, the Trump administration may need to include solutions to address escalating physical risks in its toolkit to “make America great again.”

—Liliana Diaz is a nonresident senior fellow with the Atlantic Council Global Energy Center and an adjunct professor of energy, climate policy, and markets in the Americas at the Paul H. Nitze School of Advanced International Studies at Johns Hopkins University.

7. Can the United States under Trump continue to lead on clean energy initiatives?

US clean energy initiatives—many of them conceived with strong bipartisan support—are one avenue for US leadership as a dominant energy supplier. The US government, across many administrations, has been pioneering supply-side incentives that encourage the private sector to make investments at massive scale. We have already seen improved clean energy technology, innovations in business models and project development, and increased investment in the sector.

With regard to those tax credits that have been already implemented, the industry has designed projects to be compliant with those credits and is already moving forward—on tight timelines—on a range of advanced clean energy technologies. To reach final investment decisions on at-scale projects, the industry needs certainty and political continuity. While the president has issued an executive order (titled Unleashing American Energy) focusing on evaluating appropriations resulting from the Inflation Reduction Act of 2022, the tax credits already implemented remain unaffected.

With the United States seeking a global leadership role in energy innovation and exports, policymakers should carefully engage with industry to improve regulatory details to unlock cost reductions, encourage further private sector investments, and strengthen global competitiveness, especially vis-à-vis fast and effectively moving actors like China. Going forward, the government’s focus should remain on safeguarding investment certainty so projects already in planning can continue to progress.

—Lee Beck is a nonresident senior fellow with the Atlantic Council Global Energy Center and SVP, Global Policy and Commercial Strategy, at HIF Global.

The post Seven questions (and expert answers) about Trump’s first actions to transform US energy appeared first on Atlantic Council.

Shaffer in Real Clear Energy: “The Hidden Renewable Energy in Central Asia”

Brenda Shaffer — Wed, 22 Jan 2025 16:37:00 +0000

Original source

The post Shaffer in Real Clear Energy: “The Hidden Renewable Energy in Central Asia” appeared first on Atlantic Council.

China’s lithium-ion battery exports: Why are US prices so low?

Joseph Webster — Wed, 22 Jan 2025 15:32:16 +0000

Batteries are an increasingly important element in the US-China strategic competition. Batteries are not only used for commercial items, such as electric vehicles (EVs) or battery energy storage systems (BESS)—they’re also crucial military enablers employed in unmanned aerial, surface, and subsurface systems, diesel-electric submarines, electronic warfare systems, military microgrids, and directed energy weapons.

Strikingly, the per-kilogram prices of Chinese lithium-ion batteries exported to the United States are lower than the same product sold to any other market. The low per-kilogram prices may stem from China’s export of heavier BESS batteries to the United States—or anti-competitive tactics meant to oust US, Korean, and Japanese manufacturers in a militarily relevant technology. Given batteries’ dual-use potential and domestic production prospects, the United States should raise tariffs on Chinese imports and boost funding for domestic and allied supply chains.

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Chinese leaders recognize the commercial and military potential of next-generation batteries. Beijing has directed top firms to collaborate on solid-state battery development and banned Chinese companies from supplying batteries to Skydio, the largest US drone maker. Earlier this month, the US Department of Defense (DOD) designated China’s largest battery maker, CATL, as a military company.

The DOD may have made the designation due to CATL’s potential collaboration with the Chinese navy on lithium-ion battery-powered submarines. Currently, only Japan operates such submarines, although South Korea is building three of them. The DOD’s move may indicate that China is also using advanced batteries to enhance its submarine force.

Despite batteries’ dual-use applications, Chinese companies are global players. Chinese export destinations for lithium-ion (Li-ion) batteries are highly diversified, as the chart below shows.

Significantly, Chinese Li-ion battery exports to the United States have risen sharply in recent months, reaching an all-time high of $1.9 billion in December 2024. Chinese exporters may have been expediting shipments to avoid potential tariffs before President Donald Trump’s inauguration. But also, Chinese manufacturers often accelerate shipments in December to meet year-end targets and account for the production slowdown during Lunar New Year celebrations.

While Chinese battery global export earnings have declined from recent highs, focusing on dollar amounts doesn’t tell the whole story. As measured in weight, Chinese Li-ion battery exports are rising.

Chinese trade data shows that battery exports by weight have increased year-over-year, while their export value has declined. In 2024, the United States imported 923,000 tons, slightly less than the EU’s 938,000 tons. However, comparing volumes has limitations since batteries vary widely in function and are not interchangeable commodities.

Even as the quantity exported rises, battery prices on a per-kilogram measure have dropped. Indeed, the average global per-kilogram export price of China’s lithium-ion batteries fell from $32.9 in 2020 to $20.1 in 2024.

Remarkably, Chinese per-kilogram battery export prices to the United States are the lowest in the world—only continental Latin America even comes close.

Tariffs don’t seem to be playing a major role. Chinese exporters of lithium-ion EV batteries to the United States now face a 25 percent tariff after President Joe Biden raised rates in a May executive order, up from 7 percent. But storage batteries—which are China’s primary Li-ion shipment to the United States—are not subject to the higher rate until 2026; they currently face an effective tariff rate of only 10.9 percent.

Importantly, China’s per-kilogram battery export prices vary depending on the type of batteries supplied to different markets. Stationary battery storage systems, typically weighing over 1,500 kilograms, contrast with EV batteries, which generally weigh between 326 and 544 kilograms. However, Chinese trade data, reported at the 8-digit Harmonized Tariff System (HTS)-level for external audiences, does not differentiate between lithium-ion batteries for energy storage or EVs.

In contrast, the United States’ more transparent data on Li-ion battery imports does distinguish between these categories, with most imports consisting of heavier battery energy storage systems. Significantly, per-kilogram battery costs are lower for battery energy storage systems than batteries for EVs. US BESS per-kilogram costs averaged $19.7 through the first eleven months of the year, while batteries for EVs averaged $28.8, according to US trade data. Chinese trade data also show that the EU imports more Li-ion battery units than the United States, suggesting Europe’s imports are more focused on EV batteries. This aligns with Europe’s higher EV penetration rate, which explains China’s relatively lower Li-ion battery export prices to the United States.

Indeed, US deployments of Li-ion storage projects are another factor driving its per-kilogram Li-ion battery import costs lower. Battery storage deployments have surged from 3.4 gigawatts (GW) in 2021 to nearly 8.3 GW in the first eleven months of 2024—a period that correlates with the decline in Chinese per-kilogram export prices.

Chinese battery exporters may indirectly benefit from the US solar deployment boom, despite limited eligibility for tax credits. About 53 percent of US solar projects—and 98 percent under the California Independent System Operator (CAISO), the United States’ most advanced solar market—include paired battery storage in order to reduce curtailment. While US data on its domestic Li-ion BESS production is lacking, market actors suggest China supplies most BESS batteries; conversely, EV batteries are primarily made in the United States. Without policy shifts, such as greater tariffs on Chinese products or more incentives for domestic manufacturing, Chinese suppliers are likely to dominate the growing BESS market.

Finally—and while difficult to prove definitively—Chinese battery exporters may be lowering per-kilogram prices to undercut US and allied manufacturers. US battery investment has surged, rising from under $4 billion in 2021 to over $33.8 billion by late 2024, potentially triggering worries in Beijing that the United States could eventually surpass China in this dual-use technology. Meanwhile, Chinese and South Korean exporters—the top two suppliers to the United States—appear locked in a price war, although Chinese shipments of storage batteries far outweigh South Korea’s, totaling 678,000 tons versus 58,000 tons through November 2024.

It is preferable for the United States that South Korea—a US treaty ally and vital defense industrial base partner, including in semiconductors and shipbuilding—can compete with China in batteries. Indeed, the United States and its allies must win the battery race with China, especially given the technology’s military applications. Accordingly, increasing and accelerating tariffs on Chinese-made lithium-ion storage batteries would bolster US and allied manufacturers at the expense of Chinese competitors. Worryingly, existing planned tariffs will not close the cost gap between US-made and Chinese-made batteries, according to an analysis by Rahul Verma of Fractal Energy Storage. Additional tariffs on Chinese imports—and incentives for US manufacturers—may be necessary to close the cost gap.

To be sure, additional tariffs on Chinese-made lithium-ion storage batteries will impose short-term costs and slow domestic deployment of clean technologies, especially solar energy. Still, US long-term strategic interests—which include reducing emissions as rapidly as possible—are best served by constraining China’s dual-use technological capabilities and industrial capacity in batteries while advancing related US and allied competencies.

Given the need to jumpstart US and allied battery technological and manufacturing capabilities, additional, accelerated tariffs on Chinese-made Li-ion batteries for both EVs and BESS are appropriate. Additionally, policymakers should collect better data on Li-ion domestic production and make that information public. When placing tariffs on Chinese-made Li-ion batteries, however, policymakers should ensure that the United States, working closely with allies and partners, develop a US battery complex. Outcompeting China in batteries, a vital military and energy technology, is critical for US and allied security.

Joseph Webster is a senior fellow at the Atlantic Council’s Global Energy Center and its Indo-Pacific Security Initiative. He is also editor of the independent China-Russia Report. This analysis reflects his own personal opinion.

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Ukrainian parliament prepares to vote on Bulgarian nuclear reactor purchase

Stephen Blank — Tue, 21 Jan 2025 21:34:04 +0000

The Ukrainian parliament is expected to vote soon on the possible completion of two nuclear reactors at its Khmelnytsky Nuclear Power Plant in the west of the country using Soviet-era equipment purchased from Bulgaria. The vote comes at a critical time for Ukraine’s energy sector following a prolonged Russian bombing campaign targeting civilian infrastructure that has decimated thermal and hydro power plants. As a result, Ukraine is now heavily reliant on the nuclear power industry, which is currently thought to be providing over seventy percent of the country’s electricity needs.

With other sources of power at far greater risk of Russian attack, expanding the country’s nuclear power generation capacity is seen by many in the Ukrainian energy sector as a priority. However, the only suitable components to complete reactors three and four at the Ukrainian nuclear power plant in Khmelnytsky are currently sitting in Bulgaria gathering dust and waiting for the green light from Kyiv.

Since Ukraine’s nuclear power plants date back to the USSR, the country finds itself forced rely on reactors built with Soviet technology. Bulgaria has offered to sell Ukraine reactor components originally intended for the country’s Belene Nuclear Power Plant project. This would make it possible to complete construction of two additional reactors at the Khmelnytsky plant, which would bring the total number of reactors in service to four. Two further reactors are also planned at the plant using Western technologies, but this is expected to be a longer process.

Backers of the potential agreement with Sofia note that it would strengthen bilateral ties between Ukraine and Bulgaria, which has long been a target of Russian subversion. With the Kremlin’s full-scale invasion of Ukraine set to enter a fourth year next month and with Moscow working hard to undermine support for Kyiv within the EU, this geopolitical context is an additional factor when assessing the suitability of the proposed reactor deal.

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Ukraine’s potential nuclear reactor purchase from Bulgaria has received backing from within the US nuclear industry. “As the Ukrainian parliament considers legislation to authorize completion of the Khmelnytsky Nuclear Plant, NEI supports Ukraine’s efforts to complete the facility,” commented the Washington DC-based Nuclear Energy Institute. This makes sense. US nuclear energy company Westinghouse has already signed a memorandum of understanding with Ukraine’s Energoatom to install its AP1000 reactors in Ukraine, but these US reactors will take several years to build.

In light of the extended waiting period before new nuclear reactors can realistically be installed, Ukraine and its Western partners must find ways to keep infrastructure running and expand the country’s nuclear electricity generation as quickly as possible. Under the circumstances, supporters of the Bulgarian deal argue that it would be a wasted opportunity to leave units three and four at the Khmelnytsky plant partially completed when the parts needed to finish the job and provide electricity are available.

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As Ukraine debates the potential delivery of Bulgarian reactors to expand one of the country’s Soviet-era nuclear plants, EU officials have reportedly ruled out contributing to the purchase. Opposition has also come from some segments of civil society and within parliament, with critics questioning the transparency of the proposed reactor deal and claiming Ukraine’s energy priority should be decentralization.

In a step toward greater transparency within the country’s nuclear energy industry, Energoatom agreed in January to bring its supervisory board into compliance with OECD guidelines. The process will take place under new supervisory board chairman Jarek Niewierowicz, Lithuania’s former energy minister and chief adviser to the Lithuanian president on environmental and infrastructure issues.

Helping Ukraine to rebuild and recover is recognized as a strategic priority by both the European Union and the United States, but supporting the resilience of the Ukrainian energy sector is not just a matter of standing in solidarity with Ukraine against Russia’s ongoing invasion. Given Ukraine’s considerable economic potential, it could serve as an attractive investment opportunity for the United States and EU nuclear power industries. Once the shooting stops and with better integration, Ukraine could even become a net exporter of electricity to the European Union. In the present wartime conditions, Ukraine already exports electricity when circumstances allow to neighboring countries including Moldova.

As Ukrainian MPs prepare to vote on the proposed Bulgarian purchase, longstanding efforts continue elsewhere in the energy sector to increase security, improve connectivity, and enhance integration between the Ukrainian and EU networks. While Soviet technology is certainly not a long-term solution to achieve the right energy balance in Ukraine, supporters of the Bulgarian reactor deal remain convinced that there are currently no practical alternatives until Western technologies can fully power the country’s strategically crucial nuclear plants.

Stephen Blank is a senior fellow at the Foreign Policy Research Institute.

Shaffer in Real Clear Energy: “Iran’s Energy Crisis”

Brenda Shaffer — Mon, 20 Jan 2025 16:47:00 +0000

The post Shaffer in Real Clear Energy: “Iran’s Energy Crisis” appeared first on Atlantic Council.

Syria’s energy sector and its impact on stability and regional developments

Brenda Shaffer — Fri, 17 Jan 2025 17:10:25 +0000

A quick outlook regarding Syria’s energy resources and infrastructure, including the role of declining oil revenue under the Assad regime’s governance and the prospects for, and geopolitical impact of, Syrian energy production and trade in a new era.

Executive summary

Syria has the potential to significantly increase its oil and natural gas production, which can provide energy and government revenue that are critical for its stability and reconstruction. Syria was an oil exporter in the decades prior to its civil war, and its natural gas production started to increase on the eve of the war. Most of Syria’s oil and natural gas fields are located in eastern Syria, in areas that are currently largely under the control of the predominately Kurdish Peoples’ Protection Units (YPG) and where US forces are deployed. The YPG is an affiliate of the terrorist-designated Kurdistan Workers’ Party (PKK) but has been a partner of the United States in its campaign against the Islamic State of Iraq and al-Sham (ISIS). Control of these oil and natural gas fields plays a role in the developing conflict between the new central government and the YPG, and will potentially serve as an issue of disagreement between Washington and Ankara. In the future, Syria will likely be integrated into regional natural gas trade and might become a transit state for Israeli and Egyptian gas heading to Turkey and to Europe. Turkey announced its intention to begin exclusive economic zone (EEZ) delimitation negotiations with Syria. This will likely spark opposition from Cyprus and Greece, which might turn to Washington and Brussels for support.

Vendors selling diesel and gasoline wait for customers along a street after the ousting of Syria’s Bashar al-Assad, in Damascus, Syria, January 7, 2025. REUTERS/Khalil Ashawi

1. Syria’s energy resources and infrastructure

Prior to the outbreak of Syria’s civil war in 2011, the country’s oil and natural gas reserves meant it was self-sufficient in terms of energy supplies. Before the civil war, Damascus also exported oil. Sales of oil and gas provided 20 percent of the government’s revenue.¹

Most of Syria’s oil and natural gas fields are located in the eastern part of the country. As of publication, the YPG controlled the bulk of the fields in northeast Syria. Control of these fields is a major factor in the new regime’s efforts to establish its full authority in Syria. The new central government aims to gain control of these fields, and this plays a role in the unfolding conflict between it and the YPG, as well as disagreements between Turkey and the United States.

Foreign actors are already increasing their involvement in Syria via the energy sector. Qatar and Saudi Arabia have pledged to supply fuel to Syria.²

Turkish companies such as TPAO and BOTAŞ are positioned to play a leading role in future oil and gas exploration and production in Syria, while Turkish power companies will likely play a major role in Syria’s electricity sector. Azerbaijan will also likely play a role in developing the Syrian energy sector.³ Azerbaijan has already sent significant aid to Syria, including fuel supplies. Due to its close alliance with Turkey, Azerbaijan will likely work together with the Turkish government and Turkish energy companies in energy provision and development in Syria. In addition, foreign companies such as Total and Shell, which operated in Syria before the civil war, will have an advantage in gaining access to Syrian exploration and production.⁴

2. Oil

The US Energy Information Administration (EIA) estimated in 2015 that Syria possessed 2.5 billion barrels of proved oil reserves.⁵ Syria’s crude is heavy and sour.⁶ In 2010, Syria produced 383,000 barrels per day of oil.⁷

Estimates of Syria’s oil output on the eve of Bashar al-Assad’s ouster range between 40,000–80,000 barrels per day.⁸ Up until Assad’s departure, Iran was providing the bulk of Syria’s oil supplies, up to 100,000 barrels a day. Tehran supplied this oil to Syria essentially for free, via a credit line that Damascus did not pay. Iran stopped supplying oil to Syria on December 9, 2024.⁹ Iran has told the new regime in Syria that it owes Iran between $30–50 billion for these fuel supplies and other aid during the Assad period.¹⁰ According to press reports, the new government in Syria does not intend to pay these Assad-era debts. Instead, it responded that Iran owes Syria $300 billion for the damage its forces did there.¹¹

3. Oil refineries

Syria has two oil refineries, located in Homs and Banias, and both are state owned. Before the war, these refineries’ capacity met Syria’s refined product demand.¹² However, the refineries suffered extensive damage during the civil war.

Source: International Energy Agency (IEA): https://www.iea.org/countries/syria

4. Natural gas

In 2015, the EIA estimated Syria’s natural gas reserves at 240 billion cubic meters (BCM). Syria possesses both wet and dry gas.

Syria’s natural gas is used for power production and is needed for reinjection into Syria’s oil fields. According to BP, Syria produced 8.7 BCM of natural gas in 2011, which fell to 3 BCM annually by the 2024 fall of the Assad regime.¹³ According to IEA estimates, natural gas provided one-quarter of Syria’s electricity supplies in 2022.¹⁴

Syria has not explored for oil and natural gas in its EEZ, though legal preparations to commence exploration were under way prior to the war. Like its neighbors in the Eastern Mediterranean, Syria is likely to discover oil and gas resources in its EEZ.

Prior to the war, several foreign companies engaged in natural gas development in Syria, including Canada’s Suncor Energy, the United Kingdom -based energy group GulfSands Petroleum, and China’s Sinochem. In addition to its oil production, Total also developed the Tabiyeh natural gas project. Damascus contracted the Russian energy holding Soyuzneftegaz to explore in Syria’s EEZ, but exploration didn’t commence.

5. Electricity

Provision of electricity to the public is one of the new Syrian government’s most important tasks to establish its rule and attain stability. Syria’s leader Ahmed al-Sharaa has stated a goal of providing eight hours per day of power by late February.¹⁵

Ankara has pledged to support Syria through restoration of electricity supplies to the public. Turkey has already extended electricity supply in Syria: the Idlib region receives power from Turkey, and Ankara is extending its reach to repair power plants in Syria. Turkey’s Minister of Energy and Natural Resources Alparslan Bayraktar stated that in the first phase, “[Turkey] must bring electricity to the places in Syria where there is no electricity very quickly. We will do this here first with imports. With medium-term plans, we are planning to increase the electricity installed capacity and the production capacity there.”¹⁶

Turkey and Qatar have committed to deploy floating power-supply vessels to provide electricity to Syria.¹⁷ Turkey has deployed a fleet of such vessels in various countries, including in Africa.

Prior to the outbreak of the civil war, Syria generated close to 29.5 billion kilowatt hours of electricity annually, while its consumption was 25.7 billion kilowatts.¹⁸ The bulk of this came from thermal power plants fueled by oil and natural gas. The Tishrin hydropower plant in the Aleppo district provided 4 percent of Syria’s electricity.

Source: Author’s elaboration using International Energy Agency (IEA) data

6. From exporter to importer

In almost textbook manner, the civil war broke out just as Syria’s growing oil consumption became equal to its declining production. Thus the regime had dwindling financial means to sustain its power and provide public goods, coopt support, and pay the security services. The revenue drop from oil sales was a major factor in the regime’s inability to cope with public unrest and, thus, its decision to rely on support from Iran, Russia, and Hezbollah.

During the Arab Spring, governments in regional countries rich in oil and gas survived the challenge, supported by government subsidies to the public for energy and other goods. However, states like Egypt that went from energy exporters to energy importers, and states like Syria with dwindling oil production rates, were not able to mitigate the effects of rising fuel and foods costs through increasing subsidies because they no longer had significant revenues from energy exports.¹⁹

7. Future developments

Syria has significant potential to increase its oil and natural gas volumes. Syria can also serve as a transit state for natural gas from Israel and other producers in the Eastern Mediterranean to Turkey and onward to Europe. Turkey will play a major role in Syria’s reemerging energy sector. US, UK, and EU sanctions waivers and exemptions for World Bank loans are necessary to facilitate the investment for energy supplies in Syria. The World Bank has ended loans for fossil fuels projects, and an exemption will be necessary to allow public finance for Syria’s energy sector.

Turkey will likely lead the reconstruction of Syria, especially in the field of energy.²⁰ Ankara plans to help develop Syria’s oil and natural gas resources and use energy exports to fund reconstruction. As Bayraktar explained, “We aim to develop these projects . . . we are acting with a vision to bring this potential of Syria to the Syrian economy and to use the resources obtained from there for the development, construction and development of Syria.”²¹ He stated that Syria’s oil production can increase significantly and the oil can be sent to Turkey’s refineries. The minister stated that Turkey will work with the new government in Syria on an infrastructure masterplan.²²

Improvement of Syria’s electricity supplies can benefit Lebanon, which also suffers from insufficient power supplies. Bayraktar said Turkey could also send electricity to Lebanon via Syria.²³ Future natural gas supplies from Syria or transited via Syria could also be supplied to Lebanon, which could greatly improve Lebanon’s economic prospects.

As developments unfold, the control of Syria’s oil and gas fields and power plants will change hands. As pointed out above, most of the oil and gas fields are located in areas controlled by the YPG and in proximity to US forces, which are partners of the Kurdish militia. Thus, the status of the oil and gas fields is intertwined with Damascus’s efforts to disband the YPG as well as the developing understanding between Turkey and the United States regarding Syria. The new regime in Damascus, together with Turkey, will challenge and likely prevail over the YPG and other Kurdish militias.

Discord between the new regime in Syria, Turkey, and the United States over the status of the Kurdish militias in Syria is likely to change with the departure of the Joe Biden administration. The Donald Trump administration will likely withdraw the US forces, albeit probably several months after entering the White House.

Syria will likely be integrated into regional gas trade and, as noted earlier, might serve as a transit state for gas exports from Israel and Egypt to Turkey and Europe. While this may sound farfetched, it is not without precedent. During 2021–2022, Biden’s energy coordinator, Amos Hochstein, led efforts to establish Egyptian gas exports via Jordan, along the Arab Gas Pipeline, to Syria and onward to Lebanon. Lebanon and Syria signed gas import agreements with Egypt while, in parallel, Egypt agreed to import additional Israeli gas volumes via Jordan.²⁴ Essentially, increased volumes from Israel would have enabled Egyptian exports to Syria and Lebanon, and Israeli gas would have been supplied to Syria and Lebanon. All the participants in the plan were aware of the reality that Egypt would be supplying Israeli gas to Syria and Lebanon.

Export of Israeli gas and/or electricity to Syria—perhaps under the Egyptian or Jordanian label—could provide quick relief for Syria’s energy shortages. However, the lack of direct relations between Syria and Israel, and the currently poor state of relations between Ankara and Jerusalem, prevents this. Despite the harsh rhetorical exchanges between Israel and Turkey in recent weeks, the two countries share interests in Syria: stability, prevention of the country being used as a springboard for terrorism, and removal of Iranian militias and influence.

If stability is reached in Syria, Damascus will likely succeed in increasing its natural gas production and might be able to export gas to markets such as Lebanon and Turkey. Prior to the civil war, Egypt led efforts to extend the Arab Gas Pipeline to the Turkish border. A pipeline connection on land or a pipeline via Syria’s EEZ to Turkey would not require major investments.

Turkish officials announced that Ankara would like to quickly delimitate its maritime EEZ border with Syria in order to initiate oil and gas exploration.²⁵ The borders set between Syria and Turkey will likely pose a challenge to the declared EEZ of Cyprus. Thus, the Syrian-Turkish EEZ decision could trigger reaction from Cyprus and Greece, which could appeal to Brussels and Washington to take action.²⁶

Finance for energy projects in Syria will require the removal—or at least the waiver—of US, EU, and UK sanctions that were imposed on Syria under the Assad regime. The United States has already declared a waiver of its sanctions for six months to facilitate humanitarian supplies to Syria, including fuel.²⁷ The Trump administration is likely to support the removal of the sanctions on Syria. The president can grant waivers, even if the congressional sanctions are not removed. The actions of the new regime in Syria, and of Turkey in Syria, will affect congressional approval of sanctions removal.

An exemption from the World Bank and Group of Seven (G7) countries’ limitations on funding of fossil fuel projects would also be needed in order to access public finance to support the rebuilding of Syria’s energy infrastructure and production. The Trump administration is expected to remove the limitations on public finance for fossil fuels, which were adopted during the Biden administration. The Trump administration will likely advise the World Bank to remove the limitations as well. However, this could take time, while Syria will need loans to reestablish energy supplies quickly.

To summarize, this paper recommends the following action:

The U.S. should support a process that leads to Syria’s oil and gas fields returning to central government control.
Unlock World Bank and regional public bank financing for fossil fuel projects in Syria.
Remove Western sanctions or grant waivers to allow investment and trade with Syria.
Washington should work with Ankara to integrate Syria into regional electricity and natural gas trade.

Energy will play a major role in the developing events in Syria in the coming months. The new government’s ability to provide electricity and fuel will strongly affect public support and is necessary to jump-start the economy. Foreign engagement in Syria will focus heavily on the energy sector. Turkey will rebuild electricity supplies, while Saudi Arabia and Qatar will likely pay for the replacement of the free Iranian fuel supplies that Tehran had provided to Syria. Further along, Syria might play a role in regional natural gas trade.

About the author

Professor Brenda Shaffer is a nonresident senior fellow at the Atlantic Council Global Energy Center, a faculty member at the US Naval Postgraduate School and Advisor for Energy at the Foundation for Defense of Democracies. Follow her on X @ProfBShaffer.

Webster quoted in Barron’s on new sanctions on the Russian oil industry

Joseph Webster — Thu, 16 Jan 2025 15:26:00 +0000

The post Webster quoted in Barron’s on new sanctions on the Russian oil industry appeared first on Atlantic Council.

Securing a free and open world: A US-EU blueprint to counter China and Russia

Kaush Arha, Peter Harrell, and Jörn Fleck — Wed, 15 Jan 2025 22:17:51 +0000

Introduction

The Indo-Pacific region is now the fulcrum for economic and security concerns. However, American interests span the globe, and its adversaries China and Russia are seeking to thwart them across the Indo-Pacific and the Atlantic and in between. President Dwight D. Eisenhower’s parting admonition in 1961 about a strong America echoes in the present: “The most influential and the most productive nation in the world” faced a formidable challenge—”global in scope, atheistic in character, ruthless in purpose, and insidious in method.”

A strong strategy to make America great points to making common cause with proven alliances to force multiply US resources in repulsing adversarial actions. In particular, the United States needs to fortify and connect its European and Asian alliances to better counter both China and the Russian Federation on both ends of the Europe-Asia landmass. The US-European alliance has prevailed over two world wars and the Cold War, and shared burden in Iraq and Afghanistan. History and foresight call for the United States to strengthen the transatlantic alliance as it directs greater attention to the Indo-Pacific region.

The transatlantic alliance, with all its oversights and shortcomings, has been a force for world peace and prosperity over the last seven decades—and it needs to cohere as China and Russia engage in a concerted effort to disrupt the rules governing international relations. The Chinese Communist Party (CCP) aims to challenge American interests from the Arctic to the Antarctic and has strengthened its ties with Russia, Iran, and North Korea to weaken both American and European interests and values across the globe. Consequently, it is in the interest of the United States and its European allies, even amid differences of opinion, to double down on their proven partnership to forge a coordinated response against shared adversaries.

The CCP’s push to dominate manufacturing at every level of the global value chain represents a serious and growing economic threat to American and European free market interests. The sheer scale of China’s excess capacities threatens to undermine manufacturing and economic progress in both Europe and the United States, causing deindustrialization-level trauma to our industries—“China shocks.” At the same time, China seeks to build a technological edge in key emerging technologies, ranging from new energy technologies and robotics to quantum computing and artificial intelligence (AI).

Militarily, China’s material support to Russia has enabled Moscow to sustain its land war in Europe. The growing Sino-Russian defense cooperation may also provide valuable lessons and support to Beijing should it initiate a military conflict in the Indo-Pacific region. Against this background, the United States and Europe need a new shared agenda to counter Chinese economic mercantilism and strengthen transatlantic defense production and military capabilities to maintain an edge over the China-Russia military nexus. Aligning on a shared strategy to combat Sino-Russian convergence will serve the interests of both the United States and the European Union (EU) and help to preserve transatlantic security and prosperity.

With the world’s two largest economies and the highest levels of integration, the United States and the EU enhance their economic strength when aligned. The transatlantic integrated investment landscape boasts a total annual value in excess of $8.7 trillion—with more than $4 trillion of US investment in Europe and more than $3.4 trillion of European investment in the United States. The combined technological and industrial base remains strong in both traditional manufacturing—despite emerging threats from China—and in the development of new technologies including AI. As the largest and most innovative economic grouping in the world, the transatlantic economies should be harnessed to the transatlantic allies’ collective advantage against the shared global adversaries and rivals determined to drive a wedge between them.

European Commission President Ursula von der Leyen—amid political turmoil in leading European capitals (with the exception of Rome)—appears both to comprehend the gravity of threats arrayed against transatlantic interests and to commit to stronger relations with the United States. Her views on China, Russia, and Israel are arguably more like-minded to traditional US views than any other European leader. In Kaja Kallas, the EU’s foreign policy chief, she has an able emissary capable of forging a defining US-EU partnership, with significant respect garnered in Washington through her prior role as prime minister of Estonia. President-elect Trump and von der Leyen have a generational opportunity to cement the US-EU economic partnership on a par with that of NATO to constitute redoubtable twin pillars—economic and military—of a forward-looking transatlantic alliance.

This paper explores how the United States and EU can best meet this moment through enhanced strategic partnership. For a start, that partnership should focus on five reinforcing lines of effort representing a high convergence of national interests and comparative advantage. These include defense industrial production; energy security and transition; sectoral economic agreements; digital economy and advanced technology; and infrastructure and connectivity. Collectively, these five lines of effort will advance shared American and European interests in connecting free and open spaces around the globe—constricting the operational space of their adversaries to carry out their malign activities.

Transatlantic defense industrial capacity and capabilities

A just and swift resolution of Russia’s war on Ukraine that leaves Europe and NATO more resilient, resolute, and strong represents the highest of transatlantic priorities. While NATO members deliberate collective military capabilities and readiness as well as their coordinated support of Ukraine, the EU has a critical complementary role to play during and after the cessation of hostilities. Through its power of the purse and its ability to mesh the civilian and military dimensions of European preparedness, the EU is poised to play a transformative role in buttressing NATO capacities and commitments with overlapping benefits to defense and civil sectors of the economy. Both NATO and EU leaders have made clear that the goal is now to spend more and spend better. Where appropriate, institutional investments by the United States and the United Kingdom can complement the European efforts outlined below.

To complement NATO strategic posture along four broad lines of effort, the European Commission can:

Contribute to NATO demand outlays: First and foremost, the Commission can work with EU members of NATO to meet the $34 billion demand outlays represented in the recent NATO planning strategy. It may direct the commissioner for defense (a recently established role) to work with EU members of NATO for a coordinated approach to augment their present national defense investment commitments, which will be all the more important if plans proceed for NATO to raise the target from 2 percent of respective gross domestic product (GDP) to 3 percent or beyond in the near future. The commissioner is already mandated to produce a white paper within one hundred days to frame a new approach for the future of European defense, which will “identify investment needs to deliver full-spectrum European defence capabilities based on joint investments” to help member states to prepare for the “most extreme military contingencies.” The EU has a distinct comparative advantage in undertaking such continent-wide investments augmenting individual actions by NATO members.
Establish European security corridors: While work on military mobility corridors is already underway, EU investments directed at infrastructure connectivity and cohesion in Eastern Europe should be augmented to meet the dual needs of force mobilization and economic integration. NATO’s forward deployment posture necessitates efficient road and rail networks along its eastern front to expeditiously mobilize and move military assets from Finland to Romania. It also requires multiple transport corridors to the NATO front from the nearest strategic ports to ensure resilience and redundancy. A road-rail-energy-digital corridor from Constanta-Odessa on the Black Sea to Gdansk on the Baltic Sea connecting Casneau, Bucharest, Lviv, and Warsaw may hold the highest transformative defense, economic, and political impacts. Similar corridors from Trieste on the Adriatic to Gdansk and Constanta, respectively, would further magnify the defense and economic dividends across Eastern Europe. Additionally, the Danube River Transport Corridor may be prioritized as one of the primary European economic and security thoroughfares supporting NATO’s most vulnerable southeastern front along the Black Sea.
Commit to a transatlantic defense industrial base: The Ukraine conflict has unveiled the urgent need for transatlantic defense production to move into high gear to prepare for existing and probable future conflicts. The prospect of sustained higher defense spending in Europe provides the economic motivation needed to rebuild this industrial base. American and European defense industries are stepping up to the plate, but much more needs be done. Four areas of priority and pragmatism (not precluding others) stand out for immediate transatlantic joint investment and codevelopment:
1. Munitions readiness and supply: Russia’s war in Ukraine has laid bare transatlantic munitions reserves to sustain or support an extended land war. This deficiency requires urgent remediation to not only ensure that future NATO needs are addressed but to contribute to projected needs in the Indo-Pacific theater as well. As US and EU leaders take initiatives to secure and expand ammunition production capacities on both sides of the Atlantic, they should seize opportunities to build in coinvestment and codevelopment, particularly for long-range precision artillery. The EU’s defense industrial ambitions, building off the Act in Support of Ammunition Production (ASAP) to increase ammunition production and including the European Defence Industry Programme (EDIP), should be quickly adopted and substantially expanded.
2. Air shield and next-generation interceptors: The conflicts in Ukraine and the Middle East have highlighted the need for a cutting-edge air-defense shield to withstand sustained and overwhelming drone and missile attacks. Coinvestment and codevelopment in such air-defense mechanisms and next-gen interceptors to protect Europe should be among the highest priorities to strengthen.
3. Undersea critical infrastructure security: Sabotage of natural gas pipelines and digital cables in the Baltic Sea and elsewhere have alerted transatlantic allies to the urgency of deploying a resilient security net to protect ever-important subsea infrastructure—particularly across the Atlantic, Mediterranean, North, Baltic, and Black seas. These challenges are mirrored in the Indo-Pacific region, particularly in the South China Sea. Unmanned submersibles will play a pronounced role in subsea infrastructure security and present a significant opportunity for transatlantic coordination and codevelopment.
4. A Free North: Arctic-Nordic-Baltic security capabilities and readiness: Increased China-Russia activities and coordination in the fast-changing Arctic region have raised concern from Alaska to Finland. A shared commitment to a Free North by allied Arctic, Nordic, and Baltic nations to develop the requisite capabilities—with particular attention to ice cutters, submarines, and air force assets, among others—is highly warranted and ripe for enhanced investment and development.
Cosponsor future European troops preserving peace in Ukraine: It is possible that a resolution of the Russian war on Ukraine will require the presence of a European force to preserve the peace. Given the global commitments of the United States and increasing demands in the Indo-Pacific region, it is appropriate for Europe to muster the peacekeeping force along its eastern flank. NATO involvement and specifically US backup support will remain integral and indispensable in support of any such future European peacekeeping force. The EU may offer valuable financial and political support to such a European coalition of the willing. Improved NATO-EU collaboration will also be necessary to ensure properly aligned transatlantic support for Ukraine into the medium to long term.

Energy security and transition

Energy independence and resilience are imperative for transatlantic prosperity and security. Affordable access to energy is critical for economic competitiveness in the global marketplace, and energy security is a necessary condition for a credible transition to cleaner sources. Thanks to US innovation, North America has emerged as one of the world’s most important sources of oil and gas, enabling Europe to find alternatives to Russian energy after Russia’s invasion of Ukraine. A relapse of European reliance on cheap Russian energy following cessation of Russian hostilities in Ukraine would be grossly negligent and require preparatory actions to deter future follies. And with nuclear, geothermal, hydrogen, wind, and solar energy poised to play increasingly important roles in meeting energy demand in the years ahead, there is no reason for the United States and Europe to become dependent on countries like China and Russia for critical inputs. We think it is the interests of both the United States and the EU to strive for close coordination to buttress transatlantic energy resilience and security. They should aim for substantial market share and comparative advantages over shared adversaries in old and new energy sources and technologies.

We envision four reinforcing lines of effort in such a US-EU energy security and transition pact:

Natural gas: Increased transatlantic coordination and investment is warranted to ensure greater American supply of natural gas to Europe at competitive and reasonable costs. This entails a US commitment of requisite supply to ensure European energy security and a corollary European commitment to build liquefied natural gas (LNG) import terminals with appropriate repurposed and new pipeline networks to receive US natural gas imports.
Nuclear energy: It would be imprudent to cede the nuclear energy industry to the purview of adversaries and rivals such as China and Russia. Transatlantic coordination and codevelopment of nuclear facilities and technologies should ensue, with particular attention to the development of small modular reactors (SMRs) and micro reactors. The United States and Europe enjoy a comparative edge over China and Russia in technology and market application for SMRs and micro reactors and can press their advantage. Smaller nuclear applications are being tested for a range of systems from space stations and data centers to container ships, among others.
Renewables: The United States and Europe must regain ground lost to China in global markets and supply chains for renewable energy equipment and manufacturing. Solar and wind energy represent growing portions in local energy portfolios across the world. Representatives of the once-thriving European wind-energy sector, for instance, have warned that it is unlikely to survive in the face of unfair Chinese competition. The US renewable industry is in a similar bind.
Future energy technology: The United States and Europe need to enhance their coordinated research and investment in developing future energy technology including fusion, hydrogen, and other areas where the US National Laboratories are engaged in pathbreaking research.

Sectoral economic agreements

Washington and Brussels increasingly face a shared set of economic challenges: revitalizing manufacturing in the face of predatory Chinese competition; protecting the integrity of technology and supply chains; and generating strong economic growth. A recent EU-commissioned report written by Mario Draghi highlighted the need for European strategic investments to address regulatory barriers to bolster its competitiveness.

As the global economy becomes more stratified along geopolitical lines, common sense and national interests will likely encourage the United States and Europe to coordinate their economic security measures for critical sectors of the world’s largest integrated economy. This engagement probably will involve a combination of derisking and targeted decoupling from economic systems that pose threats to transatlantic security and prosperity. As critical sectors such as semiconductors, steel and aluminum, critical minerals, and pharmaceuticals are of significant political and industry interest on both sides of the Atlantic, there is a need to come to a collective understanding.

Sectoral agreements offer rich opportunities for negotiations, usually providing many possible permutations and combinations to choose from, with scope for trade-offs across respective industrial priorities, and a means of aligning a wide range of tools to achieve targeted effects. They may constitute enhanced coordination across a mix of offensive and defensive measures to address China shocks and enhance collective economic security such as aligning industry standards, strengthening mutual access to one another’s procurement markets and subsidies, joint and coordinated investments and trade, coordinated application of tariffs, quotas, qualitative standards (cyber, data, labor rights, transparency), and other economic security tools (export controls, research security, secure supply chain rules). Additional complementarity is desirable in rules governing inbound and outbound investment screening in critical sectors as well as execution of broader export controls approaches.

Transatlantic coordination in the application of such tools in third-country markets is critical. Significant coordination on economic forensics on issues such as circumvention, transnational subsidies, and lengthening supply chains will be necessary as Chinese firms seek more creative ways to circumvent US and European efforts to protect their markets. From Central America to Southeast Asia, there is a real risk that poorly designed or coordinated transatlantic decoupling, derisking, and diversifying efforts may just result in more convoluted and veiled dependencies on China and its allies.

Any “defensive” agenda can be coupled with a positive offer to advance sectoral cooperation with other key partners, given that many of the production needs for a diversified and trustworthy supply chain will not be entirely located in the United States and Europe. This will require close alignment of development financing tools in areas such as digital infrastructure, as well as a wider use of sector-specific economic deals—such as those involving critical raw materials.

The United States and the EU have several options for the preferred forum in which to situate their sectoral agreements. It may be most expeditious to initiate them as bilateral arrangements that can later be expanded to include the Group of Seven and other member states of the Organization for Economic Co-ordination and Development (G7+).

Sectoral agreements hold high promise for advancing collective transatlantic interests and represent both a recognition of the inherent integrated nature of the transatlantic economies and an attempt to fortify critical sectors.

Digital economy and advanced technology standards

With AI and other technological advances poised to fundamentally transform business, government, education, and consumption, the United States and Europe both have a strategic interest in maintaining their individual and collective technical edge over their adversaries—while creating a joint regulatory environment that promotes Western technological development. The size of the transatlantic economy and the number of world-leading academic institutions and technology firms on both sides of the Atlantic are strategic advantages. Over the past several decades, the United States and Europe have been able to set rules and standards of economic interactions across the globe that prioritize transparency, accountability, individual liberty, and dignity. These transatlantic interests and values need to be equally and perhaps more urgently reflected in fast-evolving technologies like AI. The United States and Europe have an opportunity to coordinate to ensure they maintain a technical advantage over their adversaries and rivals and safeguard their ability to establish rules and standards for the future digital economy.

The ability to promote transatlantic interests and values in emerging digital technologies is fundamental to both US and European military defense capabilities, economic innovation, and global influence. Efforts must be intensified where progress is being made on transatlantic coordination in future technologies such as:

Artificial intelligence: On January 27, 2023, the United States and the EU signed an administrative arrangement to collaborate on research using AI, computing, and privacy-related technologies. The AI convention signed in Washington, Brussels, London, and elsewhere sends a strong signal for future collaboration, though there is much ground to cover to align US and EU regulations on AI.
Quantum computing: With recent breakthroughs in the United States and unconfirmed news of Chinese progress, it is in Europe’s interest to shift its low-key coordination with its transatlantic ally in this field into the high gear.
Biotech: China holds a slight edge over the United States and Europe in this field due to its sustained commitment and its significant investment in the sector. Europe boasts more biotech foundries than the United States, which makes it in Washington’s interest to engage with due haste with Europe and to include Japan, India, Israel, and the UK in forging a committed coalition to coordinate on biotech research, development, and manufacturing.

In addition to promoting new technologies, Washington and Brussels need to work together to protect the integrity of key existing communications and internet-connected technologies. The US government has recently imposed limits on Chinese telecommunications equipment, internet-connected vehicles, and other products. Meanwhile, the European Commission is considering developing standards for trusted suppliers of information communications technology (ICT) products. There is both a need and an opportunity for the transatlantic allies to facilitate, promote, and protect against existing technologies that rapidly reshape the global economic landscape including:

Space, cloud communications, and connectivity: American companies dominate global trusted cloud connectivity fueled by data centers connected by subsea fiber-optic cables. US-based Starlink and Blue Origin networks of low-orbit satellites are revolutionizing internet connectivity for areas once deemed remote. Cloud connectivity backed by satellite networks is ushering in a new era of global communications. The United States and Europe should coordinate in pressing their advantage against adversaries in global communication.
Electric vehicles and battery capacities: China enjoys early-mover advantage in electric car-battery technologies including the sourcing and processing of critical minerals. Coordinated US-Europe actions on market access and research and development are needed to not only protect transatlantic domestic markets but also prevent China from establishing dominance over the global EV market.

It is prudent for the United States and the EU to contextualize and subordinate their bilateral digital disagreements to their shared strategic objective of maintaining a collective technical edge over rivals and adversaries—not ceding any advantage to China or its allies. It is time to change the US-EU digital narrative from discord on digital regulations to shared rulemaking and standard setting for over-the-horizon technologies and digital governance. Through an updated and upgraded format of policy dialogue, US and EU policymakers can cement and advance Western leadership in the digital and tech spheres.

Infrastructure and connectivity

The United States and Europe have a generational opportunity to make common cause to promote and advance “free and open” spaces to serve the interests of the transatlantic community and nations around the globe. Throughout the twentieth century, the United States and Europe astounded the world through their accomplishments in connecting continents with awe-inspiring infrastructure. In the twenty-first century, when it comes to addressing the world’s seemingly insatiable demand for digital and physical connectivity, they appear to be playing catch up to China’s Belt and Road Initiative (BRI). The G7’s Partnership for Global Infrastructure Investments (PGII), led by the United States, and Europe’s Global Gateway initiative have thus far lacked in strategic coherence or impact and should be strengthened as a matter of urgency.

The free and open vision articulated by the Quad nations (India, Japan, Australia, and the United States) offers support to preserve the freedom of the seas, respect for territorial integrity including sovereign states’ respective jurisdictions over internal waters, territorial seas, contiguous zones, and exclusive economic zones, as well as safeguarding maritime infrastructure (including shipping ports, undersea cables and pipelines, oil and gas drilling and production operations) and maritime industries including fisheries. Additionally, free and open nations foster transparent investment and commerce respecting the rule of law and national sovereignty. In this sense, the free and open vision is applicable across all “commons” including space, air, maritime surface and subsurface, land, and cyberspace.

Connecting free and open spaces offers an organizing framework and strategic drive to the American and European efforts to promote quality infrastructure. Free and open spaces support increased security, expand regional stability, and promote economic growth. In particular, the greater the expansion of free and open spaces as paths of connectivity across the Eurasian landmass, the fewer opportunities for the disruptive and destabilizing behavior of Russia, Iran, and China to take root.

Several economic corridors are reemerging from Europe in all directions, promoting transport, supply chains, economic engagement, energy, and digital connectivity. Each one holds intrinsic value, but if woven together, they can transform and propel the EU economy and its larger neighborhood while also reinvigorating historic Indo-European trade and commerce. These corridors also offer attractive opportunities for US institutional investors. If developed to their full potential, they hold the promise of transforming the global landscape in a more economically sound and sustainable manner than the BRI. Five of these corridors stand out among the others for US-EU coordinated investment and support:

Free North: Changing weather patterns and increasing adversarial activities around the Arctic present an unprecedented opportunity for enhanced and expeditious coordination among the United States, Canada, Greenland, Iceland, and the Nordic and Baltic regions for improved connectivity, advancing economic commerce and security networks across the High North.
Coordinated connectivity across the Baltic, Black, and Adriatic seas: From Estonia to Greece, thirteen Eastern European nations have come together to advance transport, energy, and digital infrastructure across the region via the Three Seas Initiative. Greater engagement by Ukraine and Italy would lend additional economic heft to the enterprise. There are strong economic and military imperatives to promote a modern infrastructure network across the region to both advance NATO readiness and mobilization capabilities and further integrate Ukraine into the European Union.
Free and open Black Sea: It should be a transatlantic priority to enhance the capacity of the littoral states along the Black Sea to protect infrastructure, ensure freedom of commercial transit, counter adversarial actions to restrict access, and develop energy and maritime infrastructure. Additionally, the Danube River’s transport capabilities need to be optimally developed to ensure unfettered European water access to the Black Sea.
The Central Asia-Caucasus-Europe corridor: New leadership and energy at the heart of Central Asia is reinvigorating the region and its ambitions to establish strong digital and physical connections through Caucasus with Europe and beyond. Central Asia presents a large and valuable source of energy and critical minerals for the transatlantic community.
The India-Middle East-Europe economic corridor: At the 2023 G-20 Summit, the United States, the EU, Italy, Germany, France, India, Saudi Arabia, and the United Arab Emirates agreed to raise Indo-Mediterranean trade to new heights. From the classic Greek and Roman era to the eighteencentury, India had driven Indo-Mediterranean commerce as one of the largest economies of the world. A rising, modern India and the rapidly transforming Gulf nations are once again driving the next chapter of Indo-Mediterranean trade, linking the Indo-Pacific to the Med-Atlantic.

A transatlantic coordinated initiative to link free and open spaces from the Arctic to the Indo-Pacific region would energize the European economy, expand investment and market opportunities for American industry, strengthen transatlantic security, and convey the image of a muscular transatlantic alliance and solidarity across the globe. The driving force needs to be private-sector capital and investment, in coordination with diplomatic and political engagement that eschews traditional foreign aid and development assistance in favor of more innovative, dynamic, and responsive public-private partnerships. This necessitates seamless coordination, interoperable procurement, and risk-mitigating procedures across American and European development finance institutions. On the American front, reauthorizing legislation for the US International Development Finance Corporation (DFC) and the Export Import Bank of the United States in 2025 may facilitate greater flexibility in partnering with European counterparts.

A way forward

The partnership between Washington and Brussels, while more recent in nature, has the potential to advance both American and European interests. However, it lacks the resilience of institutional familiarity and solidarity that Washington has enjoyed with the leading capitals of Europe—forged in the twentieth century through World War I, World War II, and the Cold War.

The twenty-first century geopolitical landscape calls for a more robust, more ambitious Washington- Brussels alliance of fitting scope, buttressed by expeditious institutional coordination and trust in cooperation. Chinese predatory economic activities antithetical to transatlantic economic interests act as a strong catalyst, revealing the urgent need for closer economic coordination between the United States and the EU. Effective structural arrangements for greater coordination and understanding is urgently warranted to counter shared threats posed by China and Russia.

The experience of the US-EU Trade and Technology Council (TTC), conceptualized during the first Trump administration and established during the Biden administration, is instructive in building more robust arrangements for coordination. American and European officials should consider broadening the coordination mechanisms to include more relevant agencies on both sides.

Optimally, the TTC should be elevated and expanded to become the US-EU Strategic Council with regular biannual leaders’ meetings accompanied by a “4+4” ministerial meeting including the US State, Defense, Treasury, and Commerce departments (plus the Office of the US Trade Representative, as appropriate) and their European Commission counterparts. Importantly, the major impetus of these meetings should be directed at closer coordination on world matters, in addition to smoothening bilateral matters. Under Trump, there may also be a greater opportunity to negotiate binding commitments, as he achieved with Japan during his first term.

The US Congress and the European Parliament may also similarly consider expanding the scope of their ongoing engagement, addressing pressing issues affecting collective national interests not just at the political level but across specialized committees including foreign affairs, technology, trade, finance, commerce, homeland security, and more. In the immediate future, the transatlantic community may consider establishing dedicated working groups to develop modalities for enhanced transatlantic coordination along the five lines of effort mentioned above.

The growing coordination and solidarity of the China-Russia nexus presents a necessary impetus for a reinvigorated, forward-looking transatlantic alliance with strong defense and economic pillars. The time is now for the United States and the EU to anchor the transatlantic alliance’s economic pillar—which spans energy, technology, infrastructure, and other core economic interests—to complement NATO on defense. The fortitude and resiliency of the future transatlantic alliance and its capacity to prevail over shared adversaries and rivals will depend, in no small measure, on the strength of the US-EU alliance.

This paper is informed by the US-EU Strategic Dialogue convened by the Atlantic Council in Brussels and Washington. The views represented are those of the authors, with special acknowledgment of the able assistance of Emma Nix, an assistant director at the Atlantic Council’s Europe Center.

About the authors

Kaush Arha is the president of the Free & Open Indo-Pacific Forum and a nonresident senior fellow at the Atlantic Council’s Global China Hub and the Krach Institute for Tech Diplomacy at Purdue.

Peter Harrell is a nonresident fellow at the Carnegie Endowment for International Peace.

Jörn Fleck is the senior director of the Atlantic Council’s Europe Center.

Moldova is the real loser from the end of Russian gas transit through Ukraine

Suriya Evans-Pritchard Jayanti — Fri, 10 Jan 2025 22:29:57 +0000

A combination of circumstance, Russian malign influence, and its own failure to prepare has left Moldova the country hardest hit by the end of Russian gas transit through Ukraine. Upon the January 1, 2025, cessation of transit, Moldova finds itself in an energy crisis and facing political instability. The Russian-backed separatist region of Transnistria is experiencing major power cuts and is without an alternate source of gas, having rejected bailout offers from the European Union (EU) and Chișinău. The rest of Moldova is suffering from its reliance on Transnistria for electricity, as well as Chișinău’s consolidation of its gas market under the majority Russian-owned company Moldovagaz. Neither the Moldovan government nor Transnistria were prepared for the long-anticipated post-Russian gas transit reality.

The five-year natural gas transit contract between Russia’s Gazprom and Ukraine’s Naftogaz expired on January 1, ending a long history of Russian gas reaching Europe—and Moldova’s 2.5 million citizens—through Ukrainian pipelines. Kyiv elected not to extend the contract because, although it was earning approximately $800 million per year in transit revenue, Moscow was earning billions of dollars from the post-invasion residual annual transit of 15 billion cubic meters of gas, which was funding its ongoing assault on Ukraine. Hungary and Slovakia, which are both highly dependent on Russian gas, will be impacted, but it is Moldova that has been dealt the greatest blow.

While Moldova’s lack of preparation for the end of Russian gas transit is in large part responsible for the country’s current predicament, the Kremlin’s war on Ukraine is the principal cause of the current crisis. Amid Russia’s ongoing aggression, Chișinău and the European Union must work to find a way to stave off Moldova’s energy emergency and the looming humanitarian crisis in Transnistria, which risks further destabilizing the region. To break this cycle of annual energy crises in the future, Moldova will need to make concrete, meaningful reforms to its energy sector, which is the only way to diminish Russia’s leverage over the country.

A state of emergency

For Moldova, the end of Russian gas transit exacerbates both a rapidly deepening energy crisis and an ensuing political crisis. The official Moldovan government in Chișinău prospectively declared a state of emergency over energy concerns on December 13 and has instituted energy saving measures, such as dimming lights in public and commercial buildings by 30 percent. Transnistria, located on the “Left Bank” of the Dniester River and administered by the internationally unrecognized Transnistrian government, also declared a state of emergency, and all nonagricultural industry in the region has been shuttered. It has also set up communal heating centers and is helping residents find firewood.

But whereas Moldova proper, on the “Right Bank” of the Dniester, can import both electricity and gas from Europe—at a massively higher price than it was paying for Russian gas—the Left Bank has refused offers of in kind aid, including humanitarian aid and generators, as well as financial support from Europe with which to get through the winter. Buoyed by foreign assistance funds, Chișinău offered to help Transnistria buy gas and power imports from Europe, but the Left Bank has thus far declined any assistance. Instead, Transnistria seems to be waiting for Russia to turn the gas taps back on. Meanwhile, its lights are off and its 450,000 residents are expected to grow restive in the dark and cold.

Failure to prepare

This situation is years in the making. Moldova is one of the world’s most energy insecure countries and has long been reliant on Russian gas transited through Ukraine. Despite Moldova’s declaration of independence at the fall of the Soviet Union and much more recent disavowal of Russian gas, Russia’s majority state-owned gas giant Gazprom owns a 51 percent stake in Moldova’s state-owned gas company, Moldovagaz, and it has remained the country’s sole source of gas, whether directly or indirectly supplied. Following Russia’s full-scale invasion of Ukraine in 2022, Moldova took some steps to reform its energy sector, such as unbundling its gas transmission system to Romania’s Transgaz. However, Moldova simultaneously consolidated all gas distribution under Moldovagaz, forcing Western companies out of the market. Gas imports from non-Russian sources are possible, but they are few and mostly consist of Russian gas acquired via alternate routes. And Moldova lacks a viable market with which to attract private companies into the mix. In recognition of this, Moldova’s then energy minister, Victor Parlicov, traveled to Moscow in November 2024 to seek warmer energy relations with Russia.

Meanwhile, Transnistria houses Moldova’s only power plant, the Ciciurgan gas-fueled station, which it sold in 2004 to a Russian state-owned enterprise. Chișinău does not recognize the sale. Although Moldova has been importing some electricity from the EU, it is nonetheless dependent on Transnistrian electricity for about 70 percent of its needs. Moreover, the only high-voltage transmission line through which Moldova can import European electricity passes through Transnistria, although a new transmission line to Romania is currently under construction. In practice, this means that the Right Bank depends on the Left Bank for power, and the Left Bank depends on the Right Bank for the gas to generate that electricity. Historically, each has found this arrangement convenient for less than strictly above-board reasons. It was also a very affordable arrangement so long as Russia was providing the gas, so both sides have therefore long been dependent on Russia.

Russia, for its part, has made regular use of this leverage. The Kremlin has been waging a campaign to keep Transnistria—where just under half the residents hold Russian citizenship and are native Russian speakers, and which houses about 1,500 Russian soldiers—within its aegis and to destabilize Moldova. Energy has been its primary tool. Gazprom supplied gas to the Left Bank via Moldovagaz for free for years before presenting the bill to Chișinău. Gazprom asserts that the approximately €700 million value is a debt owed by Moldova and is using this as a justification for stopping gas supplies. (Chișinău says the debt is €8.6 million.) And any political instability born of blackouts or the inflation that buying energy on EU markets will cause is a bonus that will help the Kremlin undermine Chișinău and thereby hurt Moldova’s already shaky chances of joining the EU.

Although this situation could not have been avoided given Russia’s meddling in Transnistria, it was predicable, and Moldova could have been better prepared. Moldova’s prior annual energy crises are evidence of the foreseeability of this one, and the date of the end of Russian gas transit was well known. Ukraine’s previous bailouts of Moldova during those regular winter crunches could also have provided a template for managing this crisis even if Ukraine’s own energy crisis, caused by Russian bombing of energy infrastructure, has left Kyiv less able to support Moldova again this winter. Moldova could have built its own power station years ago to liberate itself from Transnistrian electricity supply. It could have used some of the more several billion euros in foreign assistance it has received since 2022 to develop an energy market that attracted foreign investment, including into natural gas supply diversification and distribution. It could have worked to break Moldovagaz’s monopoly instead of reinforcing it, which has helped Gazprom maintain leverage. The failure to take these steps has left the country few options for enhancing its energy security, and the current situation is the consequence.

Regardless of opportunities lost, however, the immediate cause of the crisis is Russia and its aggression in Eastern Europe. Neither the EU nor Kyiv can afford to let Moldova collapse in a wave of Russian-fomented unrest, given that it borders Ukraine and is situated in continental Europe. Most likely, EU aid will support Moldovan gas purchases through this winter. In the immediate term, Chișinău will be bailed out again.

In the medium to long term, however, Western governments must condition aid to Moldova, requiring that it makes meaningful reforms to its energy sector to avoid repeat crises every winter. To weaken Russia’s leverage, these reforms should include energy market development, concrete market liberalization, rule of law adherence, and respect for contracts. Most urgently, breaking Gazprom’s majority hold over Moldovagaz is a prerequisite. Without these reforms, the cycle of Russian energy aggression and Moldovan energy crises will continue. And if Chișinău and Brussels cannot convince Transnistria to accept energy assistance—and soon—then the continent should prepare for yet another Russian-caused humanitarian and political crisis.

Suriya Jayanti is a nonresident senior fellow at the Atlantic Council’s Eurasia Center.

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Khakova quoted in the BBC on US and UK sanctions on the Russian oil industry

Olga Khakova — Fri, 10 Jan 2025 15:22:00 +0000

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Khakova was quoted in HuffPost on Ukraine’s switch from Russian to US gas

Olga Khakova — Tue, 07 Jan 2025 14:56:00 +0000

The post Khakova was quoted in HuffPost on Ukraine’s switch from Russian to US gas appeared first on Atlantic Council.

Khakova joins ABC News Australia to discuss the end of Russia-Ukraine gas transit

Olga Khakova — Tue, 31 Dec 2024 14:45:00 +0000

Original source

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The United States needs a durable national energy strategy

Sara Vakhshouri — Wed, 11 Dec 2024 14:31:51 +0000

Energy security is critical to US national security, economic resilience, and competitiveness. Despite this, the United States lacks a comprehensive, long-term energy strategy that aligns energy security with broader national interests beyond the US political cycle.

To address this, a “National Energy Strategy” (NES)—like the National Defense Strategy (NDS)—should be mandated through Congress, with regular reviews and bipartisan collaboration to ensure stability and adaptability to emerging challenges. The next administration could work closely with Congress to draft an NES that ensures efforts are enduring and aligned with long-term national interests. Subject to five-year reviews and Congressional oversight, this approach would maintain policy continuity and resilience across political cycles.

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President-elect Donald Trump’s announcement of establishing a National Energy Council (NEC) at the White House underscores the critical need for a cohesive and long-term energy strategy. Trump proposed that the NEC would oversee the path to US energy dominance by enhancing private sector investments across all sectors of the economy, prioritizing innovation, and accelerating review and approval processes to increase energy production and delivery. This approach aligns with the broader need for a structured NES that not only drives economic growth and energy independence but also establishes a durable energy policy framework.

Creating a durable, de-politicized energy strategy

Establishing an NES under Congress elevates energy security as a national security priority. This can allow for a cohesive strategy resilient to short-term political fluctuations. Congressional oversight would align energy policies with long-term national interests, including economic growth, self-reliance, economic and energy sustainability, and global leadership. A structured NES should enhance domestic energy production, diversify supply chains, secure strategic reserves, and integrate sustainable practices. It must also prioritize technological advancements, invest in new energy sources, improve energy efficiency, and ensure the security and transparency of critical mineral supply chains. This strategy would secure reliable and affordable energy production, boost efficiency—especially for AI and data centers—safeguard industrial productivity, stabilize energy markets, and reduce dependence on foreign actors for essential resources. By promoting resilience, sustainability, and strategic autonomy, the NES would also solidify US leadership and strategic partnerships in the global energy and mineral supply chain and energy access.

A regular review mechanism for the NES every four or five years would ensure continued relevance and strategic effectiveness by adapting to new technologies and their supply chains, shifting geopolitical currents, and emerging threats like cyberattacks on energy infrastructure. This process could mirror the NDS, incorporating expert analysis and industry input to keep the strategy up to date.

Strong bipartisan collaboration within the NES would ensure energy security remains a national priority regardless of partisan changes in presidential administration or Congressional majorities. Bipartisan support is essential for creating a stable policy environment that enables long-term energy projects to move forward without disruption, fostering investment confidence in critical energy infrastructure and innovation projects.

How the NES would enhance US energy security

The NES can support investor confidence in emerging technology sectors with uncertain energy demand scenarios.

For example, rising energy demand in data centers, cloud computing, and artificial intelligence (AI) requires stable and resilient power supplies. A significant percentage of global internet traffic flows through data centers in Northern Virginia. The region’s electricity demand is projected to increase as more data centers come online. According to the author’s conversations with the Northern Virginia Electric Cooperative, the region would require the addition of 14 GW by 2030 and 24 GW by 2038 if its data center growth were to continue its steep upward trajectory. This demand is equivalent to the construction of twenty-six to thirty nuclear power plants.

AI’s energy consumption is also growing rapidly, with no reliable method yet to predict its future power needs. Without bipartisan support for long-term energy policies, the United States risks energy shortages that could stall economic and technological advancements.

In addition, the NES must conduct a risk assessment of the US energy system and address the diversification of key energy sources and supply chains. Uranium and critical mineral supply vulnerabilities provide an example of how the NES can foster resilient supply chains. In 2022, US nuclear power plants purchased 25 percent of their uranium from Kazakhstan, where Russia holds large shares in its uranium mines, and 12 percent directly from Russia. China controls much of the global production and processing of critical minerals, essential for renewable technologies.

A robust NES would strengthen US nuclear fuel and strategic mineral supply chains and reduce reliance on Russia and China by leveraging bipartisan collaboration to secure long-term energy investments and ensure policy stability. This approach is essential for advancing domestic energy sources, promoting investment in nuclear power, isotope production, and emerging technologies like hydrogen and fusion. Additionally, bipartisan efforts would help forge international alliances for critical minerals and battery supply chains, diversify supply chains through domestic and global mineral processing, and establish transparent markets for fair pricing and secure access to essential resources.

Finally, by regularly updating the strategy in line with unforeseen technological and geopolitical changes, the United States can proactively address emerging energy trends while systematically identifying and assessing risks, threats, and vulnerabilities within the national energy system. This approach allows for the reinforcement of strategic strengths and opportunities, as well as the reassessment of international alliances and energy trade partnerships. A well-executed review mechanism should prioritize infrastructure resilience to safeguard critical sectors like defense, healthcare, and digital services from new cyber and physical threats.

The NES protects the United States in an uncertain energy future

A comprehensive National Energy Strategy—anchored by Congressional oversight, bipartisan collaboration, and regular reviews—is essential for securing US national security and long-term energy stability. Prioritizing energy security will protect supplies, bolster economic growth, and sustain US leadership in global energy markets. This strategy will equip the United States to address future challenges, from rising energy demands to enhancing domestic energy resources, expanding clean energy, ensuring access to affordable energy, securing critical energy supply chains, and fostering transparent markets.

Sara Vakhshouri is founder and president of SVB Energy International & SVB Green Access, director of IWP Center for Energy Security and Energy Diplomacy, and a senior energy fellow at Oxford Institute for Energy.

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Ukraine faces its most perilous winter yet

Haley Nelson — Fri, 06 Dec 2024 16:48:03 +0000

Russia kicked off its winter assault on Ukrainian energy facilities with missile and drone strikes on November 16, damaging critical energy infrastructure when the country is struggling to accumulate enough gas for winter storage. Despite optimistic government claims that Ukraine is entering winter with “the highest possible level of readiness,” Ukraine’s energy system is at its most precarious state since the full-scale invasion. As of late October, Ukraine’s gas storage stands at 12.5 billion cubic meters (bcm), stalling below its early November target of 13.2 bcm. Ukrenegro, Ukraine’s national electric grid operator, has been forced to introduce intermittent shutdowns to reduce strains on the system after Russia attacked electric transmission facilities nationwide. With heating season underway as of October 15—when temperatures can drop as low as –20 degrees Celsius—low gas storage levels and an already fragile electric grid increase the risk of prolonged blackouts throughout the country this winter.

This most recent round of Russian attacks damaged energy facilities in several oblasts, including hydroelectric plants, critical transmission infrastructure, and network servers. Ukraine is bracing for its toughest winter yet, while Russia has already destroyed most of Ukraine’s energy generation capacity and attacks likely to escalate. Hardening Ukraine’s energy infrastructure against physical and cyber-attacks and ensuring Ukraine can defend its energy systems against Russian attacks can help Ukraine endure the frigid winter months. As temperatures in Ukraine drop below zero, it is imperative that Ukraine’s partners act with urgency to strengthen Ukraine’s energy infrastructure defense systems.

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This winter is different

Although Ukraine’s energy sector remarkably withstood Russian bombardments during two previous winters, this year presents a much greater challenge. While millions of Ukrainians lost heat during sub-zero temperatures last winter, Russia’s intensified attacks have left Ukraine’s energy systems more vulnerable than in previous years. Many of Ukraine’s power plants are either destroyed or occupied, and critical infrastructure—such as thermal power plants and high-voltage substations—remains vulnerable to missile and drone strikes. As Russia launches another offensive against Ukraine this winter, Ukraine is far less equipped to rebound as it did last year.

Ukraine’s gas reserves stand notably lower than the 16 bcm amassed by mid-October last year. Hitting the target of 13.2 bcm to meet winter demand requires an additional 0.6 bcm of piped gas imports from the European Union (EU). Ukrainian underground storage facilities (UGSs), which are the largest in Europe, played a critical role for storing up to 10 bcm of gas for consumers outside of Ukraine. European traders have been injecting gas into these storage facilities throughout the war. However, because of recent Russian missile attacks, European traders are hesitant to send gas to the country—in fact, recently, European traders have, on net, been withdrawing from Ukrainian storage sites.

An energy system on the brink

Since February 2022, Ukraine’s energy facilities have faced relentless, targeted attacks. From 2022-23, Russian forces have destroyed or occupied half of Ukraine’s generation facilities and damaged or destroyed nearly half of the country’s high-voltage substations. Russia has targeted almost everything in Ukraine’s energy system: dams, gas storage, transmission lines, transformers, autotransformers, and construction sites. Initially, the attacks focused largely on the electricity distribution networks but have shifted toward generation. After Russia illegally occupied Ukraine’s Zaporizhzhia Nuclear Power Plant, Ukraine’s nine remaining unoccupied nuclear reactors are the last fully functioning generation facilities in the country, but Russia’s attacks on high-voltage substations threaten even these lifelines.

Russia’s November missile and drone attacks represented the largest attacks on Ukrainian energy infrastructure since August 26, when over 127 missiles hit critical Ukrainian energy infrastructure, including the Kyiv Hydroelectric Power Plant. As a result, blackouts affected more than half of Ukraine’s oblasts, including Lviv, Odesa, and Volyn.

The August attacks put Ukraine’s already weak energy sector over the edge. In September, the International Energy Agency estimated that Ukraine’s supply shortfall could reach six gigawatts (GW) this winter, equivalent to the peak demand of Denmark. This deficit spells serious risks for the country.

Ukraine is getting inadequate support

The Kyiv School of Economics estimates that war-related damages to Ukraine’s energy sector amount to over $16.1 billion, with transmission facilities bearing the brunt of Russia’s assault. DTEK, the largest private investor in Ukraine’s energy industry, reported earlier this year that Russia had targeted its thermal power plants over 180 times since the full-scale invasion, depleting 90 percent of the company’s generation capacity.

Although Ukraine’s energy storage levels are lower than in previous year, and its electric grid is in a precarious state, there are several immediate actions that can be done to bolster Ukraine’s energy security ahead of the Russian winter offensive.

Since the August attacks, the EU has pledged a $39 million loan and the United States $325 million to support Ukraine’s grid rebuilding efforts, a welcome boost but one that does nothing to shield against further Russian assaults. Without enhanced air defenses, Ukraine’s critical infrastructure remains exposed.

With most of its thermal generation destroyed, Ukraine has increasingly adopted decentralized energy systems to defend against Russian strikes. Decentralization must accelerate to keep up with winter needs—it’s much more difficult to take twenty small, dispersed systems offline than it is to take out one large thermal plant. By deploying low-capacity energy sources such as household batteries and power generators, the country reduces the efficacy of Russia’s widescale attacks.

Local municipalities are already using small gas turbines to supply homes, hospitals, and essential services. The US Agency for International Development (USAID) is assisting in deploying 20-megawatt gas-powered units in district heating systems across Ukraine. Although some factories have invested in the turbines, they are expected to produce only 0.5-1 GW this winter—a minor relief to Ukraine’s worsening energy crisis.

Ukraine must also add more passive protection around its transformer substations—structural reinforcements, such as concrete walls and steel-enforced enclosures, which make it more difficult for attacks to inflict significant damage.

During the April 2024 Russian offensive, Ukraine’s passive protection saved at least half of its substation equipment from destruction. But, notes Volodymyr Kudrytskyi, then CEO and chairman of the national energy company Ukrenergo, “these are huge structures, the arrangement of which requires huge financial and human resources.”

The protection of Ukraine’s energy infrastructure goes beyond physical defense. Cyberattacks have tripled since the start of the war, and defenses must be upgraded. Strengthening cyber infrastructure, developing incident response plans, and collaborating with NATO partners can protect from cyberattacks that could potentially take the entire system offline, as happened in 2016.

The stakes are high

Sustained attacks on the country’s energy infrastructure could leave millions of Ukrainians without heating, disrupt critical services, and provoke further migration into already-strained EU countries. Without adequate air defense support for Ukraine, an energy and humanitarian crisis risks spilling into broader European instability.

The security of Ukraine’s energy system this winter depends on the support Kyiv receives from its allies. Strengthening Ukraine’s air defenses to cover existing gaps could prevent further damage and reduce the risk of a complete grid collapse.

Beyond immediate human costs, the continued destruction of Ukraine’s energy infrastructure has lasting implications. Attacks on energy facilities reduce industrial output and heighten Ukraine’s dependence on energy imports, complicating long-term recovery efforts. The persistent targeting of critical infrastructure highlights that, for Russia, destabilizing the energy system is not merely a wartime tactic, but a broader strategy to undermine Ukraine’s future.

As Ukraine braces for another harsh winter, Russia appears poised to exploit every vulnerability in Ukraine’s energy landscape. Short on energy reserves and its infrastructure at the breaking point, Ukraine remains at high risk of intensified Russian attacks. It should be assumed that Russia’s tactics of degrading critical infrastructure will continue, and perhaps escalate given the circumstances.

To secure Ukraine’s future, bolstering the resilience of its energy infrastructure is imperative. This means hardening critical facilities against both cyber and physical attacks, strengthening rapid response plans to restore power, and ensuring Ukraine has the advanced defense systems needed to protect against ongoing threats. Without these defenses, international financial support risks being undermined by the next wave of attacks.

Haley Nelson is an assistant director for European energy security at the Atlantic Council Global Energy Center.

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The EU needs a Russia strategy

Ian Cameron, James Batchik — Tue, 03 Dec 2024 21:30:12 +0000

The European Union urgently needs a Russia strategy. A strategy document that articulates a strong vision and comes with the proper policy tools and financial commitments would serve as a signal to the United States that Europe understands the threat posed by Putin’s Russia at a critical moment in the relationship between Washington, Brussels, and Moscow.

The impending Trump presidency will shape EU foreign policy and redefine transatlantic ties. A second Trump administration will surely demand more from Europe, including on issues such as Europe’s defense spending and its support for Ukraine. Even as defense budgets across Europe rise and the EU takes a more forward-leaning role on support for Ukraine, the goalposts Washington sets will move. This challenge could create positive opportunities for the EU if it produces a European strategy on Russia.

Currently, the bloc does not have a formal strategy toward Russia. This is inconsistent, as the EU has adopted official strategies for relations with a range of countries and regions including China, the Indo-Pacific, and Central Asia, with a strategy for the Middle East under development. But it’s more than inconsistent. Failure to draft a Russia strategy suggests a lack of seriousness and undermines the credibility of the bloc’s geopolitical ambitions.

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The most serious obstacle to an EU Russia strategy has traditionally been the inability of member states to agree on interests and priorities. Countries closest to Russia and those with recent histories of oppression by Moscow have a more acute threat perception, whereas others in Europe often still see Russia as an essentially regional issue.

However, Russia’s challenge to Europe is clearly no longer regional. It quite literally surrounds and permeates the EU. Russia has unleashed the largest land war on the continent since World War II. To undercut sanctions, it has built up a “shadow fleet” of oil tankers that threaten to create a major environmental disaster in European waters. From the Western Balkans to the Sahel, Russia competes for influence, generates disinformation, and seeks to destabilize governments. Elsewhere in Africa, Moscow deploys mercenaries to support friendly governments and to secure access to resources.

Inside the EU, intelligence agencies say Putin is actively engaged in efforts to undermine the political stability of member states. Russia is accused of spreading disinformation, stirring up political conflict, and even resorting to acts of sabotage, such as the recent attempt to plant explosive devices on European airplanes flying to the United States.

Faced with increasing Russian threats and growing US demands, the EU needs a unified approach toward Moscow. In response, the new European Commission should prioritize the development of an EU Russia strategy aimed at creating a more forward-thinking, ambitious, and cohesive European approach.

This would have multiple benefits. First, it would provide a forum for EU members to jointly develop a vision for future policy toward Russia. Second, a strategy would allow the EU to draw a coherent picture of how Moscow’s various tactics are interlinked and threaten the entire bloc. Additionally, the EU would be better positioned for stronger enforcement. Articulating a longer-term Russia policy would lock in the hard-won gains of recent years, helping to ensure that countries like Germany do not return to problematic practices like relying on Russian energy.

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The EU now has the right personnel in place to lead this effort. The new High Representative for Foreign Policy Kaja Kallas, an ardent Russia hawk, could push for an ambitious and forward-leaning posture toward Russia. Other senior officials including defense commissioner Andreas Kubilius could lend credibility to the strategy, which would naturally be prepared in close coordination with European Commission President Ursula von der Leyen, herself a strong supporter of Ukraine.

Any would-be Russia strategy must start with Ukraine. Support for Kyiv is the central element of Europe’s policy toward Russia, so a successful strategy must plot a path forward on key Ukraine-related issues including financial support, defense industrial cooperation, reconstruction, and eventual Ukrainian EU membership. Similarly, any strategy should also keep in mind areas like the Western Balkans, Moldova, and the South Caucasus, with a view to helping counter Russian influence.

Economic statecraft should be a key focus. The EU has gradually adopted a more ambitious sanctions policy toward Moscow, but enforcement is lacking. For example, the EU will need to develop a realistic plan to deal with Russia’s shadow fleet and to ensure that Russian energy isn’t entering the EU via backdoor routes.

In order to be effective, an EU Russia strategy must not fall victim to the tendency to water down or take an overly narrow view of the task at hand. Previous EU foreign policy documents, for example the Strategic Compass, offered a raft of initiatives and legislative projects but struggled to project a grander vision.

Drafting a Russia strategy will be a politically difficult but worthwhile endeavor. It will be challenging to achieve an EU strategy that is sufficiently ambitious and necessarily forward-leaning while maintaining support from all member states, especially as certain countries have a record of obstructing EU support for Ukraine.

Nevertheless, it would represent a crucial step toward addressing today’s changing realities. In addition to boosting the EU’s capacity as a geopolitical actor, a comprehensive and practical Russia strategy would signal to the United States that Europe is stepping up and would help strengthen transatlantic ties.

The incoming US administration should support the EU in developing its Russia strategy. An EU that is ready to lead efforts to counter Russia, both inside Europe and throughout the wider region, is exactly what the transatlantic relationship needs.

Ian Cameron is a young global professional with the Atlantic Council’s Europe Center. James Batchik is an associate director with the Atlantic Council’s Europe Center.

Alan Riley — Mon, 02 Dec 2024 21:59:58 +0000

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PEESA needs a refresh

In 2020, the United States enacted the Protecting European Energy Security Act (PEESA), which was adopted as part of that year’s National Defense Authorization Act. The act imposes sanctions on foreign persons who provide vessels or ancillary services in the construction of Nord Stream 2, Turk Stream, or any successors of those projects to create new routes for Russian gas to reach the European Union (EU).

This legislation was an appropriate response to European and Ukrainian security threats in early 2020. At the time, construction of Nord Stream 2 would have provided an additional 55 billion cubic meters per year (bcma) of Russian gas to Germany directly through the Baltic Sea.

The route would allow Moscow to bypass transit states to Germany’s east—creating the possibility for the Kremlin to threaten these countries with gas shut offs or other coercive measures without interrupting shipments to the lucrative markets to their west. No country was more exposed than Ukraine, which transited 90 bcma of Russian gas to the EU—half the bloc’s total imports from Russia—as late as 2019. While Nord Stream 2 never came online, the European security situation has changed dramatically since Moscow launched a full-scale invasion of Ukraine in February 2022. Before and during the war, Gazprom found excuses to cut gas supplies via Nord Stream 1. By the time Nord Stream 1 and 2 were rocked by explosions in September 2022, neither were transiting gas.

Down, but not necessarily out

The explosions took out Nord Stream 1 pipelines A and B, which each carried up to 27.5 bcma of Russian gas to Germany before the war. Nord Stream 2 pipeline B was taken out by a third explosion, while pipeline A remains intact but is still not operational.

PEESA should be extended to prevent any of the Nord Stream pipelines being brought online. The legislation places sanctions on activities supporting the “construction” of Nord Stream 2. The words “or reconstruction” should be added to remove any doubt that sanctions would also apply to pipelines being repaired.

The law should also be extended to Nord Stream 1. It’s clear that both Nord Stream 1 pipelines will need to be repaired before they can become operational again. It would be unfortunate if Nord Stream 2 could not be repaired because of PEESA, but Nord Stream 1 could—when in fact that both pose grave security risks to Ukraine and Europe. The historical circumstances which meant that only Nord Stream 2 could be addressed by PEESA should not now constrain the opportunity to address the threat posed by both sets of pipelines.

In addition, the EU has much more difficulty in blocking Nord Stream 1’s reopening because it is subject only to an earlier regulatory regime and not the 2009 Gas Directive. Nord Stream 2 could be stymied even if PEESA were to lapse by the directive’s security of supply test for non-EU owners—which Gazprom would have significant difficulty meeting. A recent scheme by a Miami-based investor to acquire Nord Stream 2 would likely also fail that test, given the prospective buyer’s 20-year business career in Russia. But no existing US sanctions nor EU legislation could block reconstruction of Nord Stream 1.

Updating PEESA would benefit Ukraine, the EU, and the United States

Extending PEESA to Nord Stream 1 would strengthen Ukrainian security. It would prevent Moscow from doing gas deals in Western Europe that isolate Ukraine against Russian economic and military power. Instead, Ukraine would gain leverage: most Russian gas sent to the EU would have to transit Ukraine. This would permit Kyiv greater negotiating power with Moscow and open the prospect of effectively taxing Russian gas to help pay for reconstruction, thereby reducing the cost to the West of rebuilding Ukraine. While Kyiv currently has little appetite to extend a gas transit contract permitting a limited 15 bcma of gas to flow through Ukraine that will terminate at the end of December, post-war flows could give Ukraine bargaining power and a revenue stream for compensation.

By contrast, leaving Nord Stream 1 untouched by PEESA would undermine Europe’s energy security by locking in its dependence on Russian gas. On the eve of the war in February 2022, the EU sourced 45 percent of its gas imports from Russia—in Germany, this figure was 55 percent. Extending PEESA to Nord Stream 1 would encourage continued supply diversification and make it less likely that Europe would return to its dependence on Russian energy.

The Senate must amend and expand PEESA. Simply preserving the existing legislation past its 2024 expiration date does not recognize the dramatic changes in Europe since 2020. The Senate cannot miss a major opportunity to enhance the security of Ukraine, the EU, and the United States.

Alan Riley is a nonresident senior fellow at the Atlantic Council Global Energy Center and a visiting professor at the College of Europe in Natolin, Poland.

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Khakova joins BBC News to discuss Ukraine’s energy crisis amid increasing attacks and freezing temperatures

Olga Khakova — Fri, 29 Nov 2024 17:21:00 +0000

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The West’s role in solving Central Asia’s water crisis

Ariel Cohen, Wesley Alexander Hill, and Wilder Alejandro Sánchez — Wed, 27 Nov 2024 17:59:43 +0000

The Caspian Sea, vital to Eurasia’s economy and environment, is shrinking at an alarming rate. The declining water level in the sea is one visible consequence of a larger regional water crisis faced by the C5 nations of Central Asia—Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan. This water crisis threatens the more than 82 million people who call the largely arid region home.

A forthcoming Atlantic Council report written by the authors, “Water insecurity in Central Asia: The need for collective action,” explores the global resources that can be mobilized and to what ends they can be quickly directed. This report will provide a practical roadmap that regional and international actors can employ to solve problems in the near and medium terms without massively increasing investments.

Central Asia’s imperiled water system is one of the most urgent regional issues requiring a rapid response from local governments, businesses, and their international partners. Built during the reign of the Soviet Union, the region’s water infrastructure is well past its serviceable life, resulting in up to 40 percent water losses during irrigation and up to 55 percent losses when supplying drinking water. Improving water transit, processing, and irrigation in Central Asia would buy time to allow regional governments to develop sustainable solutions to meet their water needs.

Poor as it may be in water resources and water-supply management, Central Asia is rich in uranium, rare earths, gas, oil, and agricultural commodities. This is also a region that both its powerful neighbors—Russia and China—keep close and often covetous eyes on. The challenges faced by the C5 countries offer opportunities for the United States and the West to get involved and help keep the region from falling into overdependence on either Moscow or Beijing.

The upcoming One Water Summit in Riyadh on December 3, organized by the leaders of France, Kazakhstan, Saudi Arabia, and the World Bank, provides an excellent opportunity for the United States and the West to signal its intention to ramp up engagement with Central Asia on this issue. The summit’s purpose is to expand projects by promoting interstate cooperation between international organizations, local authorities, banks, corporations, charities and nongovernmental organizations, businesses, and civil society. Such engagement could help mitigate the rapidly worsening crisis, make diplomatic inroads in the region, and ensure that the C5 countries are not dependent on Russia and China for their water supply. Western involvement is needed, and it could include greater investment from companies with experience in water-saving agricultural techniques and with track records of successfully standing up modern water storage, channel construction, and treatment projects.

The scale of the crisis

Central Asia’s water resources are severely strained due to climate change, urbanization, industrialization, population growth, and other human activities. The problems are apparent throughout the region, including along the Amu Darya and Syr Darya rivers, in the rapidly drying Aral Sea, in the partially salty Lake Balkhash, and in the Caspian Sea, the largest saltwater body of water on the planet. The region’s upstream countries, Kyrgyzstan and Tajikistan, rely on glaciers in the Pamir and Tian Shan mountain ranges to sustain water flow. However, rising temperatures are causing rapid glacial melting and threatening long-term water availability. Additionally, irregular rainfall patterns are leading to prolonged droughts in some areas and unseasonable floods in others, disrupting agriculture and habitats. The collapse of water management systems after the Soviet Union’s fall worsened the situation, as critical water infrastructure was neglected.

Furthermore, the Aral Sea disaster is one of the most striking examples of water mismanagement. Once the world’s fourth-largest inland sea, the Aral has shrunk by more than 90 percent since the 1960s due to the diversion of its tributaries, the Amu Darya and Syr Darya, for large-scale irrigation. While water diversion helped local industries (mainly the cotton industry in Uzbekistan), it has led to severe waterlogging, soil salinization, and a dramatic sea-level drop. This in turn has caused economic problems, disastrous health challenges, and an environmental catastrophe. Today, the Aral Sea is an arid, desert-like region that is failing to support local livelihoods and habitats.

Kazakhstan has made some progress in partially restoring water levels through projects such as the Kok-Aral Dam. Still, Uzbekistan’s continued water diversion for cotton farming makes a full recovery unlikely. The Aral Sea is now fragmented into several lakes, with parts of the body of water irreversibly lost, spreading salt and sand for thousands of square miles, as far as France, Japan, and the Arctic.

In addition, the Caspian Sea coastlines of Kazakhstan and Russia are drying up faster than that of the other bordering countries, Azerbaijan, Iran, and Turkmenistan. This problem is exacerbated by projects that reduce the amount of water that reaches the Caspian and the extraction of water for desalination projects. If the water level of the Caspian Sea is not protected, it will meet the same fate as the Aral Sea. Moreover, the Caspian’s loss will affect the region’s shipping and transportation industry. Currently, the Trans-Caspian International Transport Route (TITR), or the Middle Corridor, has become an important transportation artery for goods and commodities (including energy) traveling from Central Asia and China to Europe, bypassing Russian territory. A vital artery of the TITR is the Caspian Sea, with cargo ships and tankers traveling from Aktau, Kazakhstan, and Turkmenbashi, Turkmenistan, to Baku, Azerbaijan, and vice versa. Decreasing water levels would put heavy ships at greater risk of getting stuck in the shallows and unable to reach ports.

What can be done?

To help address this mounting crisis and deepen ties with Central Asia, the United States should build on existing collaboration with the C5 countries and develop new frameworks focused on the water shortage. The United States has laid the groundwork for greater involvement in the region with the creation in September 2023 of the B5+1, a diplomatic platform for private-sector collaboration between the United States and the C5 states. The United States should use this forum to focus on private-sector initiatives and private-public partnerships that can take concrete steps to alleviate the looming water emergency in Central Asia.

A collaborative approach within the federal government will also be essential to effectively engage with the region on this issue. The US Department of Commerce, in cooperation with the US Chamber of Commerce, the Department of Energy, the Department of State, the Export-Import Bank, the US International Development Finance Corporation, and representatives of industry, should form a task force to discuss regional water project proposals for potential public-private partnerships, management contracts, and financing. Such projects, including drip irrigation, desalination, water utility modernization, and joint water transport system upgrades and management, would aim to make Central Asia more sustainable by saving tens of millions of cubic meters of water per year.

Why act now?

Even though the incoming US administration will not yet be in office when the One Water Summit takes place, the forum is nevertheless an opportunity to begin addressing the grave threat of water insecurity. Water insecurity affects the C5 and other nations with which the incoming Trump administration should seek cooperation. Kazakh President Kassym-Jomart Tokayev noted that the summit will “drive the momentum on the water agenda,” particularly to save the Caspian Sea, with work to continue into 2025 and beyond. This indicates an appetite among Central Asian leaders for more international cooperation on this issue, which will be vital in mobilizing the necessary global resources and expertise to address the water shortage.

The lack of a secure water supply is an existential threat to Central Asia that can have negative ramifications, including conflicts over water, that could extend far beyond the region. The United States and the West would be wise to have a seat at the table and become involved in helping Central Asia steer a course toward a more stable—and more Western-friendly—future by helping to ensure that the region’s insecurity does not cross the line into outright water starvation. By providing capital and technical knowledge that China and Russia do not possess or have not offered, the United States can help avert a worsening crisis in the region while reducing Central Asian states’ dependencies on Moscow and Beijing.

Ariel Cohen, PhD, is a nonresident senior fellow at the Atlantic Council.

Wesley Alexander Hill is the international programs manager and lead analyst at the Energy, Growth, and Security Program of the International Tax and Investment Center.

Wilder Alejandro Sánchez is an international affairs analyst who focuses on the post-Soviet regions and Western Hemisphere.

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Webster cited in the U.S. – China Economic and Security Review Commission’s Annual Report to Congress on China-Russia trade, Taiwan’s energy security, and China’s role in US battery supply chains

Joseph Webster — Sun, 24 Nov 2024 21:54:00 +0000

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Can Serbia’s Lithium Protests Redefine Its Future? | A Debrief with Ivanka Popovic

sjones — Tue, 19 Nov 2024 16:00:00 +0000

IN THIS EPISODE

As protests against lithium mining intensify across Serbia, fears of environmental damage and distrust in government accountability are uniting citizens like never before. Could this rare unity spark broader democratic change?

In this episode of #BalkansDebrief, Resident Senior Fellow Ilva Tare explores the roots of this resistance with Ivanka Popovic, founder of the ProGlas movement and professor at the Faculty of Technology and Metallurgy at the University of Belgrade. Together, they discuss the environmental, social, and political implications of the controversial Jadar Valley lithium project.

With backing from EU leaders and major automobile companies, how is the role of foreign investment in shaping Serbia’s mining policies perceived, and what impact does this have on local communities opposing the project? How have recent protests, accented by the Novi Sad tragedy, influenced public trust in the government’s ability to manage environmental concerns associated with pollution and contamination? Discover the factors driving this movement, the role of grassroots activism, and the potential consequences for Serbia’s democratic future.

FULL EPISODE TRANSCRIPT

Ilva Tare

Welcome to Balkans Debrief. I’m Ilva Tare , a resident senior fellow at the Atlantic Council’s Europe Centre. Today we will focus on the growing protests in Serbia over the controversial lithium mining project in the Jadar Valley. While the government promotes this initiative as a game changing boost to the economy, local communities are sounding the alarm on environmental risks and government accountability—heightened by the recent tragic loss of 14 lives at Novi Sad railway station.

Joining me today is professor Ivanka Popovic, one of the founders of the ProGlas movement and also a former rector of the university of Belgrade. Thank you and welcome Ivanka. I hope we will discuss about the roots of this resistance, the government’s ambitions, and what this all means for Serbia’s future.

Ivanka Popović

Thank you, Ilva, it’s pleasure to be here.

Ilva Tare

Thank you so much. And I’ll start with the first question that is around the fact that, what do you think in your view, what has driven such a rare unity among Serbian citizens against this project, the lithium mining, despite their political or social differences?

Ivanka Popović

Well, I think we, what we’re seeing now is the culmination of the system breaking down and not meeting citizens’ expectations. First and foremost, many of the communal services such as the water supply, sewage, landfills, sanitary landfills, they’re all failing in the respect that they’re not functioning.

So something as challenging and high tech as a complex that would include a mine, a processing plant, and then also a landfill, a place where you would leave the residue of the process, is something that has, I have to say, really made people frightened, because people have lost trust in the system, in the various safeguards that exist through the functioning of institutions, independent institutions that would monitor the process.

This would not function for the needs of the people, but for the needs of those who would earn some money off of this project. And this is a real fear, because as I said, we’ve seen very simple projects fail.

For example, I’ll give you one really shocking event. For example, you have simple water supply systems in Serbia that provide running water. More than one third of this water is lost somewhere in the pipe because they have holes. So if we cannot even provide a full transfer of running water, how can we talk at all about some kind of higher technological level?

And the second point that I would like to make, there are some other projects that have already been realized in Serbia that have caused significant pollution and have affected the health of citizens in the eastern part of Serbia.

So when people put two and two together, it doesn’t really matter what your political affiliation is. You are really needing to respond to protect yourself and your family and your future.

Ilva Tare

Professor, I wanted to ask you, how are the citizens and you that are part of the protest and other citizens that have joined this cause, how do you balance the concerns about the environmental damage that you are mentioning with the potential economic benefits, such as jobs and infrastructure investment from this project, the Jadar lithium?

Ivanka Popović

So I would like to make something very clear. I am a chemical engineer and I fully understand how such a processing plant could function. And with all the potential that could exist, and even then there would be some risk. Considering how this country functions, I think it’s a really serious issue that we are facing here.

And my second point that I want to make, this is not a population that is against technological progress. Because for decades, and in former Yugoslavia, this was an area that was really growing very quickly in terms of economic development, industrial growth. But what we see now is the offset of potential gains, which I have to say would not be significant because the multilateral company Rio Tinto is the owner of this complex. And actually the very poor arrangement of how Serbia would be compensated in terms of mining fees is such that there would be significant revenue for Serbia. On the other hand, the potential problems are tremendous. And I will also explain why this is an unusual situation that we have with this potential complex.

First of all, it’s situated in fertile agricultural land that has for centuries been used for these purposes. It is one of, while not a breadbasket, it’s a place where fruit, vegetables are grown, there is very lively agricultural activity.

And the second point, because of the increasing threat of lack of quality water supply, this location is directly above what is a very significant aquifer. It’s a regional reservoir of underground water that in the future could supply Belgrade and surroundings and also this area.

Any type of interference above ground could pollute this water. So I think it’s a gamble that many people do not think is worth it, because even if there were money to compensate for damages, the funds required to correct the situation would far outweigh what the actual economic gain was.

So as a concerned citizen, but also as someone who is I think sufficiently technically literate, I could say that this is a very, very risky project that would not provide the benefits that Serbia needs. And I do believe that Serbia needs that economic development, industrial growth, but maybe in projects that would not be so rich yet.

Ilva Tare

Professor, apart from the government backing this project, there are EU countries, governments and corporate support for the lithium mining in the Jadar Valley. How do you think the citizens and the protesters can have their voice, concerns heard compared to the West, let’s say, supporting this project of the government?

Ivanka Popović

Well, this is also something that has disturbed people. As you know, Serbia is a candidate country that has not been very, let’s say efficient, in fulfilling the requirements to join the European Union. So, it’s still a long road ahead.

But on the other hand, Serbia has signed an agreement with the EU dealing with critical resources. And because these lithium reserves are quite significant, there are also other resources available in Serbia. And this is time, as I said, when you have a mutually beneficial partnership that will be beneficial for both sides.

What I see here is that maybe that there is on the side of the European Union, unfortunately, more a belief that the benefit would outweigh the risks. And of course, the benefit would be all exclusively for the European Union and not for us.

And what we have seen is also that Chancellor Scholz, the German Chancellor, visited Serbia in the summer. And there was, as I said, this agreement that was signed also with Sefcovic from the European Union. And in some ways, Germany almost wanted to provide guarantees that the project would run smoothly, but as you know, then I don’t believe that in any case in history that one country could guarantee for another country the implementation of a project. And what we all have seen is the collapse of the German coalition in power, so I think there will be new elections in Germany. No one can guarantee who the new German Chancellor will be.

So this is more or less, I have to say, a smokescreen for the Serbian government to say, the Germans are guaranteeing this, so it’ll be fine. It won’t be fine. And each country is responsible for, well, its own activities. And I think we have to be very responsible for our own population. We don’t want to be uncooperative, and we also—or some of us here—want to be part of the European Union, but in a way that we would like to see an even a partnership that would not somehow see as a relationship where one side is having much more benefits.

Ilva Tare

How do you assess the government’s handling of the public opposition to the lithium mining? And in your view, what steps are needed to address citizens’ concerns? Is there, in your opinion, any potential ideal scenario that all the concerns, environmental concerns can be addressed and the project can continue?

Ivanka Popović

Well, I would say that this is an issue that far surpasses environmental issues. We’re talking about the need for social change in this country and a government that would be willing to implement it.

And if you know, in 2022, there were mass demonstrations in Belgrade and other places in Serbia, where the number of people that were actually protesting was such that the government pulled the plug on this project, halted it, and said they will stop the project.

That was 2022. After elections this year, which were a very specific process where fortunately the population became fully aware of the amount of manipulation and tampering with voting that was occurring. In the summer, we also had very, very large, demonstrations dealing with it, you know, because after the elections in June, the government said, yes, we are now continuing with the project, knowing that there will be less opposition because there are no new elections in sight.

But this is something that really disturbed people and brought them out into the streets again. So what we’re seeing is an abuse of power by the government, so we all fully recognize that in a democracy, the majority will rule, but if this majority has been made to manipulate the processes, which is highly probable in this case, then you wonder about the legitimacy of this government.

Also, when the institutions have been hijacked, when you have a judiciary that is not responding in the proper way, but only for the needs of the government, and independent institutions that could monitor not only the environmental aspect, but any other aspect, like the financial aspect, anything that is going on. We are really worried.

And the recent tragedy in Novi Sad, this is a town 80 kilometers to the north of Belgrade, where the roof of the newly renovated train station collapsed, killing now 15 people and leaving two people fighting for their lives. It’s something that really sent the message home. You know, the first aspect with Jadar, we know the consequences of mining in eastern Serbia. Now we know because of very questionable contracts that were signed, obvious and significant corruption that is going on, a train station that was opened twice in the previous years by politicians and hailed as a tremendous step forward has made it insecure that no matter where you are in Serbia, in some kind of a building that has been somehow maybe renovated, you are really risking your life.

And I don’t think that fear is the best driving force for social change, but it’s becoming quite a significant factor to make people aware of their rights as citizens and that they need to do something to make a change and change this country into a functioning democracy where government works for the people and not so that the people are working for the benefit of the government.

Ilva Tare

And as one of the founders of the ProGlas movement—“For vote” movement—how do you see grassroots activism shaping national debates on issues like lithium mining?

Could this current public outcry over lithium be a catalyst for broader democratic changes in Serbia, in your view?

Ivanka Popović

Yes Ilva, I think you’re quite right because this—ProGlas is a play on words. It means “Pro vote”, but it also means “pro voice,” because Glas is voice. That means we would like, as a group, to be an initiative that makes people socially aware and aware of their civic rights and duties as active citizens to maintain our society and get it moving in the right direction.

The various civic initiatives have increased over the years because citizens are disappointed by opposition parties that somehow are not managing to voice the needs of the citizens and are maybe seen sometimes as maybe looking for their own narrow interest, to maybe enter parliament, which is maybe being too rough on this opposition, which is very weak and is not sufficiently united, but it’s clear that it’s not only citizens groups, grassroots organizations, but all also these opposition parties and perhaps new ones that will, grow out of these grassroots organizations will be needed.

It will have to be a very massive front encompassing all parts of the political spectrum and active citizens to try to make a change. So yes, I think this is a topic, because if you look at it either from an environmental, political, economic, any aspect, it’s a sort of a showcase of everything that’s wrong in this country and what we need to do to change it.

So I think, yes that this is the beginning of a movement that will continue and it will be very, very persistent and have a lot of energy. It does not matter how long it will take, but it will try to change this country for the better.

Ilva Tare

And lastly, how has media coverage shaped public opinion on the issue of the lithium mining and the civic movements that it has sparked in your view?

Ivanka Popović

Oh, that’s a very sensitive issue. Let’s say it’s a very depressing one.

Serbia, as you know, unfortunately does not have freedom of the press. You have a state-controlled media, regardless of whether they are state-funded or private, and you actually have only a few independent media that do not have national coverage.

So at the moment, all national coverage is by government-controlled media. A lot, a good part of the population is not even getting a balanced view of what is going on. It has increased the importance of social networks trying to get the message out because, as I said, this is not someone trying to sell a better product. It’s a question of providing the population with all the necessary information so that they themselves can make a decision on what they want to do. If they don’t want to do anything, that’s fine, but they need to have all the information and they don’t have it now.

Ilva Tare

Do you think this protest, and as I said, this rare unity among Serbian citizens will be successful in the end? And what will success be for you? What will it look like?

Ivanka Popović

Well, I’m always an optimist, so yes, I believe that we will prevail in the end, but it’s the learning curve.

Serbia is a country that has a very fragile democracy. It doesn’t have a democratic tradition, and therefore it doesn’t have a population that is used to being active in governance, more of a passive situation where more or less you vote, agreeing or not agreeing fully with what’s going on, and then you sort of are the recipient of what the government calls out for you.

Now we are trying to show, and really working on it, to show that the government—the citizens themselves have the power and duty to change the situation in this country. So yes, I’m optimistic, but I cannot give you a time frame.

Ilva Tare

Thank you very much for sharing your concerns and I wish you the best of luck with raising the voices and concerns and this activism that you are keeping alive in Serbia. Thank you Professor Popović.

Ivanka Popović

Ilva thank you very much. And I would just like to say one thing at the end.

I think it’s very important to understand that this is an autonomous, really unique situation where you can hear the voice of the Serbian people.

This is not an imported revolution or imported or somehow manipulated situation. I think we are now really seeing and hearing that people want change. Thank you so much for your time.

Ilva Tare

Thank you.

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