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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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.

Event transcript

Uncorrected transcript: Check against delivery

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.

Watch the full event

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The roots of scarcity

Turkmenistan’s vulnerability to water stress is the highest in Central Asia, a precarious position resulting from a complex interplay of factors. Much of the country’s water infrastructure is a relic of the Soviet Union, including open canals and irrigation ditches that are tragically inefficient. Estimates suggest that anywhere between 30 percent and 60 percent of the water transported through these systems is lost to evaporation or seeps into the sandy soil before reaching its intended destination. These physical conditions are compounded by systemic mismanagement. A cohesive national strategy for water conservation and distribution remains elusive, hampered by a lack of coordination among governing bodies.

This inefficiency is particularly damaging given the demands placed upon the water supply, primarily by agriculture, which consumes an estimated 94 percent of the nation’s water resources. The heart of the problem lies in the legacy of Soviet-era planning: industrial production dedicated to cotton, a thirsty crop ill-suited to Turkmenistan’s naturally arid climate. This reliance on water-intensive agriculture depletes precious reserves. A shift toward drought-resistant crops, modern techniques such as drip irrigation, and greater agricultural diversification is long overdue to alleviate the immense pressure on the water supply.

Compounding these internal challenges are external pressures. Turkmenistan relies on the Amu Darya river, which flows along its border with Afghanistan and Uzbekistan, for roughly 90 percent of its water. The construction of Afghanistan’s Qosh Tepa Canal upstream represents a significant new threat. By diverting substantial amounts of water from the Amu Darya for its own agricultural ambitions, the canal project could reduce the flow reaching Turkmenistan, further straining an already stressed system. The absence of robust transboundary water-sharing agreements and effective diplomatic channels risks tensions, highlighting the urgent need for dialogue, potentially facilitated by neutral international mediators, to navigate this issue peacefully.

Overlaying all these factors is the undeniable impact of climate change. Projections indicate that temperatures in Turkmenistan are set to rise faster than the global average, inevitably leading to more frequent and severe droughts, further diminishing already scarce water resources and pushing the nation closer to the brink.

The human and environmental toll

The consequences of this escalating water scarcity are already being felt across Turkmenistan. Food insecurity is on the rise, with reports indicating that 12 percent of the population faces severe challenges in accessing sufficient food—among the highest rate among former Soviet nations. Access to safe drinking water is also becoming increasingly precarious. Residents across the country, including in the capital city of Ashgabat, report frequent water cuts and shortages. The tap water that is available is often of questionable quality, forcing many to rely on more expensive bottled water.

Reduced water flow and dying vegetation leave the soil vulnerable to erosion, intensifying the dust, sand, and salt storms that plague the region. In the northern Dashoguz province, vast tracts of agricultural land are severely affected by salt storms originating from the desiccated Aral Sea, posing significant risks to respiratory health and further degrading farmland. This vicious cycle of soil salinity, exacerbated by inefficient irrigation and poor drainage, diminishes air quality and agricultural productivity. Altogether, this creates an increasingly hostile environment for both people and wildlife.

The economic repercussions are also significant. Turkmenistan’s economy relies on natural gas exports, which constitute nearly 90 percent of its export revenue. However, the natural gas industry itself is water-intensive, requiring substantial amounts for cooling systems, equipment cleaning, and extraction processes. Water scarcity could directly impede the nation’s ability to maintain current natural gas production levels, potentially impacting national revenue and the funding of essential public services.

Furthermore, the unique ecosystems adapted to Turkmenistan’s arid conditions, including the vast Karakum Desert, are under threat. Rivers, wetlands, and oases—vital habitats for diverse flora, fauna, and migratory birds—risk shrinking or disappearing entirely, leading to biodiversity loss and pushing vulnerable species toward extinction.

Finally, the crisis is beginning to drive climate migration. Faced with failing crops, soil degradation, rising food prices, and dwindling agricultural employment (a sector that employs over 40 percent of the workforce), people are increasingly forced to migrate in search of better living conditions, both within the country and abroad. This displacement adds another layer of social and economic strain.

A call to action to maintain regional stability

The water crisis unfolding in Turkmenistan is not merely a domestic issue; its ripples will likely be felt regionally and globally. Declining agricultural output could increase Turkmenistan’s reliance on international food markets, potentially contributing to fluctuations in global food prices. More critically, the potent combination of environmental degradation, economic hardship, and potential social unrest fueled by water scarcity could destabilize the country and, by extension, the wider Central Asian region. History, including the the Syrian uprising, serves as a warning of how severe drought and resource mismanagement can exacerbate existing tensions and lead to conflict. Such instability could create power vacuums, ripe for large global powers.

Therefore, addressing Turkmenistan’s water challenge is a matter of international concern. Proactive engagement from the United States and the European Union could play a crucial role in promoting sustainable solutions and regional cooperation. In addition, supporting comprehensive research and data collection on water resources, climate impacts, and agricultural practices is essential for informed policymaking. The United States and the European Union should take the lead in facilitating regional dialogues involving Turkmenistan, Afghanistan, Tajikistan, and Uzbekistan. Such initiatives will be critical for fostering transboundary cooperation and preventing conflicts over shared water resources such as the Amu Darya. Furthermore, technical assistance and funding from the United States and the European Union, potentially channeled through civil society organizations, could help implement sustainable water management practices on the ground—from promoting efficient irrigation techniques to supporting public education campaigns on water conservation.

Turkmenistan’s struggle with water scarcity is a powerful illustration of the interconnected challenges facing many parts of the world in the twenty-first century, where climate change, resource management, and geopolitical interests collide. Ignoring this looming crisis is not an option. Concerted action, grounded in cooperation and sustainable practices, is essential not only to secure a livable future for Turkmens but also to maintain stability in the region.

Rasul Satymov is a researcher with Progres Foundation with a focus on climate change, energy, and water issues in Turkmenistan.

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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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The welcome in Riyadh will be more than ceremonial: Saudi Arabia is the linchpin of Trump’s Gulf tour. On May 14, Trump will join heads of all six GCC states at a summit in the Saudi capital. From Riyadh, Trump will head to Doha for talks with Qatari Emir Tamim bin Hamad Al Thani, then to Abu Dhabi to meet UAE President​ Mohammed bin Zayed Al Nahyan.

But Trump’s Gulf visit is more than a diplomatic tour; it is a pivotal opportunity to reimagine US–Gulf relations for a new era. The region is no longer content to be seen as the world’s energy hub alone; its ambitions now span digital innovation, green growth, and global influence. To remain a trusted and valuable partner, the United States must evolve its engagement strategy—offering not only promises but a visionary blueprint for shared prosperity and long-term stability.

Energy diplomacy: Oil on the table

Oil production will feature prominently in Trump’s talks, as energy prices tie directly into both global economics and domestic politics. Trump has drawn a link between high inflation in the United States and expensive oil, vowing to ask Saudi Arabia and the Organization of Petroleum Exporting Countries (OPEC) to “bring down the cost of oil.”​ Oil producers seemed to be trying to pre-empt such a request with this week’s announcement of another production increase, which caused oil prices to drop. Will this be enough for Trump? He will need to balance the US desire for affordable fuel with respect for Saudi economic goals, including ambitious domestic projects funded by higher oil prices. Any public statements on oil will be closely watched for signs of compromise. Energy talks may even address renewables and climate adaptation, a newly important topic for Gulf states.

Confronting regional conflicts

The Middle East’s simmering conflicts form a tense backdrop to the visit. Containing Iran’s nuclear ambitions will be a top priority. Trump’s visit comes as Washington tries to develop a new nuclear deal with Tehran, a move quietly backed by Saudi Arabia and the UAE​. Gulf leaders will seek reassurance that this outreach won’t compromise their security. Another pressing issue is Gaza. Trump pointedly is not visiting Israel—a sign that without progress toward a Gaza cease-fire or hostage deal, such a stop would yield little. Instead, Qatar and Egypt continue to work on brokering a cease-fire and easing the humanitarian crisis.

Yemen’s war, where a fragile cease-fire now offers hope, will also come up—Trump can reinforce Gulf-led peace efforts by lending US support​. From Yemen’s tentative peace to Syria’s uncertain future, Gulf partners are bearing more responsibility for regional crises, and US backing can help them succeed​. Each of these challenges underscores the importance of US-Gulf cooperation in resolving conflicts, as Washington and its Gulf allies strive to coordinate strategies and realign on the responsibilities of peace-making.

Investment and economic opportunities

Economic statecraft is at the heart of Trump’s Gulf agenda. The region’s deep pockets and sovereign wealth are a magnet for a US president eager to spur investment and job growth back home​. Trump will seek major new investments from Saudi Arabia, Qatar, and the UAE into US infrastructure, energy, and technology ventures​. In this transactional diplomacy, big numbers matter—and reports suggest that Trump is hoping to secure additional investment deals. Visible Gulf capital flows would allow Trump to claim wins for the US economy.

Beyond oil and real estate, today’s focus includes emerging industries. Cooperation in artificial intelligence and advanced technology is on the agenda​, aligning with Gulf states’ ambitions to become tech hubs. Expect announcements of joint tech funds or research centers. Defense deals are another pillar of the economic relationship. On the eve of the trip, the United States approved a $3.5 billion sale of advanced air-to-air missiles to Saudi Arabia, a signal that security cooperation (and the hefty contracts that come with it) will feature alongside business deals. By the end of the tour, Trump will aim to unveil a slate of agreements projecting a narrative that US-Gulf ties are translating into tangible economic benefits.

Despite headline-grabbing Gulf pledges, the numbers tell a cautionary tale. The UAE’s vaunted ten-year, $1.4 trillion investment commitment is enormous. However, this commitment lacks any clear roadmap, and such long-term promises face serious headwinds amid global economic volatility. Similarly, Saudi Arabia’s promised $600 billion (over four years) investment push represents an implausibly high share of the country’s economy. Riyadh’s finances are already stretched by Vision 2030 mega-projects like the city of NEOM, forcing the government to recalibrate and prioritize domestic spending. With the kingdom contending with turbulent growth forecasts and persistent political strains (not least the fallout from the war in Gaza), a sustained influx of Saudi capital into the United States is increasingly in doubt.

Recalibrating bilateral relationships

Each stop on the trip reflects a recalibration of US ties with a pivotal Gulf partner. In Saudi Arabia, Trump will renew official ties with Crown Prince Mohammed bin Salman after having kept his relationship with Riyadh strong during his time out of office. A similarly reassuring tone is expected in Abu Dhabi, where the UAE’s leaders seek confirmation of enduring US support even as they hedge with other partners. The stop in Doha highlights Qatar’s importance as a US ally, host to a major airbase and a mediator in regional crises. Broader strategic issues will weave through these bilateral talks. With China and Russia also courting the region, Trump’s visit is a chance to reassert US influence amid shifting alliances​.

As Trump prepares for his high-stakes visit to the Gulf, it is essential that his administration makes the most of this opportunity. Beyond familiar conversations about oil and security, this visit can—and should—mark the beginning of a broader, smarter partnership. Here are four ways Trump and his team can seize the moment.

1. Stabilize energy markets, embrace climate adaptation: Trump will ask Gulf producers to help moderate oil output to keep global prices in check. Yet to make this more than a one-note exchange, Trump should propose joint US–Gulf initiatives focused on clean energy transitions and climate resilience. By supporting Gulf investments in hydrogen, carbon capture, and renewable energy, the United States can demonstrate that its energy ties are evolving with the times—making both economies more resilient and forward-looking.
2. Prioritize conflict mediation: Washington’s long-standing alliances in the Gulf are grounded in shared security interests. Trump should leverage the considerable trust he enjoys with Gulf leaders to press for meaningful progress in Yemen’s fragile peace process and the war in Gaza. A joint US–Gulf conflict resolution framework could institutionalize cooperation, ensuring both swift responses to flare-ups and sustained support for reconstruction and peacebuilding, helping to stabilize a region too often trapped in cycles of crisis.
3. Bolster economic ties through innovation: Trump’s transactional approach to diplomacy is well known, but this trip offers a chance to push economic ties into new, forward-looking areas. Encouraging Gulf sovereign wealth funds to channel investments into US infrastructure and tech startups would deliver immediate economic benefits. Yet deeper gains lie in establishing joint research ventures in artificial intelligence, cybersecurity, and next-generation industries. This form of digital diplomacy could position both sides as global innovation leaders, fostering a tech-driven alliance for the twenty-first century.
4. Strengthen cultural bridges: To humanize what is often seen as a transactional relationship, the United States should double down on cultural diplomacy. Arts collaborations, sports exchanges, and interfaith dialogues can soften perceptions and deepen trust between societies. By championing such initiatives, Trump can underscore that US–Gulf ties are not confined to boardrooms and defense pacts but extend into the everyday fabric of life. Nurturing people-to-people connections is as strategic as any formal agreement.

If Trump can look beyond the predictable and embrace a more diversified, future-oriented approach—one that ties oil and security to innovation, youth, and culture—he can transform this trip from a standard diplomatic handshake into a legacy-defining pivot. The sands of the Gulf are shifting fast. To stay grounded, the United States must not just renew its ties—but reinvent them for the decades ahead.

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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After Russia’s illegal full-scale invasion of Ukraine in February 2022, Western partners imposed unprecedented financial sanctions and export controls against Russia. These measures aim to achieve three objectives:

1. Significantly reduce Russia’s revenues from commodities exports;
2. Cripple Russia’s military capability and ability to pursue its war;
3. Impose significant pain on the Russian economy.

The Atlantic Council’s Russia Sanctions Database tracks the restrictive economic measures Western allies have placed on Russia and evaluates whether these measures are successful in achieving the stated objectives.

The Database also centralizes the financial designations of more than five thousand Russian entities and individuals sanctioned by the Group of Seven (G7) jurisdictions, Australia, and Switzerland. The Database is updated quarterly and can be queried to determine if an individual or entity is designated. Please refer to the appropriate designating jurisdiction’s websites and platforms for additional information and confirmation. The data provided in the Database is intended for informational purposes only.

How to use this database to reveal sanctions gaps: Click on the check mark () and cross mark () filters at the top of each column. Doing so will build a list of entities/individuals that are sanctioned by one country but not by another.

The seven jurisdictions covered in this database are the United States, the United Kingdom, the European Union, Switzerland, Canada, Australia, and Japan. Data in the database was last updated on November 8, 2024

Objective 1: Significantly reduce Russia’s revenues from commodities exports

Lengthening of global oil trade routes

Restrictive economic measures against Russia’s energy sector have caused major restructuring of the global oil market and lengthening of oil trade routes, but Russia is still generating revenue from oil exports to India and China. 

When the European Union (EU) banned seaborne Russian oil imports, the United States stepped in and became the largest supplier of crude oil to Europe. US crude oil exports to Europe increased by 23 percent in June 2024 year on year. However, as the United States became the top oil exporter to Europe, it lost half of its share of the Indian market. India opted for cheaper Russian oil as a result of the oil price cap and cut US crude oil imports by 47 percent in 2023. 

This reshuffling in the global energy market resulted in the lengthening of oil trade routes: The United States and the Middle East are shipping oil to Europe, while Russia is shipping oil to India and China, which in some cases re-export refined Russian oil to Europe. 

Longer oil trade routes created new loopholes in the Group of Seven (G7) sanctions regime. For example, since the G7 does not have import restrictions on refined Russian oil from third countries, Europe has been buying Russian oil products such as fuel from India, lengthening the supply chain even more. Between December 2022 and December 2023, the price cap coalition members imported about nine billion dollars worth of Russian-origin oil products from India and other third countries.

Additionally, longer, multiparty trade routes are also ultimately related to enforcement issues. In response to the oil price cap, Russia has built up a shadow fleet of tankers that can easily take advantage of these routes. At the same time, Russia has developed a multiparty blending market against which sanctions are proving more complicated to enforce. 

Russia seems to be repeating Iran’s sanctions evasion playbook, which has been to re-export blended and refined crude oil through third countries. It might be time for the G7 to take a more comprehensive step and replace the oil price cap with sanctions on Russian oil. The price cap leaves much room for maneuvering both for Russia and third countries to profit from re-exporting. Sanctioning Russian oil would significantly increase global oil prices and negatively impact the global economy. However, if India were to stop importing Russian oil, Russia would lose a significant market for its crude oil, perhaps even becoming fully dependent on China just like Iran, who has to sell oil at a much lower price than Russia.

The Treasury Department’s November 21 action designating Gazprombank demonstrates the Biden administration’s resolve to restrict Russia’s ability to generate revenue from commodity exports. Gazprombank was previously designated by the United Kingdom, Australia, New Zealand, and Canada.

Proposed G7 restrictions could irreversibly damage the global diamond industry  

The G7 has introduced phased prohibitions on the imports of Russian-origin non-industrial diamonds. They are likely to cause shock waves in the global diamond industry, but it is unclear whether they would weaken Moscow’s ability to finance the war on Ukraine. Russia’s diamond industry generates about $3.8 billion in revenue annually, a minuscule amount compared to the about $100 billion Russia received in oil and gas revenues last year. While not being a critical commodity exporter for Russia, the Russian state-owned diamond mining company Alrosa has the largest share of the global diamond market (31 percent) and produces 35 percent of the world’s rough diamonds. This asymmetry implies that diamond restrictions will not impact Russia’s war chest, but will negatively impact the $100 billion global diamond industry. 

Russia still continues to profit from diamond sales despite sanctions. For example, in 2023, Hong Kong imported $657.3 million worth of diamonds from Russia, a dramatic 1,700 percent increase from the previous year. However, countries at the low end of the supply chain, such as India, that refine and polish diamonds and other precious gems, will no longer be able to re-export polished Russian diamonds to the G7. This will especially impact India which will have to either export polished Russian diamonds to other markets or import rough diamonds from other countries. In either case, India’s diamond industry will suffer from major supply chain restructuring. 

The G7 countries are in the process of creating new requirements for tracing the origins of all diamonds before they enter G7 and EU countries. The “mandatory traceability program” will go into effect on March 1, 2025 and will likely increase compliance costs across the diamond industry. In particular, the EU will require all non-Russian diamonds to go through Antwerp, Belgium to verify their origins. Industry leaders have expressed concerns about bottlenecks and the advantage Antwerp would be getting over other sellers in case this mechanism is approved. 

The World Federation of Diamond Bourses has acknowledged the need to trace diamonds’ origins but raised concerns about the plan the G7 has suggested. The cost of compliance with sanctions, including the cost of shipping diamonds to Belgium while paying for freight insurance will likely increase the price of non-Russian diamonds, ultimately making Russian diamonds comparatively less expensive and therefore more attractive to consumers. 

The G7 governments should take into consideration concerns from the world’s diamond industry and African stakeholders, and create the space for diamond experts to present an alternative plan for traceability that meets the G7’s intent.

Objective 2: Cripple Russia’s military capability and ability to pursue its war

Can India manage to enjoy the benefits of trading with Russia without facing the consequences?

After the United States pressured the United Arab Emirates and Turkey to comply with critical technology export controls on Russia, India has emerged as a primary transshipment hub and the second largest supplier of restricted technology to Russia. As it turns out, Russian authorities began finding solutions to transact with Indian companies through clandestine channels shortly after Russia invaded Ukraine. 

When the G7 imposed sanctions on Russia, India increased imports of cheap Russian oil. India was paying Russia in rupees for a portion of these imports, resulting in Moscow accumulating a considerable amount of rupees it could not spend anywhere else, similar to the phenomenon with China that we discussed in our analysis of the “axis of evasion.” 

According to the Financial Times, by October 2022, Russia’s Industry and Trade Ministry made a secret plan that would kill two birds with one stone: Russia would buy sensitive electronic components from India with the 82 billion rupees (about one billion dollars) the Russian banks had accumulated from oil exports. The payments would take place in a “closed payment system between Russian and Indian companies, including by using digital financial assets”, and outside of Western oversight. It is difficult to determine if the plan worked because the Financial Times obtained the information about this plan from leaked Russian documents. However, given that India is now the second largest sensitive technology provider to Russia and Russian banks maintain branches in several Indian cities, it is safe to assume that it did. 

If everything follows the current trajectory, India will increase technology exports to Russia to address the massive trade imbalance with Moscow. Specifically, in the fiscal year ending in March 2024, New Delhi imported $65.7 billion worth of crude oil from Russia and exported only $4.26 billion worth of goods. To restore the trade balance, India exported items such as microchips, circuits, and machine tools worth more than $60 million both in April and May, and $95 million in July. Thus, it is now in India’s interest to export more electronics to Russia so it can correct the trade imbalance before the end of the fiscal year. 

The United States is aware of India’s increasing role in supplying Russia’s military-industrial complex with critical technology. The Treasury Department included nineteen Indian entities in its latest tranche of designations of Russia’s military procurement networks. At the same time, the State Department sanctioned more than 120 additional entities and individuals supporting Russia’s military-industrial complex, and the Commerce Department imposed export controls on forty foreign entities to prevent them from obtaining US technologies. One of the designated companies is Shreya Life Sciences, an Indian drugmaker that, according to the Treasury Department’s sanctions designation, has exported restricted high-end servers optimized for artificial intelligence to Russia. Indian authorities’ cooperation with the United States and G7 allies will be significant in ensuring Indian companies such as Shreya Life Sciences stop undermining the sanctions and export controls regime against Russia. 

As a starting point, the United States and its G7 allies should increase engagement with Indian authorities and encourage India’s Financial Intelligence Unit to share information through Egmont Group channels that may shed light on the closed payment channel that Indian companies supposedly used to transact with Russian companies, and whether this channel is still operational. Western allies should strongly encourage India to consider the exposure risk Indian financial institutions have with Russian banks that have been sanctioned or removed from the SWIFT messaging system and have branches in India, such as Sberbank, VTB Bank, and Promsvyazbank, as Indian financial institutions transacting with these Russian banks are subject to US secondary sanctions. 

Indian banks should consider their exposure to and risk of connecting with Sistema Peredachi Finansovykh Soobscheniy or “System for Transfer of Financial Messages” (SPFS). The Treasury recently warned foreign financial institutions that SPFS is considered part of Russia’s financial services sector. As a result, banks that join Russia’s financial messaging system may be targeted with sanctions.

Finally, the G7 partners should take into account India’s high dependence on imported energy. India imports 88 percent of its oil and is working toward increasing the role of renewables in the energy mix. Engaging with Indian authorities on finding alternative energy resources and suppliers would be a recommended next step for the G7 allies. This would also help India address the payment challenges it has experiencing with Russian authorities, who have been demanding that Indian companies pay Russian companies in renminbi instead of rupees.

Objective 3: Impose significant pain on the Russian economy

G7 countries issued unprecedented coordinated sanctions on Russia following Russia’s invasion of Ukraine in 2022. Western sanctions have significantly impacted Russia’s ability to fight its war and have made it more difficult for Russia to operate. There are indications that Russia’s economy is struggling. For example, the Central Bank of Russia recently increased the interest rate to 21 percent. Russia’s National Welfare Fund is declining as well as its export revenues as a result of sanctions. However, after nearly three years of war and sanctions, Western partners have not fully achieved their objectives. 

As the war continues on, the effects of restrictive economic measures are waning as Russia has created workarounds and mechanisms to transact and trade with its partners outside the reach of Western sanctions. Russia has adapted and evolved into a wartime economy. Measures such as export controls are making it more difficult for Russia to import battlefield technology and materials. However, Russia is finding solutions such as partnering with Iran and North Korea to obtain missiles, unmanned aerial vehicles, and other military equipment. 

Further, Russia is not the only country affected by Western sanctions. Russia’s neighboring countries are struggling to comply with sanctions as they have historically relied on economic ties and trade with Russia and have few opportunities to develop alternatives. Meanwhile, entire industries, including oil and precious gems, have had to develop and implement new ways of doing business and adjust to sanctions compliance. Technology companies also continue to have trouble complying with export controls. Their sensitive Western technology and dual-use goods continue to end up on the battlefield in Ukraine.

Going forward, Western partners must continue economic pressure on Russia in concert with military assistance to Ukraine. Sanctioning Russian oil will be critical in imposing pain on the Russian economy since oil and gas revenues filled one-third of Russia’s budget in 2023. However, if the United States and its G7 allies continue to leverage economic measures to change the course of wars and behaviors of states, they will need to have clearly outlined objectives and measures of assessment before pulling the trigger on sanctions. Developing a comprehensive understanding of the industries such measures will target will be critical for managing expectations of what sanctions can achieve, and what ramifications they will have for the global economy. 

Above all, the United States and G7 allies need to recognize that the use of economic tools comes at a cost, such as oil price increases and supply chain reshuffling. Economic tools avoid the damage of human deaths, but they require economic and financial sacrifice. It is now up to the G7 allies to decide what is a bigger priority: Oil prices or international security. 

Authors: Kimberly Donovan and Maia Nikoladze

Contributions from: Mikael Pir-Budagyan

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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.

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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 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. 

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

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

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. 

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. 

Staff

Kimberly Donovan

Director, Economic Statecraft Initiative

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.

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The return of “maximum pressure” is coming at the right time. Iran’s economy is extremely vulnerable. The global oil market’s fundamentals are relatively soft, as strong global supply growth keeps pace with moderating oil demand growth, driving Brent crude futures below seventy dollars per barrel for the first time since September 2024. Furthermore, nearly all of Iran’s 1.6 million barrels per day (mb/d) of crude oil and condensate exports go to a single buyer, China. This means the conditions are ripe for dealing Tehran a crippling blow. 

Removing most of those volumes from the market would come at a time of relatively high spare production capacity in Saudi Arabia and other members of the oil-producing group OPEC+. The estimated 5–6 mb/d of spare capacity (production held off the market due to output cuts) in these countries is more than enough to offset the loss of Iranian barrels. Moreover, the loss of billions of dollars in oil revenues, in addition to the Israeli military’s deterrence, would make it nearly impossible for Tehran to rebuild its smoldering Axis of Resistance and leaves the regime more vulnerable to internal dissent and international pressure.

Current global oil market conditions provide a unique opportunity to escalate pressure on Iran without causing undue harm to consumers or US allies. First, strong production growth from the United States, Canada, Brazil, and other non-OPEC+ countries and tepid demand growth have loosened global oil markets, meaning that there are reduced risks for both US consumers and the administration. Expectations from forecasters such as the International Energy Agency continue to see the market in surplus this year. Saudi-led OPEC+ has been forced to cut supply multiple times since the beginning of 2023 to stabilize prices, and while the group announced it will proceed with its plan to return barrels to the market beginning in April, it reiterated that the “gradual increase may be paused or reversed subject to market conditions.” 

As a result of the conservative production approach since 2023, OPEC+ has built up enough spare capacity to offset a sharp reduction in Iranian exports. While Washington may need to work with Riyadh to convince it to ramp up production more quickly than currently planned, the buffer can insulate consumers from potential price spikes, reducing political risks for the administration.

Second, removing Iranian barrels from the equation may help the United States avoid a harmful price collapse. Oversupply is not just a problem for Iran and other oil-producing countries—it also threatens US oil producers, which require moderately higher prices to sustain production growth and generate returns. A collapse in oil prices—as seen in 2014 and 2020—would disproportionately hurt US energy interests. By removing Iranian barrels from the market, the United States could help stabilize prices, protect its domestic oil industry, and weaken Iran all at once.

Third, Iran’s oil sector is dilapidated. Prior to the reimposition of oil sanctions in 2018, Iran’s crude oil production capacity was around 3.8 mb/d for decades. Over time, that number has fallen due to sanctions and underinvestment. In December 2024, Iran’s Ministry of Oil released a report on the status of the country’s oil sector, noting it would require three billion dollars of investment to recover the 0.4 mb/d of capacity it has lost since 2018. The ministry also admitted that if trends persist, production could decrease to 2.75 mb/d by 2028. At current rates, Iran may have to choose between meeting domestic demand and sustaining exports (and thus maintaining export revenues) as early as 2026.

Finally, disrupting Iran’s energy sector is not just about economics—it’s also about leveraging an effective tool to achieve broader strategic goals. An energy-focused maximum pressure campaign could heighten economic challenges for Iran, potentially amplifying domestic dissent. Tehran will have to divert resources from its destabilizing activities, such as its nuclear program and support for regional proxies, and make real concessions or risk further escalation.

Trump’s return to the presidency presents a historic opportunity to reset the United States’ approach to Iran. Oil markets are soft, and Iran is more vulnerable than it has been in decades. By turning off the taps, the United States can deliver a decisive blow to Iran’s ambitions and set the stage for a more stable and secure future.

Scott Modell is the chief executive officer of Rapidan Energy Group.

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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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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. 

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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. 

Sign up for PowerPlay, the Atlantic Council’s bimonthly newsletter keeping you up to date on all facets of the energy transition.

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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Ushering the auto industry into a new energy era

By Jim Farley

Read more

Ukraine can unleash energy investment even amid war

By Volodymyr Kudrytskyi

Read more

The US must assure its energy-secure future

By Meredith Berger

Read more

The importance of US LNG for economic growth and the global energy transition

By Daniel Yergin and Madeline Jowdy

Read more

Southeast Asia aims for sustainability through connectivity

By Kok Keong Puah

Read more

Energy realities require pragmatic solutions

By Rick Muncrief

Read more

Tech and power sector partnerships can accelerate the energy transition

By Arshad Mansoor

Read more

Forging stronger transatlantic energy cooperation

By Dan Jørgensen

Read more

Latin America and the Caribbean are leading the green energy transition

By Andrés Rebolledo Smitmans

Read more

Busting the top myths about AI and energy efficiency 

By Josh Parker

Read more

The small reactor revolution can transform African energy systems 

By Lassina Zerbo

Read more

Public Event Thu, February 20, 2025 • 3:30 pm ET

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.

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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.

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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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The post The 2025 Global Energy Agenda appeared first on Atlantic Council.

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Global Energy Agenda

Feb 20, 2025

The 2025 Global Energy Agenda

By Landon Derentz, Christine Suh, Paul Kielstra, Bailee Mathews (Editors)

The Atlantic Council is pleased to present its fifth Global Energy Agenda. 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. 

Energy & Environment Geopolitics & Energy Security

The post Global Energy Agenda full survey results appeared first on Atlantic Council.

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. 

Ushering the auto industry into a new energy era

By Jim Farley

Read more

Ukraine can unleash energy investment even amid war

By Volodymyr Kudrytskyi

Read more

The US must assure its energy-secure future

By Meredith Berger

Read more

The importance of US LNG for economic growth and the global energy transition

By Daniel Yergin and Madeline Jowdy

Read more

Southeast Asia aims for sustainability through connectivity

By Kok Keong Puah

Read more

Energy realities require pragmatic solutions

By Rick Muncrief

Read more

Tech and power sector partnerships can accelerate the energy transition

By Arshad Mansoor

Read more

Forging stronger transatlantic energy cooperation

By Dan Jørgensen

Read more

Latin America and the Caribbean are leading the green energy transition

By Andrés Rebolledo Smitmans

Read more

Busting the top myths about AI and energy efficiency 

By Josh Parker

Read more

The small reactor revolution can transform African energy systems 

By Lassina Zerbo

Read more

The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

learn more

The post Ukraine can unleash energy investment even amid war appeared first on Atlantic Council.

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.

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

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.

Eurasia Center events

Online Event Tue, June 17, 2025 • 1:00 pm ET

Drones, defense, and diplomacy: Negotiations and the battlefield in Ukraine

Conflict Defense Technologies Europe & Eurasia Politics & Diplomacy

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.

Further reading

UkraineAlert Feb 12, 2025

Europe must prepare to defend itself in an increasingly multipolar world

By Mykola Bielieskov

With the United States looking to pivot away from Europe to Asia and a revisionist Russia openly embracing an expansionist agenda, European leaders must prepare to defend themselves in an increasingly multipolar world, writes Mykola Bielieskov.

Conflict Defense Industry

UkraineAlert Dec 19, 2024

Five things Russia’s invasion has taught the world about Ukraine

By Peter Dickinson

Vladimir Putin’s brutal invasion of Ukraine has thrust the country into the global spotlight and transformed international perceptions of Ukraine in ways that will resonate for decades to come, writes Peter Dickinson.

Defense Technologies Disinformation

UkraineAlert Jan 15, 2025

Appeasement will only fuel Vladimir Putin’s imperial ambitions in Ukraine

By Anastasiia Marushevska

Vladimir Putin’s invasion of Ukraine is an old-fashioned colonial war rooted in centuries of Russian imperial history that cannot be ended by limited territorial concessions or other attempts at appeasement, writes Anastasiia Marushevska.

Conflict Disinformation

The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

Read more from UkraineAlert

UkraineAlert is a comprehensive online publication that provides regular news and analysis on developments in Ukraine’s politics, economy, civil society, and culture.

The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia and Central Asia in the East.

Learn more

The post Transatlantic alliance enters most challenging period since Suez crisis appeared first on Atlantic Council.

Since the beginning of 2025, Ukraine has launched a wave of long-range drone attacks against military and industrial targets inside Russia. The Kremlin remains tight-lipped over the impact of these air strikes, but open source data and media reports point to significant damage to at least eight Russian refineries along with a number of oil depots and key logistical points such as pumping stations and ports used for oil and gas exports. The range of targets suggests a well-planned Ukrainian campaign to methodically dismantle Russia’s energy infrastructure.

Ukraine’s bombing offensive is proving effective. Calculations by Reuters analysts based on oil industry trading figures covering the period from January to early February 2025 indicate that Ukrainian drone attacks have disabled approximately 10 percent of Russia’s refining capacity. Coupled with the impact of recently imposed United States sanctions against the Kremlin’s shadow fleet of oil tankers, this is expected to leave Moscow with no choice but to slow oil production in the coming months.

Reports of significant disruption to Russia’s energy industry will be welcomed in Kyiv. Ukrainian officials have made no secret of their intention to target the Russian oil and gas sector, which serves as the economic engine of Vladimir Putin’s war machine. The first Ukrainian attacks took place during the initial months of the war, with a marked increase in frequency during 2024. Ukraine’s air offensive against Russia’s energy industry now appears to be entering a new phase of heightened intensity.

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

Ukraine’s efforts to bring Putin’s invasion home to Russia have been hampered by restrictions imposed on the use of Western-supplied weapons amid a reluctance among Kyiv’s partners to risk escalating the conflict. The Kremlin has skillfully exploited these fears, with Putin warning explicitly in September 2024 that any attempt to lift restrictions on long-range strikes would mean NATO and Russia were “at war.”

In order to bypass Western restrictions, Ukraine has prioritized the domestic production of long-range drones and missiles capable of striking targets deep inside Russia. Thanks to Ukraine’s innovative defense tech sector and the country’s strong aerospace legacy from the Soviet era, progress has been rapid. In late 2024, Ukrainian President Volodymyr Zelenskyy showcased a number of new domestically produced drones and missiles with expanded ranges and payloads.

Ukrainian officials have stated that they intend to manufacture 30,000 long-range drones and 3000 missiles during the current year. Some of Kyiv’s Western partners also appear to recognize the strategic importance of Ukraine’s growing long-range arsenal, and are providing financing for production along with technical support. However, it will still be some time before Ukraine has sufficient long-range firepower to seriously threaten Russia’s ability to wage war.

At present, Ukraine’s air offensive is achieving the more limited goals of disrupting Russia’s energy industry, stretching the Kremlin’s limited air defenses, and undermining Moscow’s efforts to insulate ordinary Russians from the war. Since the onset of the full-scale invasion three years ago, Putin has been careful to cultivate a business-as-usual climate within Russia itself. Ukraine’s eye-catching daily strikes on oil refineries and storage depots are now sending a powerful message to the Russian public that the war unleashed by the Kremlin in February 2022 will not be fought exclusively on foreign soil.

Eurasia Center events

Online Event Tue, June 17, 2025 • 1:00 pm ET

Drones, defense, and diplomacy: Negotiations and the battlefield in Ukraine

Conflict Defense Technologies Europe & Eurasia Politics & Diplomacy

Ukraine’s expanding arsenal of domestically produced long-range weapons is particularly important at a time of growing uncertainty over the future of US military aid for the country. Throughout the war, the Ukrainian military has been heavily reliant on the United States and other Western partners for vital weapons supplies. However, there are now mounting concerns in Kyiv that US President Donald Trump’s efforts to reach a compromise peace deal with Putin could leave Ukraine isolated and vulnerable to further Russian aggression.

In the absence of credible NATO-style security guarantees, Ukrainian leaders believe one of the few reliable deterrents would be the proven ability to strike back powerfully at targets inside Russia. Zelenskyy’s “victory plan,” which he presented to Western partners in the final months of 2024, included a call for the supply of long-range missiles as part of a “non-nuclear deterrence package” designed to prevent a fresh Russian invasion. In his traditional New Year address, Zelenskyy spoke at length about Ukraine’s numerous new missile models, calling them “arguments for a just peace.”

There is currently very little to suggest that Putin is interested in any kind of peace with Ukraine, of course. On the contrary, he looks to be more confident of victory than ever, and appears unwilling to compromise on his original war aim of extinguishing Ukrainian statehood. However, if Ukraine can continue escalating its current wave of attacks on Russia’s economically vital but vulnerable energy industry, the Russian dictator may be forced to reassess the prospects of his invasion.

Peter Dickinson is editor of the Atlantic Council’s UkraineAlert service.

Further reading

UkraineAlert Jan 15, 2025

Appeasement will only fuel Vladimir Putin’s imperial ambitions in Ukraine

By Anastasiia Marushevska

Vladimir Putin’s invasion of Ukraine is an old-fashioned colonial war rooted in centuries of Russian imperial history that cannot be ended by limited territorial concessions or other attempts at appeasement, writes Anastasiia Marushevska.

Conflict Disinformation

UkraineAlert Dec 19, 2024

Five things Russia’s invasion has taught the world about Ukraine

By Peter Dickinson

Vladimir Putin’s brutal invasion of Ukraine has thrust the country into the global spotlight and transformed international perceptions of Ukraine in ways that will resonate for decades to come, writes Peter Dickinson.

Defense Technologies Disinformation

UkraineAlert Feb 12, 2025

Europe must prepare to defend itself in an increasingly multipolar world

By Mykola Bielieskov

With the United States looking to pivot away from Europe to Asia and a revisionist Russia openly embracing an expansionist agenda, European leaders must prepare to defend themselves in an increasingly multipolar world, writes Mykola Bielieskov.

Conflict Defense Industry

The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

Read more from UkraineAlert

UkraineAlert is a comprehensive online publication that provides regular news and analysis on developments in Ukraine’s politics, economy, civil society, and culture.

The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia and Central Asia in the East.

Learn more

The post Ukrainian drones reportedly knock out 10 percent of Russian refining capacity appeared first on Atlantic Council.

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.

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

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.

Eurasia Center events

Online Event Tue, June 17, 2025 • 1:00 pm ET

Drones, defense, and diplomacy: Negotiations and the battlefield in Ukraine

Conflict Defense Technologies Europe & Eurasia Politics & Diplomacy

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).

Further reading

UkraineAlert Jan 15, 2025

Appeasement will only fuel Vladimir Putin’s imperial ambitions in Ukraine

By Anastasiia Marushevska

Vladimir Putin’s invasion of Ukraine is an old-fashioned colonial war rooted in centuries of Russian imperial history that cannot be ended by limited territorial concessions or other attempts at appeasement, writes Anastasiia Marushevska.

Conflict Disinformation

UkraineAlert Dec 19, 2024

Five things Russia’s invasion has taught the world about Ukraine

By Peter Dickinson

Vladimir Putin’s brutal invasion of Ukraine has thrust the country into the global spotlight and transformed international perceptions of Ukraine in ways that will resonate for decades to come, writes Peter Dickinson.

Defense Technologies Disinformation

UkraineAlert Feb 4, 2025

Russia’s war against the West will continue until Putin tastes defeat

By Andriy Zagorodnyuk

Russia’s invasion of Ukraine is part of a far larger war against the West. If he succeeds in Ukraine, Putin aims to destroy the existing rules-based world order and usher in a new era dominated by a handful of great powers, writes Andriy Zagorodnyuk.

Conflict Economic Sanctions

The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

Read more from UkraineAlert

UkraineAlert is a comprehensive online publication that provides regular news and analysis on developments in Ukraine’s politics, economy, civil society, and culture.

The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia and Central Asia in the East.

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The post Ukraine can play a key role in Europe’s future energy architecture appeared first on Atlantic Council.

Watch the full event

Public Event Tue, February 4, 2025 • 5:00 pm ET

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.

Watch the full event

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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.

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

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.

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The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

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After the Ancon, the voyage did become routine. By the mid-1920s, annual traffic on the canal surpassed five thousand ships. Today, more than twelve thousand ships per year make the voyage across the isthmus. The quicker, cheaper, and safer way to bridge the oceans has transformed global trade and the Western Hemisphere.

Today, however, an observer coming upon the scene might sense dark clouds on the horizon. In his inaugural address, US President Donald Trump said that the canal had “foolishly been given to the country of Panama.” Panama is treating the United States unfairly and China is operating the canal, he argued, without providing specifics. “We’re taking it back,” he declared. The bridge, it seems, has become an impasse. 

Difficult waters require steady guides. Below, Atlantic Council experts deftly steer us through how the canal came about, why it matters today, and what to expect next.

The Panama Canal was the largest US engineering project to date when the SS Ancon (pictured) officially opened the waterway. Direct costs between 1904 and 1914 exceeded $352 million (more than eleven billion dollars today, adjusted for inflation). Records show that 5,609 people died from accidents and disease while working on the canal over this same period, though the true figure is likely higher.

1. What was the US role in building the canal?

US President Theodore Roosevelt’s use of “gunboat diplomacy”—with US warships deployed along Panama’s Pacific and Atlantic coasts—was instrumental in Panama securing its independence from Colombia. In exchange for US assistance, Washington secured its main objective for helping the Panamanian cause: rights to build the canal. In 1903, the Hay-Bunau-Varilla Treaty gave the United States control of a fifty-mile by ten-mile stretch of Panama that divided the country in half and came to be known as the Canal Zone. Ten years later, US President Woodrow Wilson opened the canal, which was constructed with locks designed by the US Army Corps of Engineers and with workers largely imported from Caribbean islands. 

—Jason Marczak is vice president and senior director at the Atlantic Council’s Adrienne Arsht Latin America Center.

2. When and how did Panama take ownership of the canal?

Throughout the twentieth century, the United States—with increasing Panamanian animosity—controlled the Canal Zone. Increased tensions, perpetuated by the stark difference between US-controlled Canal Zone life and that outside the zone, led to demonstrations in 1964 that turned violent and resulted in the deaths of both Panamanians and US Marines. This incident sparked new interest across administrations to resolve tensions around the canal, which came to the fore during the presidency of Jimmy Carter, who entered office seeking a new beginning with Latin America.

In 1977, Carter came to an agreement with Panama on a transition for the canal: joint administration until 1999, at which point Panama would fully take over the canal. Among other things, the Permanent Neutrality Treaty requires (a) efficient canal operation; (b) transit fees that are “just, reasonable, equitable, and consistent with international law,” and (c) neutrality of the canal. The Panama Canal Authority, an autonomous entity, was set up to administer, operate, modernize, and set fees for the canal. Since taking over canal operations, Panama has invested more than five billion dollars to expand the canal in order to accommodate larger ships.

—Jason Marczak

3. What is the canal’s role in international trade today?

The Panama Canal is among the most significant waterways for global trade, servicing 5 percent of the total volume of maritime trade globally. For the United States, the canal is critical for efficient trade. Forty percent of US container traffic passes through the canal annually, carrying about $270 billion in cargo. The Panama Canal is, during standard operating times, the fastest route for trade between the US East Coast and Asia, for example from New York to Shanghai. Trade from Europe to the US West Coast, or South and Central America to Asia (i.e. Brazil to China) also relies on the canal. Still, over 74 percent of the trade volume that flows through the Panama Canal is headed for, or coming from, the United States.

When El Niño exacerbated drought conditions in 2023-2024, causing low water levels in the canal’s largest reservoir, Gatun Lake, the disruption proved the economic value of the canal’s smooth operation. Lower water levels decrease not only the number of vessels able to transit, but also the volume of cargo they can carry.

Canal shipping is not immune to the laws of supply and demand; the fewer vessels able to transit the canal, the higher the price. Furthermore, the Panama Canal Authorities levy a “freshwater surcharge,” which increases when water levels are low, to incentivize water conservation and decrease traffic. The more ships that don’t divert or make reservations during drought, the greater the wait time, which reached a peak of twenty-one days in the summer of 2023. Increased costs and shipping times during the recent drought likewise increased the shipping costs as much as 14 percent year-over-year for dry bulk goods (such as grains and coal), 12 percent for vehicle carriers, and 5 percent and 3 percent for liquefied petroleum gas and liquefied natural gas, respectively. 

—Sophia Busch is an assistant director with the GeoEconomics Center.

Container cargo dominates eastward trade while oil goes west

4. What is the canal’s role in energy markets?

The Panama Canal plays a significant role in facilitating energy trade between the Americas and Asia. Shipments of US and Brazilian (as well as Canadian barrels re-exported from the United States) cargoes of crude oil, refined products, and liquefied natural gas (LNG) destined for Asia often transit the Panama Canal. The canal is particularly crucial for LNG, since virtually all operating US LNG capacity is on the US East and Gulf coasts. Finally, liquefied petroleum gas (LPG), an unheralded but vital input for petrochemicals, heating fuel, and engine fuel, is highly dependent on the Panama Canal. The US Gulf Coast accounts for about 40 percent of all seaborne LPG shipments; most of those volumes are directed to Asia.

However, increasing strains on the canal’s capacity to handle transit have, over time, reduced its use as a transit point for energy in favor of other routes. Average Asian volumes of imported crude, clean products, fuel oils, and LNG decreased by 6 percent in 2024 as compared with the average volume between 2021 and 2023.

Though Asia has historically sourced these energy cargoes from a number of sources, particularly the Middle East and the Indo-Pacific, decreasing reliability of the canal has significant consequences for the United States’ ambitions to use energy as a fulcrum of foreign policy partnerships in the region. For example, average monthly volumes of LNG bound for China, Japan, South Korea, and Taiwan from the United States via the Panama Canal decreased by 82 percent compared to the average transit between 2021 and 2023, whereas average monthly volumes transited via South Africa’s Cape of Good Hope increased by 472 percent. As a consequence, US cargoes to Asia are more costly and have a higher emissions footprint.

In the absence of a plan to address either the canal’s capacity issues or clear-cut alternatives for westbound cargoes, the Trump administration’s ability to use energy trade as a tool in its foreign policy with Asia will continue to be limited. The challenge could even deepen as drought and water availability further constrain passage. With this in mind, it’s clear why the canal’s limitations have been elevated from a persistent theme in energy markets to a headline issue for the White House. 

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

Trump’s warning on the Panama Canal

5. What is Trump’s history with the Panama Canal?

Trump’s concerns about the Panama Canal Treaties didn’t materialize in just the last few weeks. In 2003, when the then Trump-owned Miss Universe contest was held in Panama City, he first got to know the country. Even at that time, Trump expressed the view that the United States got ripped off by the treaties. Interactions with Panama came to a head in 2018 when a legal dispute arose between the Trump Organization and a Miami-based hotel investor who was trying to break off ties with the Trump business. The situation escalated into a standoff with Panamanian authorities. Eventually, Trump’s name was taken off the hotel in Panama City at the center of the dispute.

—Jason Marczak

New Atlanticist

Jan 20, 2025

What to know about Trump’s day-one promise to take back the Panama Canal

By Jason Marczak

Trump’s presidency can be an opportunity to further use the tools of the US government to advance the US business presence in Panama.

Americas Economy & Business

6. Trump says that US ships using the canal are being overcharged and not treated fairly in violation of the treaty that the United States and Panama have regarding the canal. Is that the case?

Trump’s claims that US ships using the canal are being overcharged and unfairly treated in violation of the Torrijos-Carter Treaty are not supported by evidence. The Panama Canal Authority (PCA), which manages the canal, charges fees based on the size and type of the ships that are using the waterway. Recently, natural factors like decreased water levels have started to affect the canal’s ability to support ships. As a result, in a normal supply and demand way, the pricing structure of the canal has also shifted. The rates are uniform, impartial, and nondiscriminatory, and they apply to all ships regardless of their nationality. What affects the pricing are factors like ship dimensions and design, the type of cargo it carries, and additional loading or unloading that would take place at the ports. The PCA offers a public maritime services calculator, accessible to anyone.

As a side note, the Torrijos-Carter Treaty did include specific and explicit provisions granting preferential treatment to vessels from northern and southern neighbors Costa Rica and Colombia, respectively. But the provisions apply primarily to warships and auxiliary vessels, which are entitled to the same favorable treatment as Panamanian vessels when transiting the canal. This provision, however, is mostly symbolic, and in no way impacts commercial shipping.

—María Fernanda Bozmoski is director of impact and operations and lead for Central America at the Atlantic Council’s Adrienne Arsht Latin America Center.

7. Trump says that China has too much influence over the Panama Canal. What exactly is China’s involvement with the canal, how did it come about, and should the United States be concerned about it?

Latin America is seeking options for infrastructure investment—including port infrastructure—and Chinese companies are leaning into those opportunities across the region, just as they are everywhere else. Beijing is not “operating” the Panama Canal, as Trump claimed. There are five ports adjacent to the Canal. Hong Kong-listed Hutchinson Whampoa operates two of them, one on the Caribbean side and another on the Pacific side. US, Singaporean, and Taiwanese companies operate the other three. 

Hutchinson Whampoa has operated its two ports since 1997 (when the US was still jointly managing the canal); China Harbor Engineering Company launched the cruise terminal in 2024. China Harbor is also building a new bridge over the Canal. That project is still underway.

There are multiple concerns when Chinese companies acquire strategic port assets. Beijing could conceivably use Chinese-held ports to position military assets, both overt and covert, near strategic targets in a future military crisis. Since entities affiliated with China operate ports on both ends of the canal, they could potentially slow or even block US and other Western commercial traffic as a coercion tactic. There is also an information-gathering risk, as PRC port companies can track the goods flowing through them and pass that information on to Beijing. That is primarily a concern with ports handling US goods and traffic, as that provides more access to and information on US activities. That concern extends to the equipment non-Chinese-owned ports use to move and scan commercial freight. For example, if a non-Chinese port authority uses PRC equipment to transport or scan shipping freight, that could provide an avenue for Beijing to monitor those activities, even if a Chinese company does not own the port itself.  

China’s growing infrastructure footprint is a global challenge. It is not specific to Panama. For example, Chinese companies recently acquired strategic port assets in Peru and Germany. According to recent analysis from the Council on Foreign Relations, Chinese companies have some degree of ownership in at least 129 ports around the world. 

For decades, the United States did not offer partner nations an alternative to Chinese investment. When US companies bid for ports and other infrastructure projects, they often bid alone. In contrast, Chinese companies enjoy strong support from China’s state-owned banks; they can offer low prices and attractive loan terms that US companies cannot match. The United States has woken up to this challenge and the need to put Western alternatives on the table. Under the Biden administration, the United States had some big wins outbidding Chinese firms—including Chinese state-owned enterprises—on infrastructure projects. 

The United State can prevail over China in this sector. In November 2023, when state-owned China COSCO Shipping Cooperation Limited was seeking to acquire the rights to develop the Elefsina shipyard in Greece, the US International Development Finance Corporation (DFC) stepped in and provided the financing that enabled a Greek company to win the bid, keeping the shipyard in Western hands. If the Trump administration is serious about tackling the challenges associated with Beijing’s growing infrastructure footprint, the way to do so is to put real alternatives forward, and to aggressively advocate for them. 

—Melanie Hart is the senior director of the Atlantic Council’s Global China Hub.

After nine years of construction costing more than five billion dollars, the newly expanded Panama Canal opened in June 2016. The first vessel to pass through was the Chinese container ship Cosco Shipping Panama (REUTERS/Carlos Jasso).

8. How does Panama view Trump’s concerns over the canal?

Panamanian President José Raúl Mulino has responded to Trump’s message that he wants to take back the canal with a clear message that the canal “is and will continue to be Panamanian.” The statement followed a similar message Mulino delivered in a December 22 communiqué. Following the inaugural address, Panama took the issue to the United Nations (UN)—where it currently holds a rotating seat on the Security Council—to express its concern that the United States is threatening the use of force, contrary to the UN Charter.

What is important to reinforce is that the Mulino government is actually quite aligned geostrategically with the United States and with the Trump administration on global issues, including in supporting Israel and seeking to curb the northward flow of migrants. Panama also wants greater US investment to diversify further from the growing—and concerning—influx of Chinese cash. But Mulino has to balance that with domestic political pressures and be a vocal and staunch defender of the canal—even though Trump’s message is likely meant as a negotiating tactic to gain more favorable terms and investment opportunities for US companies, and especially to mitigate concerns around Chinese-controlled ports.

—Jason Marczak

9. How does China view Trump’s concerns over the canal?

Thus far, Beijing views Trump’s statements with glee. Panama views the United States as its preferred partner; where the United States is willing to put forward alternatives, those alternatives are likely to prevail. Beijing, in contrast, is facing growing pushback over the strings it attaches to economic development. Beijing is utilizing Trump’s call to “take back” the Canal as an opportunity to present China as the partner that will recognize and respect Panama’s sovereignty. For example, China’s foreign ministry statements stressed on December 27 that “China will, as always, respect Panama’s sovereignty,” and on January 22 that “We agree with Panama’s President José Raúl Mulino that Panama’s sovereignty and independence are not negotiable . . . we respect Panama’s sovereignty over the canal.”

The current approach gives Beijing the opportunity to position itself as a preferred partner in the region. That is ironic given that Beijing frequently violates other nations’ sovereignty, deploying economic coercion and other forms of bullying to force partner countries to abide by Beijing’s political edicts. If the United States really wants to increase its influence in the region, the best way to do so is to present a valid alternative to China—one that nations will race to join. The Biden administration did so successfully in the semiconductor sector. If the Trump administration can do the same in strategic ports, that will be a massive win. Given the recent Chinese port opening in Peru, Latin America is a great place to start.

—Melanie Hart

New Atlanticist

Jan 9, 2025

The US is right to be concerned about China’s influence over the Panama Canal

By Gregg Curley

Legitimate concerns about growing Chinese influence over the canal demand Washington’s attention and warrant a measured, diplomatic approach.

China Latin America

10. What do you expect the United States to do next regarding Trump’s concerns? What should the United States do next? 

US Secretary of State Marco Rubio will break tradition this week by making his first international trip as secretary a visit to Central America. This is a welcome change. It’s a signal that the region will be top of the agenda in this administration, as Rubio will travel to Panama along with other Central American countries and the Dominican Republic. 

Such a quick and high-level diplomatic trip to Panama is an important next step to move beyond the exchange of words between the two countries’ presidents. The secretary of state may lay out more explicitly for his Panamanian counterparts the specific details of Trump’s grievances and hopefully begin to find a joint pathway forward to address them in alignment with US interests and Panama’s control of the canal. That could mean a discussion on transit fees and auction rates as well as exploring new opportunities for US investment in direct and indirect canal-supporting operations. The United States could then deploy tools of the federal bureaucracy, such as US International Development Finance Corporation funding, to support and incentivize US companies to invest further in the canal and rebuild a greater US presence and corollary stake in the canal’s future.

—Jason Marczak

The post Expert context: What’s going on with Trump and the Panama Canal? appeared first on Atlantic Council.

While US LNG export capacity is set to double by 2028, world LNG markets will potentially be oversupplied as soon as 2026. Accordingly, maintaining US competitiveness in the sector requires deploying an abundance of policy and regulatory tools. In addition to lifting the Biden administration’s pause on the authorization of US LNG export infrastructure, the Trump administration should maintain and strengthen sanctions against Russian energy while expanding US global oil exports and increasing US gas shipments to Europe. If these actions are taken, Russia’s already delicate position will weaken, strengthening US leverage in any future negotiations, stabilizing prices, and potentially delivering a favorable end to the war in Ukraine.

The United States and Russia compete in energy markets, particularly natural gas, with Europe as the primary battleground. Driven by Europe’s rejection of Russian energy following the country’s invasion of Ukraine, US LNG exports to Europe surged by over 3,700 percent from 2017 to nearly 7.4 billion cubic feet per day in 2023. US LNG shipments to Europe will likely increase further with the recent cessation of Russian gas transit through Ukraine, and even more so if the European Union achieves its stated goal of weaning itself fully off Russian LNG by 2027.

While Asian demand is rising, Europe remains the primary market for US LNG. High costs from long distances and from Panama Canal fees limit Gulf Coast LNG competitiveness in Asia compared with Qatari and Australian producers. In contrast, US shipments to Europe travel shorter distances than Asia-bound cargoes and avoid fees for transiting the Panama Canal. Additionally, unlike shipments from Qatar and Australia, US cargoes do not face potential chokepoints in the Red Sea, as illustrated by the Houthis’ efforts to block passage in the Red Sea and through the Suez Canal. 

Importantly, a significant return of Russian gas to Europe would severely harm US LNG exporters and Trump’s “America First” agenda. Projections suggest there could be a global LNG glut later this decade if all planned projects are completed. Furthermore, the resumption of significant Russian gas flows to Europe, though seemingly unlikely at present, would put pressure on US LNG exporters. While some LNG exporters are protected by take-or-pay contracts, others rely heavily on spot markets and could be severely affected if Russia reclaims market share at their expense. 

US-Russia competition does not end in natural gas markets, however.

The United States and Russia are also rivals in oil markets. US crude exports have grown from 700,000 barrels per day in January 2017 to 4 million today. Since February 2022, US crude exports to Europe have increased by 800,000 barrels per day, helping to displace Russian production that was cut off as a result of Russia’s invasion of Ukraine. With US liquid fuels consumption projected to decline by 2026 and domestic gasoline demand already peaking, US oil and gas exporters will increasingly rely on external markets, intensifying competition with Russian producers.

Russia isn’t standing still in the competition: Moscow is considering merging its three largest oil companies into a mega producer. 

Strengthening sanctions on Russian oil and gas now will not only benefit US companies. It will also give Trump more negotiating leverage over Russian President Vladimir Putin. The Russian war machine is quickly running out of money. One recent study by Craig Kennedy of Harvard University finds that surging but under-the-radar borrowing in Russia is squeezing borrowers in Russia’s private sector. Kennedy reports a 71 percent surge in Russian corporate debt since the middle of 2022, fueling inflation, interest rate hikes, and a potential credit crisis. Accordingly, Russia’s total war costs far exceed what’s reported in official budget expenditures—and its corporations are the ones paying the price. With Gazprom at risk of becoming overindebted, there is a heightened likelihood that Russia’s pipeline export monopolist is permanently scarred because of the war in Ukraine. 

The United States should seize on this moment to ensure long-term US LNG exports to Europe permanently replace Russian natural gas flows. Indeed, Trump can help achieve US energy dominance by strengthening sanctions on the Russian energy sector—reducing Russian export earnings, deepening European energy ties with the United States, and, importantly, creating more leverage over Moscow in future negotiations over Ukraine. 

As leaders including Trump often note, peace is achieved through strength. Securing a favorable deal with Russia demands leveraging US power effectively.

Richard L. Morningstar is the founding chairman of the Atlantic Council’s Global Energy Center and served as US ambassador to the European Union and Azerbaijan. 

Landon Derentz served as the director for energy in the National Security Council at the White House from 2018 to 2019 and is the senior director at the Atlantic Council Global Energy Center.

This article reflects their own personal opinions.

The post Trump’s clear path to securing US oil and gas dominance appeared first on Atlantic Council.

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:    

1. Venezuelan oil exports have been diverted to friendly nations.
2. 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.
3. Compensation to the regime is limited to taxes and royalties, which are required by Venezuelan law.
4. 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. 

Former staff

William Tobin

Former Assistant Director

Global Energy Center

Africa China

EnergySource Dec 3, 2024

There’s a more effective way forward than “maximum pressure” for Venezuela

By David Voght and Patricia Ventura

Following the fraudulent outcome of Venezuela’s July election, there is growing pressure on the United States to reintroduce sanctions to expel Western firms from the nation’s oil sector. However, preserving the existing policy, which restricts the regime’s financial access while promoting energy security and countering foreign influence, might prove more effective.

Energy & Environment Energy Markets & Governance

EnergySource Oct 2, 2024

China’s cleantech growth strategy sets its sights on Brazil

By Joseph Webster, William Tobin

China is relying on cleantech exports to help drive economic growth, but with the United States and other developed nations becoming increasingly hesitant to purchase Chinese imports, China’s cleantech sectors need to search for alternative markets. Brazil has emerged as a potential top buyer, but it must walk a fine line to avoid becoming overly dependent on China.

Brazil China

EnergySource Sep 12, 2024

After Venezuela’s stolen election, here’s how the US should craft an effective sanctions policy

By David L. Goldwyn

As Venezuela’s political crisis worsens, the United States has a role to play in advancing the country’s democratic cause and also inflicting pain on the Maduro regime, while minimizing negative impacts on Venezuelans, the broader region, and US interests. This will require crafting a smart sanctions policy based on lessons learned and five key elements.

Energy & Environment Geopolitics & Energy Security

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The post ‘Maximum pressure’ sanctions on Venezuela help US adversaries, hurt Venezuelans appeared first on Atlantic Council.

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.

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.

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.

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.

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:

1. The U.S. should support a process that leads to Syria’s oil and gas fields returning to central government control.
2. Unlock World Bank and regional public bank financing for fossil fuel projects in Syria.
3. Remove Western sanctions or grant waivers to allow investment and trade with Syria.
4. 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.

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.

The Atlantic Council in Turkey aims to promote and strengthen transatlantic engagement with the region by providing a high-level forum and pursuing programming to address the most important issues on energy, economics, security, and defense.

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MENASource Jan 13, 2025

Turkey’s Syria and Libya strategies add up to a Mediterranean power play

By Emadeddin Badi and Abdullah al-Jabassini 

By aligning its strategies in Libya and Syria, Turkey seeks to consolidate influence and amplify its leverage across both theaters.

Defense Policy Drones

Fast Thinking Dec 8, 2024

Assad has fallen. Now what?

By Atlantic Council

The power shift in Syria will reverberate across the Middle East and the world. Our experts explain what’s next.

Conflict Iran

TURKEYSource Jan 6, 2025

Assad’s fall has created an opportunity for US-Turkey cooperation

By Rich Outzen

Long a point of discord between Washington and Ankara, developments in Syria present an opportunity to return to cooperation.

Conflict Politics & Diplomacy

The post Syria’s energy sector and its impact on stability and regional developments appeared first on Atlantic Council.

The post Webster quoted in Barron’s on new sanctions on the Russian oil industry appeared first on Atlantic Council.

US allies and partners in East Asia share a similar energy security challenge: heavy reliance on maritime energy imports that could be interdicted or blocked by the Chinese navy. In recent years, the PRC’s “Malacca Dilemma”—its vulnerability due to Beijing’s dependence on energy shipments through the Strait of Malacca—has been the subject of significant attention. However, Taiwan, Japan, and South Korea are even more dependent on seaborne shipments, and their vulnerabilities have received less attention from policymakers. Indeed, the Chinese navy recently conducted exercises near Japan’s southwest islands in the Miyako Strait, suggesting that the PRC might attempt to impose a naval blockade in the event of hostilities. Moreover, the PRC continues to reduce its exposure to global energy markets by boosting its domestic output of renewable energy, subsidizing the uptake of electric vehicles, and, incongruously, expanding its indigenous coal energy capacity. Japan, South Korea, and Taiwan, on the other hand, lack mainland China’s comparative resource abundance and, accordingly, face more difficult energy security challenges. 

To enhance the energy security of these US allies and partners in the Indo-Pacific, policymakers must grapple with artificially suppressed energy prices and the need to avail the region of more liquefied natural gas (LNG) shipped from the United States. 

Gradually increasing indigenous energy prices (which are often heavily subsidized) across East Asia would lower overall demand, incentivize regional supply sources, and significantly strengthen the region’s energy resiliency. Unfortunately, this policy is unlikely to produce results in a rapid timeframe, and it puts considerable upward pressure on inflation, a net negative for economic growth as central banks are then forced to tighten monetary policy in response. Regional policymakers will need to balance short-term political economy considerations with long-term energy security risks.

There’s a simpler and more effective way to strengthen Indo-Pacific energy security in the near term, however. Purchasing more US LNG would enhance East Asia’s energy security by reinforcing ties between the region’s democracies and the United States. Crucially, deepening transpacific LNG ties would likely reduce the probability of Chinese aggression, underscore the region’s importance to various US constituencies, decrease global emissions, and improve urban air quality across the region. Strategically, by linking their energy security to the nation with the world’s strongest military, East Asian democracies can also enhance deterrence vis-à-vis Beijing. 

Surveying East Asia’s energy security

East Asia’s energy security landscape reveals significant challenges for US allies and partners. The PRC is the most energy-secure economy in the region, by far, while the democracies’ challenges are stark on a comparative and absolute basis. Taiwan, Japan, and South Korea are almost entirely dependent on seaborne hydrocarbons, while the PRC is much less reliant on imports, especially seaborne imports.

Even though the PRC is the most energy-secure economy in the region, it is still taking huge strides to minimize its current reliance on foreign energy imports. Beijing is deploying massive amounts of solar energy, onshore and offshore wind, and nuclear energy. China has also aggressively sought to increase domestic LNG- and electric-powered vehicle fleets. While mainland China’s mass deployment of clean energy technologies will reduce overall pollution and carbon dioxide emissions, all things being equal, these effects are somewhat reduced by Beijing continuing to ramp up its coal power capacity. The clearer benefit that these measures provide to the PRC is to decrease its reliance on energy imports.  

Taiwan, Japan, and South Korea, conversely, remain almost totally dependent on maritime imports for crude oil, natural gas, and coal. Taiwan’s coal dependency is especially striking and worrisome: It is the world’s largest per-capita consumer of coal for the electricity sector, a peculiar state of affairs given the risk of a potential energy quarantine or blockade by PRC forces.

In the event of a confrontation or conflict with the PRC, the People’s Liberation Army Navy might attempt to prevent energy supplies from reaching not only Taiwan, but also US allies South Korea and Japan. At a minimum, an implicit blockade would impose profound disruptions on these economies. In a worst-case scenario, it would potentially force US allies and partners to capitulate to the PRC’s will.

Sustaining East Asian democracies’ energy security will prove difficult and they cannot eliminate their need for maritime energy imports. Still, the Unites States and its regional allies and partners should take appropriate action to manage these risks.

Safeguarding East Asia’s energy security by constraining demand

East Asian democracies’ energy security is constrained by the region’s economics, politics, geography, and even geology. None of the East Asian democracies have abundant indigenous energy potential—for either renewables or hydrocarbons—that can completely satisfy demand, at least not with today’s technology. Given their inability to substitute imports with indigenous energy production in the foreseeable future, Taiwan, Japan, and South Korea must reduce overall demand. Gradual, frequent, and steady increases in electricity and energy prices can help mitigate energy security vulnerabilities in the East Asian democracies.

Higher energy prices would enhance each economy’s energy security by incentivizing firms and households to limit demand and improve energy efficiency. Additionally, higher electricity prices would improve the economics of indigenous electricity generation sources—chiefly for nuclear energy—but also for other energy sources, including offshore and onshore wind, as well as solar. Notably, greater adoption of these resources would lower the region’s overall carbon footprint and reduce pollution, especially in urban areas. 

Nonetheless, higher prices would undeniably introduce challenges. Higher energy prices could divert manufacturing production to places with lower costs, as manufacturers might re-site production to other economies with less expensive electricity or fuel costs. Moreover, higher energy prices across East Asia would impose pain on the region’s energy-intensive industries and on consumers directly, potentially sparking a political backlash. 

Raising energy prices would undoubtedly pose domestic political risks across East Asia. But the status quo—energy insecurity and dependency on seaborne imports at risk of interdiction—could create severe risks for the region’s democracies, especially Taiwan. The region can balance its security and developmental needs, especially over the near and medium terms, by turning to US LNG.

How US LNG can help

There would be considerable substantive and political benefits to East Asian democracies importing more US LNG. Their reliance on emissions-intensive coal could be mitigated by natural gas, which has a lower overall carbon footprint. Importantly, the gap between coal and natural gas emissions intensity may grow if the US natural gas complex is able to seize carbon reduction technologies, such as carbon capture and storage and methane abatement.

Besides lowering emissions, US LNG would enhance these economies’ security in two ways. First, owing to the realities of the United States’ comprehensive national power, the PRC is less likely to interdict vessels carrying US LNG than it would, say, shipments of Indonesian coal. Tying their energy security to the United States would also significantly bolster East Asian democracies’ deterrence against potential PRC aggression. Additionally, greater commercial ties with US companies can help to reinforce US commitments to the East Asian democracies, especially since bilateral trade deficits are likely to become much more politically sensitive in the years to come. 

An increase in the amount of US LNG that East Asian democracies purchase over the next half decade is made possible by a rapidly accelerating buildout in US export capacity. By the end of 2025, monthly US LNG export capacity is poised to finish at 9.4 million metric tons (Mt), up from 8.2 Mt/month in December 2024, largely driven by the startup of the Plaquemines facility near New Orleans, Louisiana. In addition, per Kpler analysis, up to 125 Mt per year of new export project approvals looks possible under the Trump administration, which would provide a steady stream of fresh LNG exports through the end of the decade.

Asian democracies also have plenty of space to replace existing imports with more US LNG. Across Japan, South Korea, and Taiwan, of the 136 Mt that was imported through 2024, just 14 Mt was sourced from the United States (11 percent of the total). More US volume could help to replace LNG arrivals from the likes of Qatar (17.4 Mt), Russia (7.9 Mt), Indonesia (7.4 Mt), and Malaysia (17.9 Mt), among others. Additionally, the wealthy Asian democracies, especially Japan and South Korea, could facilitate coal-to-LNG switching across the region. The Philippines should also be a strategic priority, as the country is now home to four new US military sites, is a target of attempted Chinese coercion, and is suffering from an energy crisis. East Asian democracies, working with US, Australian, and Qatari LNG exporters, could ensure that key southeast Asian nations are able to achieve energy security and urban air quality benefits from LNG. 

With a potential quarantine or blockade of Taiwan looming larger every year, it is essential for the East Asian democracies to mitigate their energy security vulnerabilities. This process will not happen overnight, nor will it be easy. It’s important to get started as soon as possible with both efforts: Taiwan, South Korea, and Japan should strengthen themselves by incentivizing indigenous energy production, and they should also import more US LNG to bolster their strategic relationships with the United States.

Landon Derentz is senior director and Morningstar chair for global energy security at the Atlantic Council Global Energy Center. 

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. 

Reid I’Anson is a macroeconomist at Kpler. This article reflects their own personal opinions.

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Central to this strategy is Turkey’s proclivity to leverage military interventions, political agreements, and economic tools to advance its objectives. In Libya, Turkey’s 2019 intervention secured it a critical foothold through the deployment of drones, Syrian mercenaries, and direct military support. This allowed Ankara to negotiate an EEZ agreement that, from its vantage point, redefined maritime boundaries and challenged the claims of Greece, Cyprus, Egypt, and Israel. The agreement was not merely an economic gambit; it was a strategic move to confront Mediterranean rivals over territorial waters and energy resources. Five years later, Ankara is seeking to establish an EEZ agreement with Syria’s new government that would extend its maritime claims further into the Eastern Mediterranean. While Turkey frames these actions as legitimate assertions of its rights, regional powers are likely to view them as provocations that deepen tensions in an already volatile environment.

Balancing Russia in Libya 

Libya occupies a central role in Turkey’s Mediterranean strategy, serving as a gateway for Ankara’s regional ambitions and a platform for projecting influence. The 2019 Memorandum of Understanding with the GNA, which established a long-contested maritime boundary, has been criticized for raising unresolved sovereignty issues and its questionable legality under international law. Beyond these legal challenges, Turkey’s position in Libya is further complicated by Russia’s entrenched involvement. Through the Wagner Group—recently rebranded as the Africa Corps—Moscow has bolstered Libyan National Army Commander Khalifa Haftar’s forces, securing itself its own foothold in Haftar’s areas of control. Reports of Russian arms transfers over Turkish-controlled airspace from Syria’s Hmeimim airbase to eastern Libya after the fall of Damascus exemplify the paradoxical nature of the Turkey-Russia rivalry. On the surface, such developments may appear transactional, but they reflect Ankara’s broader strategy: maintaining escalation dominance by setting boundaries on Russian operations while leveraging its role as a regional balancer to extract strategic advantages.

This balancing act underscores Turkey’s calculated pragmatism in Libya, where collaboration with Russia acts as both a counterweight to regional adversaries and a measured gamble. By permitting Moscow’s logistical transfers, Ankara has transformed a potential liability into a tool of strategic leverage, subtly positioning itself to influence Russian ambitions in Africa while reaffirming its indispensability to NATO and fortifying its regional clout. However, this strategy is not without vulnerabilities. The delicate balancing required to manage Moscow’s activities leaves Ankara exposed to the risks of miscalculation, overreach, and dependency. Disruptions in its arrangement with Russia—or fractures in its relationships with NATO allies, regional powers, or Libyan factions—could unravel Ankara’s hard-won gains, imperiling its broader Mediterranean ambitions and leaving its geopolitical foothold exposed.

Flexing muscle in Syria

In Syria, Turkey’s intervention was initially driven by the need to address immediate security threats, primarily removing the self-proclaimed Islamic State and containing Kurdish forces seeking to expand territorial control in northern Syria. However, with the fall of dictator Bashar al-Assad, Ankara recalibrated its approach, merging economic and geopolitical ambitions with its security objectives. The prospect of an EEZ agreement with Syria mirrors the dynamics of the 2019 Libya pact. While such a pact could offer maritime gains and deepen Turkey’s influence in the region, it is fraught with risks. Greece, Cyprus, and other European powers are likely to view such an agreement as an illegal and destabilizing move, further polarizing regional dynamics and intensifying disputes over energy and sovereignty.

Turkey’s approach in Syria also reflects its broader ambitions to integrate its strategies across theaters, enhancing its influence through interconnected policies. The country’s pursuit of maritime gains in Syria builds on the successes of its Libya agreement while highlighting the risks inherent in replicating this strategy in a different geopolitical context. The overlapping tensions in Libya and Syria demand constant recalibration, as Ankara navigates volatile rivalries and shifting alliances. The integration of its strategies underscores Turkey’s vision of the Mediterranean as a unified arena for projecting power.

However, significant challenges loom in Syria, the most salient of which stem from Israel. Following the collapse of the Assad regime, Israeli airstrikes have escalated, targeting countless military installations and destroying aircraft, radar systems, and missile sites. Simultaneously, Israeli forces have conducted incursions and expanded their presence beyond the occupied Golan Heights, particularly in the Quneitra province of southern Syria. These actions reflect dissatisfaction with Syria’s current trajectory. There is a widespread perception within Israel that Syria risks becoming a Turkish protectorate, a scenario that would severely constrain Israel’s military latitude in the region. This concern is compounded by the belief that Iran will continue to maneuver for influence, viewing Syria’s strategic assets as too valuable to relinquish. In this context, a Syria rebuilt under the leadership of Arab states is seen as a far more desirable outcome, curbing the influence of both Turkey and Iran while pre-emptively neutralizing their resurgence.

Should this vision prove unattainable, Israel may resort to curbing Turkish influence by undermining Syria’s unity, channeling support to ethnic and religious minorities to fragment the country and weaken Ankara’s position. This could set the stage for a potential collision course between the two. The interplay of this rivalry highlights the fragile nature of Ankara’s ambitions, with Israel emerging as perhaps its most formidable challenge. Tel Aviv’s ability to operate beyond traditional international norms, as starkly demonstrated in Gaza, and to secure the unwavering support of Ankara’s traditional Western allies—regardless of its methods—exposes the looming asymmetry Turkey faces in this geopolitical contest.

Strengthening influence in the Mediterranean

Anticipating the challenges to its broader Mediterranean aspirations, Turkey is building synergies between its strategies in Libya and Syria to maximize its leverage, reflecting its broader ambition to reshape the Mediterranean’s geopolitical map and strengthen its negotiating position. In Libya, Ankara has adapted to the shifting political landscape, engaging with Eastern Libyan factions and the Haftar family to expand its influence. This outreach signals a pragmatic shift from confrontation to cautious diplomacy, as Turkey seeks to transform former adversaries into cooperative stakeholders while navigating the crowded Libyan geopolitical arena. In Syria, Turkey’s political influence has positioned it as a linchpin for regional engagement with the Syrian government, mediating between Damascus and key external actors, including Arab states, European Union countries, and potentially Russia. Ankara’s subtle gatekeeper role sharpens its leverage, turning regional rivalries into stepping stones for its own ascent.

By aligning its strategies in Libya and Syria, Turkey seeks to consolidate influence and amplify its leverage across both theaters. This calculated approach underscores Ankara’s effort to position itself as an indispensable actor in the Mediterranean, translating tactical maneuvers into broader geopolitical gains while pre-empting challenges that threaten its ambitions. Yet, this high-stakes strategy leaves Turkey exposed. The overlapping tensions in Libya and Syria demand constant recalibration, as advances in one arena could rapidly unravel in another. 

The return of US President-elect Donald Trump to the White House this month looms as perhaps the most significant determinant shaping the region’s dynamics. Trump’s transactional approach to foreign policy could offer Ankara opportunities to assert itself more aggressively, particularly as it leverages its strategic position in the Mediterranean. However, this same approach raises the specter of greater US disengagement from regional conflicts, leaving Turkey to face escalating challenges from Moscow, Israel, and other regional powers without the backing of its traditional Western allies. The uncertainty of this geopolitical environment underscores the precariousness of Turkey’s gains, where advances in one theater could rapidly unravel in another, placing its broader Mediterranean strategy on a knife’s edge.

Ultimately, Turkey’s Mediterranean strategy reflects both ambition and vulnerability, a delicate dance on shifting sands where every advance risks triggering a cascade of challenges. Much like Ankara views Libya and Syria as interconnected theaters, Western actors should embrace this moment of change to recalibrate their bilateral relations with Turkey, recognizing shared interests in maritime stability and regional development. 

In Libya, this means supporting a political process that moderates a Turko-Russian oligopolistic arrangement while promoting stability and inclusivity to align with shared Turko-Western priorities. In Syria, targeted sanctions relief and reconstruction efforts tied to an inclusive political framework can support stabilization efforts and address immediate needs. By anchoring their engagement with Turkey in mutual interests and shared goals, Western actors can transform competition into cooperation. This recalibration will be pivotal in shaping whether Turkey’s Mediterranean gambit becomes a cornerstone of regional stability or a foundation of enduring fragility.

Emadeddin Badi is a nonresident senior fellow with the Middle East Programs at the Atlantic Council.

Abdullah al-Jabassini is an adjunct professor at the Johns Hopkins University, School of Advanced International Studies (SAIS) Europe.

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Click to jump to an expert analysis:

Jason Marczak: Latin American leaders across the political spectrum are rejecting Maduro’s power grab

Geoff Ramsey: Trump should take note of the Maduro regime’s internal tensions

Iria Puyosa: The new sanctions are insufficient to remove Maduro from power

Lucie Kneip: The Venezuelan opposition will need to unite around a theory of change

William Tobin: Going forward, the US should better balance oil sanctions with sanctions against individuals

Latin American leaders across the political spectrum are rejecting Maduro’s power grab

The voting tally sheets overwhelmingly showed that González won Venezuela’s presidential election on July 28, 2024. It’s even a point on which Trump and US President Joe Biden agree. Both have referred to González as president-elect, with Trump doing so over social media yesterday following the reported detention—and release—of opposition leader Machado.

So, in what type of country does a president lose an election—and there’s evidence to back it up—but then goes ahead and assumes another term anyways? “It’s a dictatorship,” says Chile’s president, Gabriel Boric, in reference to Maduro’s government. Boric is one of many Latin American leaders who have categorically rejected Maduro’s claim that he won the July presidential election. On that point, there is agreement among Boric on the left to Argentinian President Javier Milei and Panamanian President José Raúl Mulino on the right—both countries which González has visited. González also visited the United States in the past week, where I had a chance to speak with him. 

In a fragmented and polarized region, what Maduro has achieved is to bring leaders from across the political spectrum together to reject his new power grab. Brazil, Colombia and Mexico—although not recognizing Maduro’s win—unfortunately had representatives present at today’s inauguration. But at least the presence was limited to the current ambassadors serving in the country. Perhaps the highest-level foreign official at the inauguration was the speaker of Russia’s Duma, Vyacheslav Volodin. 

The continued large-scale regional rejection of Maduro is no small feat. The region is historically divided. But the critical question is how to avoid complacency and leverage this unity to further support the democratic opposition. Regional governments, including the incoming Trump team, should accelerate diplomatic coordination to give new momentum to the opposition and to make life harder for Maduro and his accomplices. At the same time, these governments should work to avoid burdening the Venezuelan people with more hardships. It’s a delicate tightrope to walk, but it’s necessary to give further hope to the overwhelming number of Venezuelans who cast a vote for democracy and freedom in July.

—Jason Marczak is vice president and senior director at the Atlantic Council’s Adrienne Arsht Latin America Center.

Trump should take note of the Maduro regime’s internal tensions

By assuming yet another illegitimate mandate based on a fraudulent election, Maduro has confirmed that he is willing to cling to power at all costs. Opposition leader Machado and election winner González are deeply popular in Venezuela, but Maduro has the guns and thugs on his side—and he’s not afraid to use them. Yet in spite of the mounting number of political prisoners and the recent reported detention and release of Machado, it is easy to overstate how strong Maduro really is. 

In the wake of July’s stolen election, Maduro has had to reconfigure his cabinet completely, placing more and more power in the hands of hardliners in the Chavista coalition. A key benefactor of Maduro’s drive to assume a new mandate is Interior Minister Diosdado Cabello, a longtime rival who Maduro has kept at arm’s length since taking power in 2013. Entrusting him as top enforcer may well be a sign of just how few friends Maduro has left inside Chavismo. Others in the coalition, meanwhile, may well have doubts about the idea of six more years of economic chaos, violence, and international isolation. 

When Trump takes office on January 20, his team should take careful note of these internal dynamics. The goal should be to combine pressure with incentives that can disrupt regime cohesion, presenting key figures in the ruling coalition with dilemmas in a way that makes a democratic transition more appealing than clinging to power. For this strategy to work, the next US administration will have to keep sanctions policy nimble and responsive to events on the ground, and avoid a “set it and forget it” approach. Sanctions alone are unlikely to unseat Maduro, unless they are accompanied by a clear roadmap to lift them, giving fence-sitting regime figures a blueprint to follow. The first Trump administration’s Democratic Transition Framework, presented in 2020, laid out a vision for change involving power sharing and reconciliation, and it may be worth dusting off this time around as well.

—Geoff Ramsey is a senior fellow at the Atlantic Council’s Adrienne Arsht Latin America Center.

The new sanctions are insufficient to remove Maduro from power

In response to Maduro’s illegitimate swearing-in for another term as president of Venezuela—despite González’s electoral victory—the Biden administration has slightly increased pressure on his authoritarian regime. The new measures include raising the rewards for Maduro and Cabello to a maximum of twenty-five-million dollars and sanctions against two thousand individuals involved in repression, violation of human rights, and electoral fraud. However, the US oil company Chevron’s license to operate in Venezuela remains in place.

Indeed, the new sanctions are insufficient to remove Maduro and Cabello from power. The ruling coalition, which White House representatives are now labeling as “narcoterrorists,” can continue to collaborate with transnational criminal networks that include allies in Iran and Russia while simultaneously increasing repression against democratic political leaders and human rights defenders in Venezuela.

Venezuelans are again taking to the streets in large numbers, demanding a transition to democracy and the inauguration of González. The Biden administration has an opportunity to take more decisive action to support Venezuela’s democratic re-establishment. Helping to pave a clear path for Venezuela’s return to democracy could become a significant legacy for Biden in the Western Hemisphere. Delaying meaningful action could risk losing this crucial opportunity, especially since the opposition is now strategically united, the people are mobilized, and the ruling coalition is showing cracks.

—Iria Puyosa is a senior research fellow at the Atlantic Council’s Digital Forensic Research Lab.

The Venezuelan opposition will need to unite around a theory of change

Maduro’s illegitimate re-inauguration is the latest scheme in the authoritarian government’s campaign to eliminate resistance to its consolidation. To add insult to injury, regime affiliates briefly detained Machado during her first public emergence after months of hiding, rattling supporters domestically and abroad. While swaths of the Venezuelan opposition quickly condemned her detention, it remains to be seen how the opposition will respond to tests of its ability to unify in 2025, given differences in attitudes toward electoral participation, negotiations, and pressure tactics.  

Heading into the 2025 subnational elections, opposition coalition candidates will have to determine whether it’s worth throwing their hat in the ring given the electoral conditions. Some may decide that the government’s blatant fraud at the national level will be even more easily achieved at the local level, while others may seek to draw on the infrastructure of their strongholds to procure as much regional power as possible, in which case they will need to develop a clear strategy of mobilization. The regime will seek to exploit these conflicting strategies to undermine the opposition’s political will to rise to the occasion.

Maduro’s government has historically proven adept at taking advantage of internal divisions by providing opportunities for disgruntled splinter groups within parties to gain footing by positioning themselves more closely to regime affiliates. This strategy of party cooptation is likely to continue in many of the major parties unless the opposition can find a way to resolve internal differences and coordinate on defining a theory of change.

Beyond electoral participation, opponents of Maduro will continue to face repression through the targeting of political figures, journalists, and human rights activists, as well as crackdowns on protests and digital censorship. Maduro’s best strategy is to stoke fear and fatigue with protests and mobilization. International allies will be critical in supporting political participation and free speech as Maduro seeks to further stifle these tenets of democracy.

—Lucie Kneip is a program assistant at the Adrienne Arsht Latin America Center.

Going forward, the US should better balance oil sanctions with sanctions against individuals

As Maduro illegitimately steps into office for his third term today, Venezuela’s oil sector is in sustained yet marginal recovery. In recent months, Venezuela surpassed the one-million-barrel-per-day milestone for the first time since mid-2019.

The oil sector in Venezuela has been experiencing a secular decline since the early 2000s, and production output from Venezuela’s degrading oilfield infrastructure began to drop dramatically during the first half of 2014. An oil price crash sent dominoes cascading for Venezuela’s state oil company, Petróleos de Venezuela, SA, which faced declining demand at the same time as it confronted a sizeable volume of maturing debt, the beginning of central bank monetization, and intensifying operational inefficiencies. 

The sanctions imposed on the oil sector under the “maximum pressure” campaign from 2018 to 2022, spanning the Trump and early Biden administrations, exacerbated but did not cause this decline. However, the strategy did divert most of Venezuela’s oil to China at discounted prices, and led Iranian service company NIORDC to play a key role in maintaining output. Phantom traders from China and Iran handled virtually all of Venezuela’s exports in 2021.

The recent uptick in Venezuelan oil output has come with the reentry of Western firms, most substantially since April 2024 under the US Treasury Department’s policy of “specific licensing.” Under this policy, individual firms can seek authorization from the Office of Foreign Assets Control to operate in Venezuela under transparent and restricted terms, which strictly limit remuneration to Maduro’s enablers. Under this policy, approximately half of Venezuela’s exports have been routed to the United States or to Europe since May 2024. This effectively represents a diversion from China and increases transparency.

There is doubt that a renewed maximum pressure strategy would achieve its aims. In any case, it is incumbent on the Treasury Department to ensure that Maduro cannot use the oil sector as a cash cow, and to continue to tighten its clasp around Maduro’s network of enablers through individual sanctions.  

—William Tobin is an assistant director at the Atlantic Council’s Global Energy Center, where he focuses on international energy and climate policy.

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To condemn the Russian Federation for its behavior, the international community has come together to support Ukraine. A primary method of punishment that Ukraine’s partners and friends have pursued against Russia is the implementation of sanctions. Several Russian banks have been removed from SWIFT, the international financial messaging system. Thousands of companies have terminated or suspended business operations in Russia. Hundreds of Russian oligarchs, politicians, and government officials have had their assets frozen or seized, and several countries around the world have reduced their consumption of Russian gas.

Initially, the international community had hoped that sanctions would sharply reduce the value of the ruble and thus bring a swift end to Russia’s war. But this was not to be the case, and the effects of the sanctions were slow. The Russian Federation’s economy contracted by 2.1 percent in 2022 but grew in 2023 and 2024 due to Russia’s decision to increase its defense spending. Meanwhile, the Russians lost billions of dollars due to international sanctions on Russian businesses, gas companies, and trade. Despite these losses, however, the Kremlin has continued its full-scale invasion.

Three years later, the picture looks different. The Russian economy is now beginning to see the full effects of international sanctions. If these trends continue, then the full impact of these financial punishments, combined with strong Ukrainian resistance to Russian forces, could at last put enough pressure on the Kremlin to end its war.

The first signs appeared at the end of 2024. The ruble has weakened, with the Russian currency having lost more than half of its value against the US dollar and the euro, according to a recent analysis by the Kyiv School of Economics. International sanctions on Russian financial institutions played a critical part in this devaluation. In addition, according to the Kyiv School of Economics, Russian oil exports “dropped to $64.40 per barrel” at the end of 2024 (exports were initially $70 per barrel). This suggests that the Russian government is generating less revenue from oil sales.

Rising inflation is causing concerns in Russia, too. In his annual televised question-and-answer session last month, Russian President Vladimir Putin said that inflation is a problem and that the Russian economy is “overheating.” He acknowledged that the price of goods has increased, but he attempted to counter this by saying that wages for Russian citizens have also increased. He then concluded that the Russian Central Bank was working to adjust its benchmark to address rising inflation.

Putin’s points on inflation were telling. The Russian leader seldom discusses problems pertaining to Russian society. Thus, the fact that he felt the need to acknowledge inflation as a serious issue suggests that something greater is afoot. 

In addition to the decline in the Russian ruble and rising inflation, there are other causes of concern within Russia. According to the Carnegie Endowment, industrial factories in Russia are operating at only 81 percent capacity. Many of these businesses cite labor shortages as a major reason for the underproduction of goods and materials. The labor shortage is partially caused by the Russian invasion of Ukraine, as hundreds of thousands of Russian men have been conscripted into the Russian military. The promise of signing bonuses to join the military has also enticed still more recruits to join, especially from impoverished areas of Russia. The obvious effect of sending these men to the front is that they no longer can work in Russian factories. Furthermore, Russia has sustained over eight hundred thousand casualties since the start of the war, including both dead and injured. Many of the injured who do come back are unable to return to work in the factories.

As for international business, Russian exports and trade have been significantly impacted. Thousands of Western companies have suspended and terminated their business in Russia, meaning that the country is not generating revenue from these organizations. In addition, several banks have stopped trading with Russia, meaning that the Russian Federation is conducting fewer transactions. Furthermore, the international community is cracking down on companies and businesses that are helping Russia avoid international sanctions. Fear of additional punishments has caused several of these “sanctions busters” to suspend their business and trade with Russia. This has also hurt the Russian economy.

Putin’s obsession with the war in Ukraine has been costly. Throughout the war, the Russian government has spent tens of billions of dollars’ worth on defense equipment and weapons. Russia has also increased its national defense spending to record numbers while slashing spending on other government services, including scientific research. It is not just that direct spending on the war is “unproductive.” The total effect has been to impoverish Russians in other areas of their lives, as well.   

Given these developments, perhaps international sanctions are finally working to their full effect. The current signs show that Russia will face an economic recession in 2025, and Putin and the Kremlin will have to determine how to try to address these financial woes.

For now, there is no clear strategy. Many Russians appear concerned about the state of the Russian economy and their well-being, and they likely believe that their wages will not account for rising inflation. This suggests that 2025 will be a difficult year for Russians and the economy. Time will tell how significant these events will be.

Mark Temnycky is a nonresident fellow at the Atlantic Council’s Eurasia Center and an accredited freelance journalist covering Eurasian affairs.

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A low-carbon vision meets untold natural resource wealth

Guyana had embarked on an ambitious journey toward sustainable development long before ExxonMobil’s massive oil discoveries off its coast in 2015. In 2009, recognizing the value of its vast rainforests in the fight against climate change, Guyana launched its pioneering Low Carbon Development Strategy (LCDS). This wasn’t merely an environmental policy; it represented a fundamental rethinking of how a developing nation could approach economic growth.

The strategy’s origins lay in a holistic understanding of Guyana’s natural wealth. The country’s rainforests, covering roughly two thirds of its territory, store an estimated 19.5 billion tons of carbon dioxide equivalent. Rather than viewing these forests as obstacles to development, Guyana recognized them as vital assets in the global fight against climate change.

An early partnership with Norway—which pledged up to $250 million to help preserve Guyana’s rainforests—established the LCDS’s credibility. It provided vital seed funding, helping Guyana develop the institutional capacity and technical frameworks necessary for environmental asset management on a national scale.

The 2015 oil discoveries placed Guyana at a crucial decision point—over 11 billion barrels of oil equivalent were enough to transform the nation’s economic trajectory overnight. Many nations might have abandoned their environmental commitments in the face of such wealth. Instead, Guyana chose to update and strengthen its low-carbon strategy, creating LCDS 2030.

The balancing act of LCDS 2030

Guyana’s approach reflects a sophisticated understanding of its natural capital. Rather than treating environmental protection and resource extraction as mutually exclusive, Guyana developed parallel value streams from its natural assets.

The country’s forests, for instance, generate revenue through both sustainable forestry and carbon credits, which monetize environmental stewardship. In 2022, Guyana made history by becoming the first nation to receive private sector validation for forest conservation-based jurisdictional carbon credits, leading to a landmark $750 million agreement with Hess Corporation.

The groundbreaking deal involves the sale of 37.5 million carbon credits (about 30 percent of Guyana’s credit issuance) between 2022-32, with increasing minimum prices from $15 to $25 per ton and a 60 percent revenue share for Guyana if market prices exceed these floors. The credits are independently verified under the United Nations (UN) ART TREES standard and meet UN social and environmental safeguards.

The country has further pushed boundaries by launching a Global Biodiversity Alliance aiming to develop a biodiversity credits system that extends beyond carbon, creating a comprehensive framework for valuing ecosystem services. By combining carbon credits, biodiversity credits, and sustainable forestry income, Guyana’s sustainable finance approach offers a new paradigm for how developing nations can maximize the value of their natural assets while preserving them for future generations.

Similarly, rather than treating petroleum wealth as an end in itself, Guyana views it as a means to finance its climate transition. Oil revenues are channeled into renewable energy projects, climate-resilient agriculture, coastal protection, and green job training. For example, the government has invested 12 percent of the nation’s gross domestic product in upgrading drainage and irrigation networks and expanding rehabilitation of sea and river defense structures at critical locations. These investments are complemented by planned water treatment facilities and comprehensive flood management programs.

By 2027, Guyana is projected to produce 1.2 million barrels of oil per day, rivaling some OPEC members. But unlike many oil producers, this production surge is balanced with concrete environmental commitments.

The power of inclusion

The most innovative aspect of Guyana’s approach lies in its governance framework. The Multi-Stakeholder Steering Committee overseeing the LCDS represents a comprehensive model of inclusive decision-making, drawing representatives from government, civil society, Indigenous organizations, the private sector, and academia. Specifically, Indigenous communities—traditional stewards of the forests—are integrated through village-level consultations, dedicated representation in decision-making, and capacity-building programs, ensuring they play a central role in shaping Guyana’s national sustainable development strategy.

Guyana’s global leadership

The strength of Guyana’s commitment to this balanced approach was powerfully articulated at the 16th Conference of the Parties to the UN Convention on Biological Diversity in 2024. There, Vickram Bharrat, Guyana’s minister of natural resources, presented his nation’s journey not as a compromise, but as a pioneering model for development:

“As a developing, oil-producing nation with ambitious infrastructure projects, we face the challenge of balancing economic growth with environmental preservation. However, through the Low Carbon Development Strategy 2030, we are committed to ensuring that development proceeds without compromising our natural capital. Our forests will continue to serve as vital carbon sinks and biodiversity hotspots, supporting both climate action and ecosystem resilience.”

The minister’s words were backed by one of the most ambitious conservation commitments globally: expanding Guyana’s protected areas from 9 to 30 percent of its land mass by 2030.  At COP29 in Azerbaijan, Guyana further demonstrated its leadership by receiving the Transparency Award and co-chairing the Forest and Climate Leaders’ Partnership. Bharrat’s call to move beyond theoretical debates to “measurable, accountable action” underscored Guyana’s role as a practical innovator in global climate solutions.

Lessons for a world in transition

Guyana’s ability to transform potential contradictions into complementary strengths offers a compelling model for managing the energy transition. The same government that oversees a rapidly expanding oil sector is also pioneering biodiversity credits and expanding protected areas. This isn’t coincidental—it reflects a nuanced understanding that modern development requires balancing multiple priorities and revenue streams.

The strategy treats oil wealth not as an end goal, but as a bridge to a sustainable future. Oil revenues are systematically channeled into building the infrastructure, institutions, and human capital needed for a low-carbon economy. This approach recognizes that the oil boom, while significant, is temporary. The benefits of preserved forests and biodiversity, however, are permanent.

For other oil producers, particularly those in the developing world, Guyana offers a template that could be adapted to local conditions. The success of this model is already providing compelling evidence that developing nations need not choose between economic development and environmental stewardship. Instead, they can pursue a more balanced path that recognizes and monetizes the value of all their natural assets and builds toward a more sustainable future.

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.

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EnergySource is the Global Energy Center’s (GEC) online publication providing commentary and analysis on developments in the energy and climate sector from a wide-array of thought leaders, politicians, and experts.

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Online Event Fri, December 6, 2024 • 12:00 pm ET

Chevron CEO Mike Wirth on the future of energy policy

AN #ACFRONTPAGE EVENT—Mike Wirth, chairman and chief executive officer of Chevron, discusses his vision for policies that address both energy security and environmental protection in an increasingly complex global landscape.

Economy & Business Energy & Environment Energy Transitions Geopolitics & Energy Security

According to Chevron* Chief Executive Officer Mike Wirth, there’s a rising “recognition” that the energy transition is “going to take longer than people would have hoped a few years ago.”

At a December 6 Atlantic Council Front Page event, Wirth argued that building what is essentially “a separate energy system”—a zero-carbon energy system—“in parallel” is going to require new infrastructure and new investments. “That’s going to take time,” he said.

Wirth explained that while finding solutions for climate change is at the forefront of policy discussions in Europe and the United States, developing countries are more focused on solutions that enable energy access and affordability. But, Wirth said, there are no “one-size-fits-all solutions.”

“The reality is some of these solutions work better in some places than they do in others, and none of them serve all the different needs of a diverse economy,” Wirth said. He added that he thus appreciates the flexibility of the Paris Agreement, in allowing countries to make their own nationally determined contributions based on their own contexts.

With President-elect Donald Trump soon to reenter the White House, Wirth said that he expects to see continued growth in conventional energy and also in “new technologies that address future market demands.”

“The US is an energy superpower. We have a strong diverse energy economy, and it is fundamental to our economic competitiveness,” he said. “We need all of these solutions” to satisfy future demand for energy.

Below are more highlights from the conversation, moderated by Atlantic Council President and CEO Frederick Kempe, in which the Chevron head discussed the future of the energy system under a new US administration and the impacts of geopolitics on energy.

The four-year outlook

• Wirth said the next US administration needs to craft policies that “balance” between three “tradeoffs”: Mitigating environmental impact, ensuring access to affordable energy, and maintaining national security.
• Wirth said that he believes Trump understands “the importance of a strong energy economy for a strong US economy.” He added that he expects the Trump administration to “reduce the regulatory burden” that the energy industry faces, and that there will be continued growth and advancement in both renewables and conventional energy.
• The next administration may want to take a look at the United States’ sanctions on oil-producing countries Iran, Russia, and Venezuela, Wirth noted. “Enforcement of those sanctions has been designed to allow those barrels to continue to come into the market” in part to avoid spiking oil prices, he said.
• “They haven’t really crimped supply, they’ve just redirected supply,” he argued. And that, he added, has created “certain risks” as the countries that have been subject to sanctions have looked into other, more dangerous ways to sell and ship their energy. For example, Wirth explained, Russia has resorted to using a shadow fleet, which poses risks for other ships and the environment. “That’ll be another issue that the administration will grapple with,” Wirth said.
• Chevron is the only US oil company allowed to operate in Venezuela. Wirth said that while the company has not yet discussed this with the incoming Trump administration, Chevron wants to maintain its presence there. “Other companies have left Venezuela. They’ve been replaced by and large with companies from two countries: Russia and China,” Wirth said. “If we were to leave,” he added, there is “no doubt” Chevron’s operations would meet the same fate.

Energy and geopolitics: “Fundamentally intertwined” 

• Wirth said that energy and geopolitics—including the conflicts unfolding around the world—are “fundamentally intertwined.”
• Considering Europe’s scramble to decrease its dependence on Russian gas following Russia’s 2022 invasion of Ukraine, Wirth argued that “Europe is going to have to reassess its overall approach to energy supply.”
• The United States, Wirth said, can be “an important source of supply to our allies” in Europe and beyond. “We’ll need to be in that future to avoid creating the same kind of single-point dependence that has existed.”
• On the conflict in the Middle East, Wirth said that Chevron has shut down natural gas platforms in the eastern Mediterranean. “These facilities have been targeted by rockets and missiles from Hezbollah,” he said. But, he added, “the naval version of the Iron Dome has proven to be effective in interdicting,” Wirth said.
• In discussing the technologies supporting the energy transition, Wirth warned that China has a “very strong hold” on the supply chains for materials—including rare earths and critical minerals—that make up technologies such as solar panels and electric vehicles.
• “You see a lot of the mining activity going on in Africa . . . and a lot of the processing goes on in China, which gives China a lot of influence over supply pricing,” he said. “We haven’t diversified the supply chains for some of these inputs to new energies nearly enough.”

Katherine Walla is the associate director of editorial at the Atlantic Council. 

Note: Chevron is a donor to the Atlantic Council. 

Watch the full event

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Conversely, Asia is the destination for over 85 percent of crude exports and two-thirds of LNG exports from the Middle East, primarily the Gulf states. Asia is also expected to dominate global energy consumption by 2030, unlike stagnating demand in developed countries. Consequently, Asia will continue to underwrite future growth prospects in the Gulf, where the performance of the hydrocarbon sector, relative to the non-oil sector, continues to drive gross domestic product growth, budgets, and current account balances.

The global transition to a less fossil-fuel-based energy system is unlikely to end energy interdependence between the Gulf and Asia. Rather, this transition presents opportunities for the Gulf states to exercise energy diplomacy through addressing and managing energy transition-related issues with its interlocutors in Asia.

As a result, the Gulf states have developed four stylized positions in the governance of the global energy transition: Rule breakers, rule takers, rule promoters, and rule shapers.

Rule breakers

The Gulf states’ most traditional stance involves acting as rule breakers, seeking to delay the global move away from fossil fuels. The rationale for this is clear: These nations possess some of the world’s largest proven reserves of oil and gas. A rapid shift away from their resources would drastically reduce their hydrocarbon-based growth and prosperity, posing risks to both economic stability and, potentially, regime stability. Forecasts suggest oil revenues could plunge by 80 percent by 2050, driven by the falling use of road transport, making the preservation of the fossil fuel industry essential for these nations.

As part of this “dig in” strategy, Gulf countries such as Saudi Arabia continue to bolster the dominance of fossil fuels in the global energy system. They remain outspoken in their opposition to mainstream views on climate change and have actively increased domestic crude, refinery, and petrochemical capacities to secure demand for decades. Gulf states are also investing in overseas refineries, petrochemical plants, and oil while funding research into more efficient gasoline engines and oil production methods. These narratives and behaviors differ markedly from those in developed countries.

The Gulf states’ reliance on Asia further highlights their role as rule breakers. Asia is the leading destination for Gulf crude and LNG exports, with countries like China, Japan, South Korea, and India being key consumers (Figures 1 and 2). Saudi Aramco has been making long-term supply deals with private refineries in China to lock in long-term demand for their crude oil exports. In Southeast Asia, Gulf investments in oil and petrochemical industries are substantial, including projects in Thailand, Malaysia, and Vietnam.

Rule takers and rule promoters

Some Gulf states have adopted an “all in” strategy to align with mainstream energy transition policies, despite this being far from their preferred approach. Environmental consciousness among Gulf populations is low compared to regional peers, and Gulf governments’ support for sustainability is largely driven by considerations for monetization, economic diversification, or prestige.

Rule-taking by Gulf states is best illustrated by their institutionalized commitment to the energy transition. All Gulf states are signatories to the Paris Agreement and have net-zero goals except Qatar. The United Arab Emirates (UAE) has led regional efforts, establishing the Gulf’s first Ministry of Climate Change and Environment in 2016 and spearheading renewable energy power projects and ambitions such as Abu Dhabi’s target for 60 percent of its energy to come from clean sources, e.g., solar and nuclear, by 2035. Even land-scarce Bahrain has recently ramped up its deployment of solar power.

Within this “all in” strategy, rule-promoting Gulf states go one better by exporting low-carbon technologies, financing, or expertise. The UAE supports renewable energy projects in overlooked and cash-strapped regions, such as the Pacific Islands and Maldives, through its Abu Dhabi Fund for Development. Saudi-based ACWA Power’s thirteen solar, wind, and green hydrogen deals in Uzbekistan render Tashkent the company’s second-largest foreign market after the UAE in terms of investment costs ($8.4 billion) as of the end of 2023.

Rule shapers

The most sophisticated role played by the Gulf states in the global energy transition focuses on maximizing the limited space for fossil fuels while contributing to climate solutions. This “conditional joining in” strategy privileges emissions over fuel type, which means that as long as emissions are minimized through technologies like carbon capture and zero-flaring practices, the production of fossil fuels should not be demonized. For instance, Saudi Arabia influenced the United Nations’ Intergovernmental Panel on Climate Change to include the term “unabated” fossil fuels with carbon capture as part of the solution to meet global climate goals. In the case of Qatar, QatarEnergy is building solar power plants at Dukkhan, Ras Laffan, and Mesaieed to produce power that will lower the carbon footprint of its LNG facilities rather than for use by households.

The evolution of some Gulf states into rule shapers is motivated by several considerations. First, the Gulf states believe they can influence the global narrative on fossil fuels. Saudi Aramco’s leadership on the Aiming for Zero Methane Emissions Initiative aims to shape discussions on methane levels instead of simply being a rule taker for decisions that will significantly impact oil exporters. Second, major Gulf companies have a comparative advantage that they can leverage in the low-carbon energy transition. With some of the lowest carbon dioxide emission levels globally, Saudi Aramco and the Abu Dhabi National Oil Company are likely to have acquired a social license to operate well into the energy transition. Third, low-carbon energy investments may be aligned with domestic priorities in economic diversification. An example is Emirates Global Aluminium, which makes and exports “green” aluminum, whose production is powered by solar energy. Saudi Arabia’s interest in investing in Indonesia’s nickel resources, for instance, reflects its broader ambitions to secure a complete supply chain for the electric vehicle manufacturing hub in the kingdom.

Gulf-Asia ties also illustrate the promotion of the Gulf’s rule. The circular carbon economy (CCE) initiative, spearheaded by Saudi Arabia, promotes the continuous use and reuse of carbon from fossil fuels and has been endorsed by China, India, and the Association of Southeast Asian Nations. The investment by some Gulf countries in lowering fossil fuel emissions from ammonia production, which is essential for food and industrial sectors, has garnered interest from countries like Japan and South Korea.

Looking into the future

Overall, the UAE, Qatar, and Saudi Arabia are adopting rule-shaper and rule-promoter roles more often than the other Gulf states which are largely rule-takers. Their respective roles are reflected in their interactions with Asia. Although differences in state capacity largely explain the variation among the Gulf states, all are cognizant that the “dig in’ strategy is becoming less and less tenable.

Nevertheless, Gulf states must exercise caution in their relatively new roles to avoid reputational damage. UAE-based initiatives such as Blue Carbon and the UAE Carbon Alliance have invested in projects like forestry conservation in Africa, from which carbon credits can then be sold to companies and governments to offset emissions. While Blue Carbon has been chided for ‘carbon colonialism’ in its practices, the UAE Carbon Alliance has been careful to co-invest with established global partners. 

Still, expect an increase in Gulf states’ participation in global climate governance. Policies that promote Gulf participation in international climate initiatives—through roles in the Conference of Parties climate summits, collaborations with multilateral organizations, or bilateral initiatives—could reinforce the Gulf’s commitment to the energy transition away from fossil fuels.

Li-Chen Sim is an assistant professor at Khalifa University in the United Arab Emirates and a non-resident scholar at the Middle East Institute.

Farkhod Aminjonov is an assistant professor at the National Defence College in the United Arab Emirates. All views expressed are personal.

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Dear Chairman Cardin and Ranking Member Risch,

We, Ukrainian civil society leaders, write to you as chairman and ranking member of the US Senate Foreign Relations Committee, longtime friends of Ukraine, and staunch advocates for anti-corruption and global human rights, to ask that the Senate Foreign Relations Committee support the extension of congressional sanctions on Russian President Vladimir Putin’s Nord Stream 2 gas pipeline. To ensure that these sanctions and the authority upon which they are based do not expire at the end of this year, we urge you to approve the renewal of the Protecting Europe’s Energy Security Act (PEESA) as part of this year’s National Defense Authorization Act (NDAA) conference.

Failure to extend the PEESA sanctions would allow commercial actors to cooperate with the Kremlin to one day restart the Nord Stream 2 pipeline. This pipeline, which was constructed by Moscow for the sole purpose of bypassing Ukraine and leaving it susceptible to Russian aggression, would reestablish the continent’s dependence on Russian gas, revive mechanisms for Russian corruption to be funneled into Europe, and hand back to Putin the capacity to blackmail Europe over its support for Ukraine.

Restarting the Nord Stream 2 pipeline would also hamper Ukraine’s vibrant civil society and demoralize Ukraine’s citizens. This would further Putin’s broader goal of erasing Ukrainian sovereignty.

Recognizing the consequences of failing to renew the PEESA sanctions, the leaders of the US Senate Banking and the US Senate Armed Services committees have reportedly agreed to the inclusion of a PEESA extension in NDAA. The Senate Foreign Relations Committee remains the sole committee of jurisdiction standing in the way of extending these critical sanctions against Russia’s Nord Stream 2 pipeline.

We, the signatories of this letter, are fighting for Ukraine’s democracy and reform. As allies of civil society and anti-corruption crusaders, we urge you today to stand with us, as you have throughout your storied careers, and support the extension of the PEESA sanctions as part of this year’s NDAA conference, thereby making it impossible for Russia to restart its Nord Stream 2 gas pipeline.

Sincerely,

Hanna Hopko, ANTS Network

Andriy Zagorodnyuk, Centre for Defence Strategies

Mykhaylo Gonchar, Center for Global Studies

Olga Aivazovska, Civil Network OPORA

Maksym Skrypchenko, Transatlantic Dialogue Center

Daria Kaleniuk, Anticorruption Action Center

Olena Tregub, Independent Anti-Corruption Commission NAKO

Further reading

UkraineAlert Nov 7, 2024

Donald Trump’s election victory fuels hopes and fears in Ukraine

By Peter Dickinson

Donald Trump’s election win has sparked alarm in Ukraine, where many fear he will end US support for the country. However, some war-weary Ukrainians hope he can help end the Russian invasion, writes Peter Dickinson.

Conflict Elections

UkraineAlert Nov 14, 2024

Freezing the front lines in Ukraine would condemn millions to Russian occupation

By Mercedes Sapuppo

Donald Trump’s election win is fueling speculation of a possible peace deal to end the war in Ukraine, but any attempt to freeze the front lines would condemn millions of Ukrainians to the horrors of Russian occupation, writes Mercedes Sapuppo.

Conflict Disinformation

UkraineAlert Oct 24, 2024

North Korean troops could help Putin avoid a risky Russian mobilization

By Olivia Yanchik

Russian dictator Vladimir Putin has turned to his north Korean ally for troops to help cover his own army’s catastrophic losses in Ukraine and avoid a politically risky second wave of mobilization in Russia itself, writes Olivia Yanchik.

Conflict Defense Industry

The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

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The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia and Central Asia in the East.

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The post Ukrainian civil society leaders call for extension of Nord Stream 2 sanctions appeared first on Atlantic Council.

Russia’s ability to sustain military operations depends largely on revenues generated by the country’s energy exports. However, due to Russia’s significant share of global oil and gas markets, Western leaders have been reluctant to impose comprehensive bans on Russian energy exports amid concerns that this could lead to price spikes and global economic instability.

As a compromise, the West has allowed Russia to continue oil and gas sales while attempting to cap the amount of income the Kremlin can receive. While this approach is well intentioned, it has proved difficult to implement in practice and has produced limited results. In order to undermine Putin’s war machine, the West needs to impose additional restrictions while also exploring ways to improve implementation.

The importance of energy exports to the Russian economy is well documented. In 2023, for example, oil and gas revenues accounted for more than one-third of Russia’s federal budget. As the third anniversary of the full-scale invasion draws near, there are now mounting indications that Russia’s economy is under strain. To curb rampant inflation, Russia’s Central Bank recently raised interest rates to 21 percent. The growing costs of the war and the damage done by sanctions measures are adding to these pressures. If energy exports were further curtailed, Russia’s war effort could be severely impacted, with Vladimir Putin forced to choose between sustaining the invasion or avoiding economic collapse.

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

Since the onset of Russia’s full-scale invasion in February 2022, the most significant measure imposed on Russian energy exports has been the price cap. This step was intended to limit Russian revenues from oil sales without disrupting global supply by restricting the price Russia received per barrel. However, it has become apparent that the effectiveness of the price cap depends heavily on enforcement and targeting.

Moscow has been able to bypass Western restrictions by selling to major clients like China and India. To aid in this process, the Kremlin has developed a network of around 1,400 tankers operating outside of Western oversight. This is often referred to as Russia’s “shadow fleet.” Addressing the challenges created by Russia’s ability to navigate maritime restrictions will require considerable creativity and determination.

The tankers used by Russia are often registered with shell companies in countries with limited transparency, making it difficult to trace ownership and enforce sanctions. Oil is often also transshipped via third countries, where additional companies help to conceal the origin of the cargo. This lack of transparency, combined with uncoordinated global sanctions enforcement, complicates efforts to target Putin’s shadow fleet.

One option would be to sanction more ships directly. At present, only a handful of tankers from the shadow fleet are under international sanctions. If transporting Russian oil incurred sanctions on individual vessels, many ship owners may become reluctant to continue participating. The passage of tankers through the Black Sea and Baltic Sea could also be legitimately challenged on environmental grounds.

Additional steps could include introducing secondary sanctions targeting key Russian energy industry companies such as Gazprombank. This could potentially discourage many of Russia’s main energy customers in China and India. While some secondary sanctions are already in place, extending existing measures to include financial service providers in Russia could prove particularly effective. To maximize impact, Western countries could also look into the possibility of blacklisting potential intermediary financial institutions that facilitate Russian transactions.

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When it comes to enforcing sanctions, Western governments consistently find themselves one step behind the Kremlin and are regularly forced to respond to Russia’s latest circumvention tactics. Secondary sanctions can certainly help limit Russia’s maneuverability, but further steps are needed. Streamlined decision-making processes and more comprehensive implementation could significantly tighten today’s sanctions regime and reduce the gaps that Russia currently exploits.

While a number of formats are already in place to facilitate cooperation between countries engaged in sanctioning Russia, it may be worth exploring the establishment of a dedicated sanctions coordination hub that could improve the agility and efficiency of sanctions measures. A new grouping of this kind could enhance communication among participating countries, allowing for sanctions to be developed, refined, coordinated, and implemented without delay. Closer cooperation would also make it easier to identify and target financial institutions and companies that facilitate indirect trade with Russia.

Establishing an effective international hub to coordinate sanctions against Russia would require considerable political will from all participating nations. It may need to be created within an existing framework such as the G7 group of nations or the European Union. The obvious model would be the Ukraine Defense Contact Group, which features more than fifty countries and helps coordinate military aid to Ukraine. If greater cooperation in the sanctions sphere could be achieved, it may prove a crucial step toward ensuring swift and effective responses to Russia’s evasion tactics.

There can be little doubt that fresh approaches are needed in order to increase the pressure on Russia’s wartime economy. The Kremlin has proven itself highly skilled at circumventing sanctions, while Western policymakers have struggled to close loopholes or impose costs on Moscow’s enablers. By introducing additional sanctions on Russia’s economically vital energy industry and intensifying cooperation between sanctions partners, the West can undermine Vladimir Putin’s ability to wage war while also strengthening the global order against further acts of international aggression.

Oleksiy Zagorodnyuk is a Kyiv-based independent researcher focusing on Russia’s wartime economy.

Further reading

UkraineAlert Oct 29, 2024

Putin is creating the conditions for Russian victory in Ukraine

By Mykola Bielieskov

Whoever wins the US presidential election, they will inherit a war in Ukraine that requires their urgent attention to prevent a Russian victory that would signal the decline of the West and transform the geopolitical landscape, writes Mykola Bielieskov.

Conflict Defense Policy

UkraineAlert Oct 31, 2024

Ukrainians brace for blackouts ahead of Russian winter air offensive

By Aura Sabadus

A recent lull in Russian missile attacks has led many Ukrainians to conclude that the Kremlin is stockpiling ahead of a major winter air offensive targeting Ukraine’s civilian energy infrastructure, writes Aura Sabadus.

Conflict Geopolitics & Energy Security

UkraineAlert Nov 7, 2024

Donald Trump’s election victory fuels hopes and fears in Ukraine

By Peter Dickinson

Donald Trump’s election win has sparked alarm in Ukraine, where many fear he will end US support for the country. However, some war-weary Ukrainians hope he can help end the Russian invasion, writes Peter Dickinson.

Conflict Elections

The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

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UkraineAlert is a comprehensive online publication that provides regular news and analysis on developments in Ukraine’s politics, economy, civil society, and culture.

The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia and Central Asia in the East.

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The post Russia’s economically vital energy sector is Vladimir Putin’s Achilles’ Heel appeared first on Atlantic Council.

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Despite frequent predictions of impending economic meltdown, there is currently little sign that the Russian economy is in immediate danger. At the same time, the full-scale invasion of Ukraine appears to have placed Vladimir Putin in an unenviable economic position. If the war continues for an extended period and is accompanied by factors including increased sanctions, inefficient military leadership, and pervasive corruption, this could plunge Russia into a severe economic recession.

Ending the conflict also presents economic risks. Russia’s unprecedented military spending since 2022 has enriched elites and boosted domestic demand, overheating the economy. If the war ends, this fiscal stimulus will cease, potentially causing a significant drop in real incomes for much of the population. This could lead to heightened social tensions and undermine the stability of the ruling regime.

Vladimir Putin frequently claims that Western sanctions have been counterproductive and often uses his public addresses to boast of Russia’s wartime economic performance. Official data broadly supports this narrative, with Russia reporting strong GDP growth in 2023 and during the first half of the current year.

A range of factors are fueling the current growth of the Russian economy, with military expenditure perhaps the single most important driver. The Russian authorities allocated around six percent of GDP for the military in 2024, representing the highest total since the Cold War. Further increases are planned for 2025. Nor does this cover all war-related costs. Significant additional spending is required to fund a range of defense-related industries and to finance the occupation of Ukrainian regions currently under Kremlin control.

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

Despite the outward appearance of stability, Russia’s wartime economy faces mounting challenges. Russia’s National Welfare Fund is steadily dwindling, while export revenues have gradually declined during 2024 as a result of tightening sanctions and constraints on resource extraction caused by limited access to modern technologies.

Economists are now warning that the Russian economy is in danger of overheating, largely as a result of unprecedented military spending. Meanwhile, Russia’s low unemployment rate of around 2.5 percent is more indicative of a severe labor shortage than a healthy economy. The problems caused by this lack of workforce add to the challenges created by sanctions-related restrictions on access to Western equipment, exacerbating Russia’s technological deficit.

Inflation currently poses the single greatest threat to Putin’s wartime economy, and was a key factor behind the recent decision to hike the country’s key interest rate. Russia’s Central Bank aims to reduce inflation to around four percent in 2025, but this may not be a realistic target. Indeed, official inflation data from the Kremlin may actually underestimate the rising cost of living for ordinary Russians.

Over the past year, even official Russian government bodies such as Rosstat have cautiously acknowledged negative economic trends such as rising inflation, labor shortages, and declining activity in some sectors of the economy. Taken together, these negative factors are likely to contribute to a period of slower growth, if not stagnation.

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Online Event Tue, June 17, 2025 • 1:00 pm ET

Drones, defense, and diplomacy: Negotiations and the battlefield in Ukraine

Conflict Defense Technologies Europe & Eurasia Politics & Diplomacy

The impact of Western sanctions on the Russian economy remains hotly debated. While the sanctions imposed in response to the full-scale invasion of Ukraine have yet to produce the kind of economic crisis that many analysts were anticipating in early 2022, the effectiveness of these measures remains difficult to quantify and should not be dismissed. Tellingly, while Putin insists sanctions have not hurt Russia, the lifting of all sanctions remains a key Kremlin demand.

Sanctions have clearly complicated the situation for Russian exports and for the import of technologies. However, Russia has been able to find numerous ways of bypassing or otherwise mitigating the effects of many restrictions. Russia’s economically vital energy exports have been redirected from the West to the Global South, with a shadow fleet of tankers playing a crucial role in this process.

Similarly, Russia has been able to continue accessing military technologies and equipment by importing via third party countries including China. This has created some inconvenience and led to rising costs, but it has prevented sanctions from achieving the desired goal of isolating the Russian economy and depriving Putin’s war machine of essential components.

A number of additional factors have further blunted the impact of sanctions. These include slow implementation and the continued existence of multiple loopholes. Restrictions on capital transfers have also played into the Kremlin’s hands, keeping wealth within Russia.

Many Russians have clearly benefited financially from the war. Military contracts have proved particularly lucrative for the country’s business elite, while the departure of Western companies has created vacant niches for Russian companies to fill.

Ordinary Russian citizens have been able to earn unprecedented sums of money by enlisting in the military, with the families of soldiers killed or wounded in Ukraine receiving substantial payments. Those working in factories servicing the war effort have also seen salaries increase as much as five times amid surging demand and labor scarcity. Overall, the invasion of Ukraine has enabled millions of Russians to pull themselves out of poverty.

The economic benefits enjoyed by a wide range of social groups in Russia as a result of the war have helped foster pro-war sentiment and bolster support for the Putin regime. Ending the invasion of Ukraine would therefore potentially weaken the position of the authorities and fuel instability. This creates further incentives to continue the war.

The current state of the Russian economy is far from critical but it does present Putin with a dilemma. He currently appears intent on continuing the war indefinitely while hoping to outlast the West and exhaust Ukraine. Alternatively, he could seek to move toward a settlement of some kind. However, there is a very real danger that either option could end up plunging Russia into a serious economic crisis.

If Putin opts to maintain his uncompromising push for an historic victory in Ukraine, it is not clear that Russia has the resources to wage a prolonged war on the present scale. In this scenario, current warning signs such as rising inflation and labor shortages could eventually become major problems. If he seeks a settlement and withdraws the Keynesian crutch of today’s vastly inflated military spending, the economic repercussions could be dire. The Russian economy is not yet close to collapse, but it is increasingly dependent on wartime conditions and faces growing risks of overheating.

Alexander Mertens is professor of finance at National University of Kyiv-Mohyla Academy and professor of economics and finance at Kyiv’s International Institute of Business. With special thanks to Oleksiy Zagorodnyuk for his help with data research and analysis.

Further reading

UkraineAlert Oct 15, 2024

As the US election nears, anxiety is mounting in Ukraine

By Kate Spencer

Few countries have more at stake in the coming US presidential election than Ukraine, which is heavily dependent on US aid to sustain its fight against Russia’s ongoing invasion, writes Kate Spencer.

Conflict Defense Policy

UkraineAlert Oct 29, 2024

Putin is creating the conditions for Russian victory in Ukraine

By Mykola Bielieskov

Whoever wins the US presidential election, they will inherit a war in Ukraine that requires their urgent attention to prevent a Russian victory that would signal the decline of the West and transform the geopolitical landscape, writes Mykola Bielieskov.

Conflict Defense Policy

UkraineAlert Oct 15, 2024

Ukraine may allow drone exports in bid to support domestic producers

By Marcel Plichta

Ukraine may allow the export of drones in a bid to boost domestic production amid limited state procurement budgets and to prevent Ukrainian drone manufacturers from relocating abroad, writes Marcel Plichta.

Conflict Defense Industry

The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

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UkraineAlert is a comprehensive online publication that provides regular news and analysis on developments in Ukraine’s politics, economy, civil society, and culture.

The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia and Central Asia in the East.

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The post Russia’s economy is overheating but Putin cannot change course appeared first on Atlantic Council.

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The gaping hole in European sanctions

In June 2022, in response to Russia’s full-scale invasion of Ukraine, the European Commission imposed an embargo on Russian crude oil and refined oil products. However, Brussels granted a temporary exemption to some European Union (EU) member states due to their unique challenges in securing alternatives to Russian oil imports, including Hungary, Slovakia, and the Czech Republic. The exemption was intended to provide time to establish new sources of supply. Since then, about 14 million tons of Russian oil per year have been transited via Ukraine to these three countries, unchanged from pre-war levels, bringing approximately $6 billion to Russia’s war chest.

Central Europe’s oil diversification laggards

The EU should have closed this Druzhba pipeline loophole long ago. Despite the temporary nature of the exemption, Hungary and Slovakia have done little to develop alternative supplies. By contrast, the Czech Republic announced that it will eliminate its dependence on Russian crude by next year and aims to request its exemption be canceled once the Italian TAL pipeline’s expansion is completed, which will make more seaborne oil supplies available to the landlocked country.

Hungary’s inertia has not been for lack of help. Croatia constantly offers to expand the Adria pipeline, capable of importing non-Russian oil from its shores to Hungary. In August 2024, Croatian pipeline operator JANAF tested and confirmed that the pipeline can transport 14.3 million tons of oil, exceeding the annual needs of MOL’s refineries in Hungary and Slovakia.

However, MOL has contracted only 2.2 million tons for 2024. Hungarian officials have expressed skepticism about depending on Croatia—an EU and NATO ally—for oil. “Croatia is simply not a reliable country for transit,” claimed Péter Szijjártó, Hungary’s foreign minister. Instead, Hungary relies on Russia’s oil, as Moscow continues its military aggression against Ukraine and poses a threat to the NATO alliance.

Undermining solidarity

Hungary, the Czech Republic, and Slovakia paid Moscow €557 million for crude oil in April 2024, funding the Kremlin’s war and raising concerns within the EU about the precedent it sets for other member states. For example, although Germany halted its imports along the northern Druzhba pipeline, it could consider a similar deal at the Belarus-Poland border to resume imports of cheaper Russian oil. After the left-wing populist BSW party finished third with 14 percent of the vote in Brandenburg’s recent state elections, party leader Sara Wagenknecht said she would try to lift the embargo on Russian oil if her party entered the state government.

Allowing individual member states to circumvent the spirit of sanctions could play into Russia’s strategy to weaken EU solidarity, in line with the Kremlin’s historical “divide and conquer” tactics to exploit intra-European divisions. The EU’s sanctions aim to diminish Russia’s ability to finance its military operations. Hungary’s disinterest in developing alternative supplies—creating a workaround to continue importing Russian oil instead—undermines these collective efforts.

Given these developments, it is crucial for the European Commission to reassess the current sanctions on Russian pipeline oil. Closing loopholes that permit Hungary and Slovakia to continue importing Russian oil is essential for maintaining the integrity of the EU’s sanctions regime and the unity of its members. Implementing mandatory changes over a six-to-nine-month period would allow affected countries reasonable time to secure alternative supplies through existing infrastructure, such as the Adria pipeline.

Hungary’s actions present a critical test for EU unity and the effectiveness of its sanctions regime. By exploiting legal loopholes, Hungary risks undermining not only the collective response to Russia’s aggression, but also the foundational principles of EU solidarity.

The situation highlights the delicate balance that the EU must strike between respecting individual member states’ interests and upholding collective commitments to international security. A decisive response from the European Commission by cancelling exemptions for Russian pipeline oil would reinforce the EU’s dedication to solidarity and its resolve in confronting global challenges. Failure to act now could not only weaken the effectiveness of sanctions against Russia—it risks setting a concerning precedent for EU unity in future crises.

Sergiy Makogon is an energy expert who served as the chief executive officer of GasTSO of Ukraine from 2019-22.

EnergySource

EnergySource is the Global Energy Center’s (GEC) online publication providing commentary and analysis on developments in the energy and climate sector from a wide-array of thought leaders, politicians, and experts.

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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.

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The Russia-Ukraine gas transit agreement inked in 2019 will expire in December 2024, but Russian gas transit through Ukraine will remain a possibility. This doesn’t have to be the case.

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Central and Eastern Europe needs to rethink its approach to energy security

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The upcoming Three Seas Initiative Summit is an opportune time for Central and Eastern European leaders to pivot toward clean, affordable, and local renewables to build energy security.

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The post Hungary’s Russian oil deal threatens EU solidarity appeared first on Atlantic Council.

Public Event

Atlantic Council Regional Conference on Clean and Secure Energy

The regional conference on clean and secure energy gathers top government, business, and thought leaders to discuss the next steps in the clean energy transition.

Central Asia Climate Change & Climate Action Energy & Environment Energy Markets & Governance

Speaker

H.E. Alparslan Bayraktar
Minister of Energy and Natural Resources of the Republic of Türkiye

Event transcript

Uncorrected transcript, translated from Turkish

ALPARSLAN BAYRAKTAR: Distinguished guests, distinguished representatives of the Atlantic Council, distinguished participants, ladies and gentlemen. I would like to start by expressing my pleasure to be here with you all at the Regional Conference on Clean and Secure Energy organized by the Atlantic Council.

Distinguished guests: climate change, the pandemic, supply chain disruptions, high energy and commodity prices, rising capital costs and high inflation that is felt on a global scale, geopolitical risks and vulnerabilities, especially in our region, and regional conflicts are just a few of the current risks we face. Moreover, as we face all these challenges, there is also the task ahead of us: for the world economy to return to a carbon-neutral state by 2050. Therefore, we obviously face a very challenging energy transformation process.

For a successful energy transformation, and for us to be successful in this process, we need to develop more rational policies, implement these policies with determination, maximize our cooperation in line with the purpose of this gathering, and realize the necessary investments. However, in this aforementioned multi-risk environment, policy inconsistencies, uncertainties, and stop-starts all frankly have an extremely negative impact on the investment climate.

Considering this environment, what are we doing as Türkiye? What are our challenges, our priorities, our energy policies, and our energy transformation roadmap? One of them is addressing the increase in our energy demand. Türkiye is a country whose energy demand increases every year. When we look at energy demand over the last two decades, our demand for electricity and natural gas has tripled. We anticipate that this will continue to increase for the coming period. Our electricity demand forecast for 2035 is 510 terawatt-hours, but I believe this will be easily exceeded. Artificial intelligence, the additional energy requirements by big data, the transformation of transportation especially within the context of energy transformation, and electric vehicles will take this demand much higher. In addition, we need to meet these increasing needs to match our growing population, growing economy, urbanization, and regional developments. Of course, we need to meet this increasing demand with more affordable costs—costs that our consumers and citizens can afford.

Although there has been a significant decline in recent years, the second issue for the Turkish energy market is our dependence on foreign energy imports—our dependence on imported energy resources. Unfortunately, this is ongoing.

Consequently, as Türkiye, we are trying to implement a multidimensional, multilayered and unique energy strategy. We believe that in order to successfully achieve our decarbonization targets, our policies and regulatory framework must be more adaptive, more comprehensive, more flexible, more rational, and in line with new digital technologies. As Türkiye, we are focusing on five main areas in our long-term energy planning to achieve this decarbonization goal. These are, of course, renewable energy, which is one of the main topics of this conference; energy efficiency; nuclear energy; the role of natural gas as a transition fuel; and mining for the energy transformation.

Distinguished guests, today in Türkiye, renewable energy resources constitute more than half of our installed capacity. In this sense, Türkiye ranks fifth in Europe and eleventh in the world in renewable energy. We have identified renewable energy as the area of development and the area with the highest potential for our country until 2053, the date we set our net-zero emission target. For this reason, we will continue to support renewable energy projects in many different ways and methods, from small rooftop systems to large-scale projects. We have a very ambitious renewable energy program that will cover the next twelve years, that is, until 2035. In renewable installed capacity, we want to add five thousand megawatts of solar and wind capacity to our existing installed capacity every year. In other words, over the next twelve years, or by 2035, we want to increase our installed solar and wind capacity, which is currently thirty thousand megawatts, to ninety thousand megawatts.

In the next few days, we aim to share with you, our public, Türkiye’s Renewable Energy Strategy for 2035. We will likely publish it on the twenty-first of this month for the Turkish public and the international community.

While we continue to mobilize of all our potential in the field of renewable energy, we are of course aware of the fact that, unfortunately, renewable energy sources are also intermittent energy sources. Consequently, we consider the sources that will provide us with a reliable base load to be extremely important. In this sense, renewable energy is definitely one of the important areas that Türkiye should include in its energy mix and energy portfolio. And as you all know, we are currently building our first nuclear reactors. Four nuclear reactors are being built at the same time in Mersin Akkuyu. Because four reactors are being built simultaneously, the nuclear construction site in Mersin Akkuyu is the largest nuclear power plant construction site in the world. The progress of the first reactor here is over 90 percent complete, and hopefully by 2025 we will produce the first carbon-free electricity from this plant. By 2028 we will have commissioned the remaining three reactors. Through this, we will be able to meet 10 percent of Türkiye’s electricity needs from this plant and save Türkiye thirty-five million tons of carbon emissions per year. Of course, Akkuyu is not the only project we are targeting—we are also aiming to reach a total energy capacity of twenty thousand megawatts, which Türkiye has set as a target in its long-term energy plan for 2050. Of course, we want to achieve this not only with conventional, large-scale power plants, like the power plants we are considering in Sinop and Thrace, but also with small modular reactors that will enable us to reach a power capacity of at least five thousand megawatts.

Distinguished guests, with the First National Energy Efficiency Action Plan that we put into practice in 2017, we have reduced our energy consumption in primary energy by approximately 14 percent between 2017 and 2023. In this sense, energy efficiency is an area with great potential. During the implementation period of this action plan, both the public and private sectors have invested around $8.5 billion in Türkiye, allowing a reduction of seventy million tons of carbon emissions. This has also opened the door to forty-five thousand new green jobs. In January this year, I announced Türkiye’s Second National Energy Efficiency Action Plan for 2024-2030. In the coming period, we aim to make investments of approximately twenty billion dollars, together with the public private sector. Along with these investments, we will also reduce our energy intensity. Our energy consumption will be 16 percent lower than the base scenario, and we will reduce carbon emissions by one hundred million tons per month. Overall our target is that by 2040, Türkiye will save $46 billion through increased energy efficiency.

Dear guests, while integrating more renewable and intermittent resources into our system, we should not ignore natural gas. Natural gas also plays an important role in integrating more renewables. Natural gas is also important for our cities to have better quality air. As Türkiye, we are the fourth largest natural gas market in Europe, with our consumption exceeding fifty billion cubic meters. In order to establish a secure supply of natural gas and ensure diversification, we have increased the capacity of our gasification terminals. We have increased our gasification capacity five times in the last eight years. Beyond capacity increases to FSRUs and other facilities, we have increased our underground storage capacities, and we have made very important investments in natural gas infrastructure in many areas, including international pipeline projects. Thanks to this, Türkiye has gained the capability to purchase at least half of the natural gas it consumes annually as LNG.

Additionally, we continue to focus on all areas of the value chain in natural gas. We are implementing important programs, especially on the upstream side: on natural gas exploration and production. Consequently, in 2020, we made the largest natural gas discovery in the history of the Republic of Türkiye in the Black Sea. 2020 was the year of the pandemic, and it was the largest discovery in the seas in the world. After just a short period of time, we are now already producing natural gas for 2.6 million households. Of course, we aim to increase our production in the Black Sea fields and Sakarya gas field. In the first quarter of next year, we will reach a daily production of ten million cubic meters, and with the floating production platform that we recently brought to our country, we will reach a production of twenty million cubic meters in 2026. Soon, Türkiye will realize an annual production of 7.5 billion cubic meters, but our targets in the Sakarya gas field are much beyond this, what I have shared with you are the targets for the next two years.

While we carry out all these works, including infrastructure investments and upstream investments for energy security, we also make important contributions to the supply security of our region, especially Southeastern Europe. As of today, Türkiye has natural gas export agreements with Bulgaria, Romania, and Serbia. Because Türkiye has the infrastructure to supply more than the fifty billion cubic meters of gas that I mentioned earlier, and because it has the infrastructure to buy more gas, it has the capacity to transfer excess gas that it does not need to European markets and countries that are in serious need of gas. In 2024, we have also started to more intensively realize long-term LNG agreements, especially in our supply portfolio, where our supply portfolio predominantly includes piped gas. For natural gas, the United States has become Türkiye’s most important LNG supplier. The share of American LNG in the Turkish market has increased considerably, especially over the last five or six years, thanks to our infrastructure investments, and the fact that American LNG is highly competitive. In order to supply more natural gas, especially to Southeastern European countries, we need to increase our interconnection capacity with Bulgaria and Greece. I would like to express that we, as Türkiye, are and will be present in the investments to be made in this regard. I believe that it will make a significant contribution to both the supply security of this region and the diversification of gas.

Dear friends, today the mining sector has become critical to the production of clean energy technologies such as electric vehicles, wind turbines, batteries, and solar panels. In this sense, rare earth elements or critical minerals deserve special attention for their important role in electrical and electronic components and industrial processes. In Eskisehir, in the middle of Anatolia, we have discovered the world’s second-largest single field-reserve of rare earth elements, and in cooperation with our national mining company Eti Maden, we aim to develop this field with a value-added, high-standard mining approach. We believe that critical raw materials should not be a source of conflict, but a tool for regional and global cooperation. This is why Türkiye recently joined the Mineral Security Partnership Forum, which aims to enhance international cooperation. We held our first meeting in the United States a few days ago.

Distinguished guests, without transmission—without a strong transmission infrastructure, it is not possible to talk about a successful energy transition. For this reason, we need to strengthen our infrastructure, especially considering the sixty thousand megawatts of solar and wind, and of course offshore wind and geothermal resources that we will add to our installed capacity over the next twelve years. We need to increase our existing electricity grid in conjunction with our neighbors such as Georgia, Azerbaijan, Bulgaria, Greece. Similarly, in natural gas, and we need to strengthen our interconnection capacities. Therefore, one of the issues that we will focus on in the coming period, and where we will have many areas of cooperation, is transmission infrastructure and the investments required. We will share more details publicly in Türkiye’s Renewable Energy Development Strategy Program, which we will release in the coming days. In addition to this, we aim to expand the scope of EPIAS, our energy exchange, to new areas, including emission trading. This is important for Türkiye to become a carbon pricing country in 2026, especially as Türkiye enters the European Union market, which is our largest export market. We aim to realize this by establishing a carbon market within EPIAS. Likewise, we also aim for EPIAS, which is relocating to the Istanbul Finance Center, to become a commodity exchange.

Distinguished guests, it is important that our energy transition and energy security efforts are carried out in cooperation and together. This is necessary for us to achieve success. As you know, issues such as energy planning, capacity building, uninterrupted supply of energy, modernization of grid infrastructure, development of global storage capacity, and the importance of diversified and sustainable supply chains are of great importance. These issues were greatly emphasized at the G20 meetings held in Brazil last week, as well as at the G20 energy ministers meetings. We can successfully achieve the critical process of the energy transformation through deepening cooperation in this field.

As Türkiye, we are determined to have a better, cleaner, and more sustainable energy future for everyone, and our determination and will are very strong in this regard. With these feelings and thoughts, I hope that this conference will be successful, and I greet you all with respect and love.

Watch the speech in Turkish

The post Turkish Energy Minister Alparslan Bayraktar offers an ‘energy transformation roadmap’ appeared first on Atlantic Council.

Public Event

Atlantic Council Regional Conference on Clean and Secure Energy

The regional conference on clean and secure energy gathers top government, business, and thought leaders to discuss the next steps in the clean energy transition.

Central Asia Climate Change & Climate Action Energy & Environment Energy Markets & Governance

Speakers

Matthew Baldwin
Deputy Director-General, Directorate General for Energy, European Commission

Sanja Bozinovska
Minister of Energy, Mining and Mineral Resources, North Macedonia

Ahmet Berat Çonkar
Deputy Minister of Energy and Natural Resources, Republic of Türkiye

George-Sergiu Niculescu
President, Romanian Energy Regulatory Authority

Moderator

Matthew Bryza
Managing Director, Straife; Former US Ambassador to Azerbaijan

Event transcript

Uncorrected transcript: Check against delivery

MATTHEW BRYZA: Thanks. Thanks so much. Thanks so much to you, Fred, to Defne, to Grady, to Alp, to Zeynep for this really amazing conference that has been rich with fresh ideas and really a new tone on energy security and clean energy.

It’s an honor to be up on the stage right after Assistant Secretary Pyatt and after Deputy Minister Ekinci. I want to—we’ll call up our panel right now, but just congratulate you, Berris, on your appointment as deputy minister. We’re going into our third decade of collaborating together to try to develop the type of infrastructure we’re going to talk about now, and especially natural gas as a transition fuel. Congratulations.

So, please, may our panel join me up here? We have together with us Matthew Baldwin, who’s deputy director-general of the Directorate General for Energy of the European Commission. Matthew, thank you. We have—we have the Honorable Sanja Bozinovska, who is minister of energy of North Macedonia; Deputy Minister of Energy for Turkey Ahmet Berat Çonkar; and George-Sergiu Niculescu, who’s president of the Romanian Energy Regulatory Authority. Thank you.

According to the European Council, the share of Russia’s pipeline gas in the—in the EU, as Assistant Secretary Pyatt was talking about, dropped from around 45 percent in 2021 to about maybe 8 percent in 2023. And for pipeline gas and LNG combined, Russia accounted for less than 15 percent of total EU imports. This drop was possible largely thanks to a sharp increase in LNG imports, especially from the United States, which were enabled by investments in regasification terminals especially in Germany, which I think surprised everybody by how quickly it was able to pivot and deploy commercially viable projects that were supported, of course, by the government and by the European Commission.

Also, we saw a reduction in natural gas consumption in the EU by, I guess, around 15 percent, with a target to continue reducing that consumption by another 15 percent this year. And before that—in the decades before, I think it’s fair to argue the European Union worked very hard, especially the Commission, to stimulate investment in pipeline interconnections that also Assistant Secretary Pyatt discussed, which allow natural gas molecules to reach the buyers, the consumers, according to market mechanisms—supply and demand—rather than monopolistic power. So these are really impressive achievements that a lot of people in this room have worked together on for decades.

However, Southeast Europe is now flooded by Russian natural gas. It’s coming in via the TurkSteam pipeline, via the Russia-Ukraine pipelines. And in recent weeks, in my own experience, natural gas traders and investors in regasification terminals, especially in Greece, have told me that the LNG import terminal at Revithoussa is operating at only 20 percent capacity. And as I mentioned yesterday, I’m on the board of advisors of the largest natural gas distribution company in Bulgaria, which has booked five slots, doesn’t know how we’re going to use them. And at this point, it’s very difficult to reach a commercially viable contract right now for LNG that can outcompete the pipeline gas.

So looking ahead also, the European Commission and Azerbaijan have agreed in their Strategic Energy Partnership of July 2022 to double by 2027 imports of natural gas into the EU via the Southern Corridor. However, as we discussed yesterday, that goal conflicts with the EU’s objective of phasing out all natural gas usage by 2035, so in eleven years.

So I’d like to turn to Deputy Director-General Baldwin first and maybe focus on that last issue. How can we reconcile the need for longer-term natural gas sales and purchase agreements to allow this expanded infrastructure for natural gas to be financed with the ambition to phase our natural gas within eleven years?

MATTHEW BALDWIN: Well, thank you, Matt. And let me join the raucous applause to the Atlantic Council for putting on such another great event. And indeed, as Ambassador Pyatt said, it’s wonderful it’s in Istanbul—I mean, a pivotal city for the region in all of the things we’re talking about.

Thanks for the question. A bit of context, of course, to remind us how we got here. We are committed to be the first climate-neutral continent by 2050. We’ve done a lot of the heavy lifting in terms of developing what we call the European Green Deal, commitments to reduce our greenhouse gas emissions by 55 percent by 2030. We’re also looking at additional work to focus on 2040, which I think is meaningful in terms of generating necessary investments, focusing on a reduction around 90 percent by 2040.

And let’s also remind ourselves it’s not just the plucky European Union. We’ve heard from deputy foreign minister that Turkey itself is driving strongly in this direction. And the last COP took a really quite momentous decision to phase out fossil fuels with, yes, some important guardrail language, but that’s the direction of travel.

And of course, that’s the context in which we’ve had to manage the crisis in the last couple of years. And it has been—it’s been severe and it’s been difficult. I’m sure we’ll come back onto the specific aspects in the region.

But to try to answer your question, we’ve never pretended even before the crisis, when we needed gas in the worst way in the shortest possible timeframe, we never said that gas is not a transition fuel. We’re going to need gas in our pipes all the way through 2049. When countries are getting out of coal and into gas power generation, that’s a plus.

MATTHEW BRYZA: Yes.

MATTHEW BALDWIN: We know we’re going to need that. And if we can deliver on the burgeoning CCUS framework, I think that also provides a perfectly plausible outlet for companies to be buying gas now with a view to use it even beyond 2050. And by the way, there will be a number of countries that aren’t meeting that timescale, and therefore, you know, to be—to be ruthless about it, these companies will still have a market for their gas.

We are sometimes asked, therefore, you know, against the twenty-five-year or whatever planning profile that FIDs need for triggering LNG projects in the—in the US, how does that all fit? And I think if you—if you look in that framework that we’re going to need a continued supply of gas, we are not, I would stress, in the Commission, in the long-term contract business. I don’t have terminals in my office. I’m not calling gas traders in the middle of the night. But we’re totally fine with our gas purchasing companies making such arrangements to provide those commitments. We on the record are saying that. And I think if you look at the trends in terms of long-term contracting—and you probably follow this as closely as I do—it’s the portfolio players who have actually taken up the biggest slack. And if you think of the logic in that with the turmoil in the European gas markets and elsewhere, it’s about acquiring these long-term contracts which I think have done—have been effective in triggering FID, and then parceling out smaller contracts often for gas purchasing companies.

But I really want to stress, if European gas purchasing companies want to do those long-term contracts, and if they think that contributes to the security of supply, that’s absolutely great. Not a magic solution. These are also indexed. A lot of people said, looking at our gas price spikes in 2022, oh, if only—if only we had long-term contracts and we weren’t just on the spot market—which we weren’t, by the way—then everything would be fine. But that’s not the case. And a lot of those contracts, of course, are indexed to the—to the TTF.

If I may just make one last point on this issue, because I think it’s relevant in terms of our move towards climate neutrality, and that’s methane. And you know, it’s probably overtalked about now, but the great coming LNG glut in the second half of this decade—we know it’s coming from the US and from Qatar—as that market starts to loosen, big gas-consuming places like the EU and like Japan and Southeast Asia increasingly will be able to choose a bit between. And I think we need to use the current work that’s going on, the work we’re doing with Brad Crabtree and the MMRV Group to find a really global way of homing in on measuring and monitoring of emissions; and the work to reduce methane-reduction pathways, which we’ll be announcing in the COP, to enable that sort of choice as to where we’re getting the gas in the future. And I think that’s a big new trend.

Last point—of course, and I’m sure we’ll come back to it—in all of this, the regional collaboration that Ambassador Pyatt mentioned that we were doing in Greece, and as we—and I’d like to come back to the Russian gas question in a moment—you know, it is going to be so pivotal in all of this work.

So thank you. Sorry to be a bit long.

MATTHEW BRYZA: No, thanks, Matthew. Beautifully comprehensive and thoughtful. Really important clarification about the Commission’s view on longer-term natural gas sales.

MATTHEW BALDWIN: Hopefully wasn’t new, but, yeah.

MATTHEW BRYZA: It just—it doesn’t—there’s a lot of static in the system and that message doesn’t always come through, especially in places like Baku, where they really are worried about not being able to fund their upstream investment, which we’ll come to.

But one of your underlying points, of course, is natural gas, as Deputy Minister Ekinci was saying, as a transition fuel. So I’d like to turn, then, to Minister Bozinovska about North Macedonia’s plans. I mean, my understanding is North Macedonia is still dependent on about—on lignite for about 55 percent of its primary energy, so to generate electricity. So what’s the status of your gas interconnection planning with Greece and with Bulgaria? And also, what are your plans to develop a domestic natural gas distribution network, if any? Thank you.

SANJA BOZINOVSKA: First of all, thank you for the invitation.

As you said North Macedonia is mostly dependent on coal. We are working on a program. We just submitted our growth plans to the European Union, so we are waiting for an answer in the next—in the following months. The estimation is it will cost around three billion, which for our country is a significant amount of money.

We also established a just transition. And it’s led—I’m in the steering committee together with the Ministry of Environment. And we are discussing with EBRD, with EIB, and with the World Bank regarding the financing.

Regarding the gas in North Macedonia, there is only at the moment one connection; it’s from Bulgaria. And we had one tender with Greece; unfortunately, it was—there were objections from the European Investment Bank, and now we are doing our best to re-tender. We have secured all the finance. It’s around 86 million. And EBRD clearly state it’s the last financing that they have, so it will be their last financing into gas connector. We hope in the next two weeks that we will have the tender ongoing, and by the end of the year or January this work should start.

We heard that Alexandroupoli started from the 1st of October. Some projection about the work is around two years, but we hope that it can be finished a year and a half so it will be another diversification of the gas so it can come from Greece to North Macedonia. On Monday, we signed with Serbia the memo of understanding for also the gas connection, because from North Macedonia it’s only twenty-five kilometers that needs to be built. So in the near future, we plan to have Greece, North Macedonia, Serbia, and then it can go to Southeast Europe since this is also an important region to be valued. So this is the exact situation.

And regarding the 55 percent, we are doing a new energy law and we plan also to have more renewables. We have around in the last three years built seven hundred megawatts of solar and we need financing regarding the green infrastructure. And we also plan to include battery storage, which is a hot topic now in this region. We plan to have also construct for differences in order to, let’s say, have more renewables. So we are working on this. We are a new ministry, just three months established. But I hope by end of the year we will have more things in the law.

And we are working also with the energy community in Vienna and, yeah, in Brussels. I’m going in December, so we will discuss which issues are still a challenge and what needs to be done.

MATTHEW BRYZA: Wow, quite impressive vision, and not just vision but implementation. It sounds like you’re doing specific, concrete investment planning; I mean, I know you are. And this is a really important strategic issue, as well, going back to the Vertical Corridor that Assistant Secretary Pyatt talked about. And I want to come back to that issue in the next round, if that’s OK. But you’re not just talking about, as my old boss President Bush would say, strategery—you’re talking about the practicality of how to make the investments work.

So then I’d like to move to Deputy Minister Çonkar on this issue of making practical investments work. And Turkey has been a driving force of the diversification of sources of natural gas supply into the EU thanks to the Southern Corridor, but thanks to the investments that, again, many of us all worked together on to make possible in the upstream in Azerbaijan decades ago. And I mentioned in my opening remarks the ambition to double the flow of natural gas from—well, through the Southern Corridor into the EU.

So, from your perspective and Turkey’s perspective, where are those supplies of gas going to come from? Azerbaijan, as I’ll talk about in the next round, is not getting enough upstream investment to have those molecules coming out of the ground in time, but there’s a possibility of swaps from Turkmenistan which would have to go across Iran. Or is it cross-Caspian infrastructure, maybe, that we’re looking at? What could be the sources of supply?

AHMET BERAT ÇONKAR: Thank you very much, Matthew. First of all, thank you very much for this opportunity.

First of all, I would like to give some information about our gas infrastructure. As mentioned, Türkiye is the fourth-largest gas market in Europe, with an annual consumption of approximately fifty billion cubic meters of natural gas. For many years, Türkiye was importing almost all of this gas, total number was imported. After the discovery of natural gas in the Black Sea in August 2020, we started production only in three years’ time. Within three years’ time, we were able to start production. As of today, we are producing 6.2 million cubic meters of natural gas from our Black Sea fields, and we have additional one million from other fields. So Türkiye right now produces about 7.5 million cubic meters of natural gas from its own sources.

This means that we are able to meet about 2.6 million households’ needs from our own resources, so this is an important development for us. We are hoping to increase this production to ten million cubic meters in the first quarter of 2025.

MATTHEW BRYZA: Sorry, ten billion—ten billion per year?

AHMET BERAT ÇONKAR: Ten million per day.

MATTHEW BRYZA: Oh, ten million per day.

AHMET BERAT ÇONKAR: Per day. And as Minister Bayraktar mentioned, our aim is to double this to twenty million per day, which comes to almost 7.5 billion cubic meters per year, by the end of 2026 with our new floating production unit that will be operational at the end of 2026.

So, also we have made infrastructure investments to receive gas both through pipelines and LNG. Beyond that, we have made a lot of storage investments as well. So, you know, one of these storage facilities is Silivri natural gas storage project, which is the first natural gas storage of Türkiye. And it has critical importance in the energy supply security of our country. And as a result of the capacity increase were carried out in this facility, a storage capacity of 4.6 billion cubic meters has already been reached in Silivri. With this capacity, Silivri natural gas storage facility is the largest marine storage facility in Europe and is of critical importance for providing uninterrupted energy to our country.

Also, another project I want to mention in this area is the Salt Lake natural gas storage project. By the end of 2021 the first phase of this project was completed, and expansion works are continuing here as well. As of now, 1.2 billion cubic meters operating gas capacity and forty million cubic meters daily back production capacity has been reached in this pursuit as well. Also, we have increased our regasification capacity by almost fivefold. So our whole supply portfolio is changing and transforming in gas. With these infrastructure investments, we offer more competitive solutions for the markets.

Türkiye plays a pivotal role in realizing the goal of Southern Gas Corridor. As you mentioned, it’s a very important project. However, alongside the opportunities that this presents for Türkiye and the wider region, there are significant challenges that must be overcome to ensure that the expansion of this corridor is successful, timely, and sustainable. Türkiye’s role in the Southern Gas Corridor strengthens its position as a regional energy hub, and enhances its leverage in diplomatic and trade negotiations with both supply and consumer countries. I think it’s very important for this conjuncture.

Expanding the capacity of the Southern Gas Corridor offers us substantial economic benefits. Increased natural gas flows will likely lead to additional transit revenues for us and bolstering our economy. Moreover, the project could drive foreign investment into our energy infrastructure and related industries, creating jobs and stimulating economic growth.

Despite these opportunities, there are several key challenges in this area, as I mentioned. One of the most imminent challenges is the infrastructure investment required to expand the capacity of the Southern Gas Corridor. Türkiye’s strategy focuses on maintaining a diverse supply base here, ensuring a balanced energy market that is both flexible and secure.

Additionally, we continue to support international cooperation in expanding our resource base. We have signed long-term LNG supply agreements with major global companies, as mentioned in the morning. We also want to increase our cooperation with the countries in the region on a win-win basis and add resources in this region to the system. Türkiye continues to serve as a key facilitator for the energy projects in our Caspian region, Central Asia, and the Middle Eastern region with its unique location. As you also mentioned, Turkmenistan’s gas and the Caspian resources, there are a lot of untapped potential in these areas, so we need to work hard in integrating this to the system. As mentioned, collaboration and cooperation are the unique tools we can use to strengthen our energy supply security.

Finally, the successful expansion of this Southern Gas Corridor will require close regulatory and political coordination among multiple countries and stakeholders. So we need a very, very close and coordinated work in order to achieve this objective.

MATTHEW BRYZA: Excellent. Thank you, Deputy Minister Çonkar.

Deputy Minister, that was an absolutely comprehensive vision you’ve outlined that is taking the idea that was for years rhetoric and turning into reality that Turkey is a natural gas hub. It already is, and it will be for trading soon. Eventually, there will be a Turkish benchmark, I guess, for trading. We’ll get back into the mix of molecules in a second, but it’s a remarkable set of achievements that—not only are they enhancing Turkey’s strategic importance and helping the EU diversify its sources of supply, but I think of the air in Ankara, how—when I first visited there in 1998 how dirty it was and brown from all the coal, the lignite being burned. And now it’s so clean because of this transition to natural gas as a primary fuel for power generation.

But you also mentioned at the—at the end the importance of cooperation and regulatory cooperation. So let’s hear from a regulator. I’d like to turn now to Mr. George-Sergiu Niculescu, who’s the president of the Romanian Energy Regulatory Authority.

Romania sits at a geoeconomic/geostrategic confluence of the European Union on the one hand, and Moldova and Ukraine on the other hand. But in addition to that place on the map, you also have interconnectivity on electricity into the EU, which is an important market incentive for investments in a range of power generation and transmission projects. And also, it is stimulus for investment in natural gas transit as well. So, from your regulatory perspective, how are you working to attract those investments, and how’s it going?

GEORGE-SERGIU NICULESCU: Thank you very much for the question. Good morning, everyone.

Romania is deploying a lot of efforts in order to boost investments in the energy sector, both in generating new capacities, transport, and distribution as well, because it is very important that these two goes head to head. We cannot have investments only in producing electricity; we also need to enforce and enhance the grids in order to take in this new energy and deliver it to the consumers.

As Assistant Secretary Pyatt said, a common letter from Romania, Bulgaria, and Greece have been submitted to the European Commission regarding the need of investments in more interconnecting the grids. We saw that we have a gap between this part of Europe’s markets regarding the price of electricity and the western countries, because not all the countries have made investments in interconnectors. So the energy should flow freely from where it’s produced to where it’s consumed without any bottlenecks, without any borders.

Let me tell you that Romania has a total interconnecting capacity of 3.3 gigawatts, and this is for a consumption of around eight gigawatts, so more than 30 percent we have interconnecting capacities. I believe that Romania did this job, investing in interconnected. We are interconnected with every neighboring countries, and still we are looking to develop this.

We stimulate investments in the grids by throwing in support schemes. Ministry of Energy has called for projects for 1.3 billion euro dedicated only to distribution companies that want to invest in enforcing the grid. So the money’s on the table; they just need to deploy projects and sign the contracts and cash in the money, and then develop the projects.

For our TSO, also the Ministry of Energy has a dedicated call for projects for half-a-billion euro. This is on top of the reinvestments programs, yes, so more or less two billion euros for grid enforcements. And our authority, ANRE, has in the middle of this summer proved the new methodology for the next five years, which means that the revenues are regulated by us, and we have signed the methodology that stimulates investments. We have a methodology that generated good work, in our opinion, a return which—average cost for investment, which is around 7 percent. And on top of that, we have placed some KPIs in order for them to be able to provide better service for the consumers. I’m talking about the distributors, the companies that distribute the electricity. So this—if they reach out to these targets, they can go around 8 percent, 8.5 percent per year… This is a generous way to stimulate them to throw in huge volumes of money in order to enforce the grids, because the transition already started in Romania. It is no turning back from these targets that we imposed. And the transition needs better grids.

On top of that, we are not overlooking our natural gas resources. Because you talked about natural gas, the Black Sea offers us a lot of potentials.

On top of hydrocarbons, natural gas, also a good wind opportunity. Romania is the first country in the Black Sea region that has developed an offshore wind law, so we are pioneers in this regard with the help of the Department of State and the Department of Interior in the US government. We have from June this year a law that regulates all the aspects regarding the offshore wind.

Natural gas, coming back, I believe—I strongly believe that in the first part of 2027 we will see the first molecules of natural gas extracted from the Neptun Deep that will go into our transport system. Transgaz, our TSO, is making huge investments in order to overtake this new volumes of natural gas, and we have plans to use the natural gas in Romania by increasing our gas-fired turbines instead of coal-fired turbines, replacing them. And one example is the 1.7 gigawatts installed capacity in Mintia that will generate electricity. So using the gas in Romania, mostly, and of course acting as a—as an exporter, original exporter, for additional volumes for Republic of Moldova, as well as Hungary and other countries.

So ambitious projects, keeping on our targets and ambitions regarding the transition, of course having in mind the resources that Black Sea and our country has in terms of natural gas. So it’s, as I like to say, a tailor-made solution for the Romanian energy system.

MATTHEW BRYZA: Yeah, wow, tailor made and really comprehensive in terms of you’ve got the entire value chain that you’re focusing on, not just generation. And we’ll come back to generation and SMRs, by the way, in the next round. But from generation to the grid, I think very often people overlook the critical need for investments in upgrading the grid and don’t include that in the levelized cost of energy, so sometimes you get a distorted vision that—one that I was talking about yesterday, how much more cost-effective onshore wind can be, but you have to take into account those grid investments. And you are, and you’ve got the investment incentives.

Yeah, Matthew?

MATTHEW BALDWIN: Just to throw in a figure, our estimation of the grid infrastructure investment needs in the coming period is something of the order of magnitude—I think it’s 580 billion euros is the figure we’re looking at.

MATTHEW BRYZA: Wow. Wow.

MATTHEW BALDWIN: And of course—

SANJA BOZINOVSKA: But for where? Which countries?

MATTHEW BALDWIN: Sorry?

SANJA BOZINOVSKA: Which region?

MATTHEW BRYZA: For the EU.

MATTHEW BALDWIN: For Europe as a whole.

SANJA BOZINOVSKA: Europe whole.

MATTHEW BALDWIN: For Europe as a whole. I mean, and that’s because of grid, grid integration. I mean, that’s the biggest thing. There’s almost more renewables than the grid can currently handle, and so this is—this is a huge challenge.

Broader investment in infrastructure and energy needs more than 600 billion a year for the coming period.

MATTHEW BRYZA: A year? Wow.

MATTHEW BALDWIN: So checkbooks out, please, ladies and gentlemen.

MATTHEW BRYZA: Wow. Well, let’s stick with you for a second, Matthew, if we may.

MATTHEW BALDWIN: Sorry, yeah. Mmm hmm.

MATTHEW BRYZA: Yeah. And go back just for a moment to natural gas, and the fact that I mentioned before that right now—right now—Southeast Europe is awash, if that’s not a mixed metaphor, with Russian molecules. 2027 is the ambition for the EU to cut out, as you were saying, all fossil fuels from Russia. And what’s happening, I think, often now is that Russian LNG is being landed in other parts of the region, in Europe, and being rebranded as Belgian or Spanish or whatever it is. How do you get at that problem? And will tackling that, the—sort of the identity of molecules, be part of this phasing out of Russian natural gas in 2027, or does it even matter? Does everything kind of work out in the end through some sort of financial transaction?

MATTHEW BALDWIN: Well, we think it matters. I mean, just—it was good of Ambassador Pyatt to be so strong in support of what we’re trying to achieve. It’s worth—I looked up the language the other day we used in the Versailles Declaration in the immediate aftermath of the war. It was very unequivocal. This is twenty-seven heads of state and government, calmly they’re saying the mess that was launched by the invasion—saying we must phase out our dependency on oil, and gas, and coal, as soon as possible. And it’s interesting to look back on what we’ve achieved because—I’ll come to gas in a moment—on coal, it’s over.

MATTHEW BRYZA: Yeah, Russian, specifically.

MATTHEW BALDWIN: Russian coal is over. And coal, by the way, on its way to being over. Oil is down to 3 percent European-wide. That’s concentrated heavily in three member states: Hungary, Slovakia, Czechia. And they are, you know, on the process of coming out. But the sanctions, again, have been—have been effective.

Gas, I think we’ve given the numbers—45 percent down to 15 percent, 8 percent pipeline—but going up again. There’s some particularly local reasons as to why that is. US production dropped off a little bit. There was the outage in Freeport. We saw higher spot market prices in Asia, which drove up demand. But we’re not hiding from the fact that this is stubborn and difficult.

Throw into the mix that we have the transit contract across Ukraine which comes to an end at the end of 2024. We’ve been working intensively with our member states and our partners in European Community countries as well to model the impact of this, and the good news is we think it’s manageable. We don’t see any reason for this to have security of supply or, indeed, price impacts. There’s a global situation, 550 billion cubic meters of LNG, not all necessarily to the region. But given this and our estimations for the forthcoming LNG supply in 2025 to 2028, we think it’s going to be OK.

So what—how do we manage this situation in the future? LNG imports are part of that increase. Year on year, we think it’ll be an additional 2 bcm of Russian LNG coming into the system. And you know, you talk about it being rebranded, but it’s Russian LNG and I don’t think anyone’s pretending otherwise. It’s coming into countries in Northern Europe. It’s coming into countries in Southern Europe. And I don’t know, I have no insight into Gazprom or Kremlin pricing strategies, but it does seem that things are being priced to disrupt investment in things like—to disrupt projects like the Vertical Corridor. It would seem to be the case.

And I—you know, we—encouraging for me as a bureaucrat who’s very committed to this area is what President von der Leyen said in July. You know, she’s had five years or three years battering away on this issue, and she has tied her colors to the mast once again for the next commission, and I quote: “We will ensure that the era of dependency on Russian fossil fuel imports is over once and for all.”

MATTHEW BRYZA: Wow.

MATTHEW BALDWIN: To tumultuous applause in the European Parliament. There’s no backing off of this target.

MATTHEW BRYZA: Yeah, no equivocation. Yeah.

MATTHEW BALDWIN: So we’ve done, if you like, the—some of the easy bits. The last mile will be difficult. We’ve been asked to look at options. Our new incoming commissioner, who’s going to go through his hearings next week, he’s also been charged with this in his so-called mission letter. So watch this space is my—is my cheeky conclusion.

It is very difficult. A molecule is a molecule, as implied in your question. But I’m not convinced, personally, that the traceability issues are going to be so serious. There seems to be less evidence of LNG being transferred in tankers. It’s a technically more complex business than we’ve seen on the oil side. So we are on this issue and we very much need to address it—and we need to address it, again, in partnership and cooperation with other countries in the region. A lot of the gas is coming in—and no blame attached—through Turkey, and we’re looking forward to considering that and discussing it.

MATTHEW BRYZA: Thank you very much. That’s unequivocal. And, yeah, we should in no way underestimate the dramatic progress the European Union has made in these—in these short few tragic years of Russia’s war on Ukraine.

And so, in that mood of geostategy, then, I’d like to turn again to Minister Bozinovska and ask how—now that the name issue is, thank goodness, finally resolved, the name of North Macedonia and that dispute with Greece that lingered way too long is gone—the Vertical Corridor provides a way to—to really to bind North Macedonia and Greece together. You talked about the interconnection that made a little bit of a blip in terms of the European Investment Bank. But from a—from a more geostrategic perspective, how are you envisioning that sort of cooperation with Greece and beyond in terms of the Vertical Corridor that Ambassador Pyatt talked about?

SANJA BOZINOVSKA: So regarding politics is one thing, and then the stability—

MATTHEW BRYZA: Exactly.

SANJA BOZINOVSKA:—and benefits of the citizens, it’s another thing. So we have excellent communication with the Greeks. I just was in—before going to Washington I was in Greece, and we had also very successful meetings with the Greek regulator. And we are also working on market coupling with Greece.

MATTHEW BRYZA: Oh, nice.

SANJA BOZINOVSKA: Yes.

So, regarding the electricity, one, since we are—we want to be in EU, we want—we need to be coupled with one EU member, so we chose Greece. So with energy, we are perfect neighbors, so we are working on the market coupling.

And regarding the infrastructure, it’s very important we are aware and we are—regarding electricity, we are not connected, unfortunately, with all the neighbors. We are missing Albania. So we want to be connected east-west. We have the Bulgaria and North Macedonia. And when we build the transmission line, it will be North Macedonia, Albania, Montenegro, and then there is the underwater cable with Italy. So we also want to be connected both northwest and—north-south, and east-west. So we are planning on this regarding the connectivity.

And regarding the vertical, yes, we are planning, as I said, also to continue with talks with Serbia. And we need just to work on the financing here, since this is just now—we just started. They have—I think they have other sources, but we need to work on the sources, because now gas is not anymore the perfect green solution. However, we need just to secure finance. It’s not a big deal. It’s only twenty-five kilometers. I think we will be successful. So the vertical integration, I think it’s good. And we have support from EU and also from the United States.

MATTHEW BRYZA: Thank you. It’s so refreshing to go from a geopolitical theoretical question right back to the practical, in how do you get it done? And in our time working together with Turkey and Georgia and Azerbaijan, way back when two and a half decades ago, to start talking about what became the southern corridor Baku-Tbilisi-Ceyhan oil pipeline, we always had it in our minds that nothing was going to happen if the projects weren’t commercially—not only commercially viable, but attractive, with the competitive pull on capital, right, for other investments. And that’s what you’re describing, so—

SANJA BOZINOVSKA: And, just not to forget, regarding the cooperation, in June there was one blackout. And it was Montenegro, Croatia, Bosnia, and Albania. So four countries were a couple of hours without electricity. And it is very important to cooperate also on a regional level. And the question is now in ENTSO, in Brussels. And they’re still investigating. It was in June. They said by December they will have the outcome. And we had once also a couple of years ago, and it was in Greece couple of hours. So we just need to be more connected, and we need to communicate more as countries on a regional level, so we prevent this from happening.

MATTHEW BRYZA: Yeah, imagine—

MATTHEW BALDWIN: Just briefly to come in, it’s amazing to hear a minister—we really pay tribute to all the great things you’re doing. But it’s part of a process that we took a decision to start on ages ago, called the enlargement of the European Union, and delighted that North Macedonia is one of the enlargement candidates. And we have a process through what’s called the Energy Community.

It sounds like a commonplace thing, but it’s actually a fairly amazing organization because it’s been working with member states—excuse me—states like soon-to-be member states, like North Macedonia, to go through the painful business of the necessary reforms to meet the acquis, but most importantly to develop this regional cooperation, which you described, which is absolutely central to how the energy single market works. And, for example, why we have an incredibly efficient electricity single market. But it is, as you say, so nice to move from the theory, you know, North Macedonia becoming part of the European Union, to the practical benefits it delivers on the ground. It’s fantastic.

SANJA BOZINOVSKA: There are political issues in this also.

MATTHEW BALDWIN: Oh, no kidding. Yeah.

SANJA BOZINOVSKA: But we try to do the energy—

MATTHEW BALDWIN: If it was easy, we would have already done it, right?

SANJA BOZINOVSKA: Yeah.

MATTHEW BRYZA: That’s right. Exactly. Well, sticking with that theme then, of practicality of investments to power, no pun intended, the energy transition, Deputy Minister Çonkar, as Minister Bayraktar told us yesterday, Turkey now ranks fifth in Europe in installed renewable generation capacity, eleventh in the world as well. Which is amazing, how quickly that’s happened. And these investments are accelerating, and in pursuit of net zero target at the six hundredth anniversary, I guess, of Mehmed Fatih in 2053. So can you—can you describe for us some of the frameworks for stimulating investment in this sector?

AHMET BERAT ÇONKAR: Yeah. As you mentioned, Türkiye ranks fifth in Europe and eleventh globally in terms of installed capacity in renewable energy. The achievement reflects a firm commitment to a cleaner and more sustainable energy future by Türkiye. But it also highlights the scale of the challenges we must overcome to reach net zero emissions. The deployment of renewable energy is one of the key areas of our long-term energy strategy. We have set ambitious targets to increase the share of clean energy in the national energy mix, while reducing the carbon emissions in Türkiye. Renewable energy accounts more than 56 percent of our total installed capacity as of today, and it’s increasing day by day with new renewable energy investments.

As Mr. Bayraktar mentioned yesterday, we aim to add an additional sixty gigawatts of solar and wind capacity within ten years’ time. So it’s a quite challenging objective. And also, we would like to do this in both smaller distributed gigawatt-scale projects. So this is also another challenge for us. For this purpose, we need to commission 3.5 gigawatts solar and 1.5 gigawatts of wind power each and every year. In addition, we aim to reach five gigawatts of offshore wind installed capacity in the coming period. In order to achieve this right now, we are working on some legislation to speed up the investment processes. And it will be soon in the parliament. We are working on it closely right now.

Of course, the transition will not be easy, as it will affect many sectors and will bring many challenges to all. Electricity is a very sensitive issue for all countries. And people are directly affected by the prices, as we think about the inflationary environment also. This is also another aspect. So since transition costs will be reflected in the pricing, all governments will be affected by this issue. So we need to do very good planning in this area. While changing the energy generation portfolio, we also need to change the transmission system. When we reach the maximum renewable capacity, the traditional transmission systems need to change as well.

Since renewable resources can be intermittent, renewable energy, capacity needs to be managed very diligently. There are additional needs, such as a smart grid, digitalization, better management of the demand, and also the storage capacity. Our transmission systems needs to be increased for renewable energy, as I mentioned. We are right now also continuing our discussions on the Mega Grid Project, so that we can increase the transmission capacity with neighboring countries. Another pillar of the electricity sector in terms of renewable energy transformation is the nuclear energy, as mentioned earlier. Türkiye has different nuclear energy projects right now. The first one is under construction in Akkuyu, and the other two are in the negotiation phase with different countries.

We need to add nuclear to energy—our energy mix to reduce the carbon emissions. Akkuyu Nuclear Power Plant will be commissioned next year. It will start commercial production and reach a total capacity of almost five gigawatts within three years’ time, when the four reactors start producing electricity. And afterwards, we would like to quickly start the other two nuclear projects, one in Sinop, one in Tekirdağ. We plan to reach nuclear energy capacity of about twenty gigawatts by the year 2053. We are also following closely SMRs, the small modular reactors, as baseload energy. We plan to add about five gigawatts of capacity, nuclear capacity, in this area to our energy portfolio as well. And also until 2035, we are also planning to invest in hydrogen storage, as I mentioned earlier. And also our Minister Bayraktar, mentioned the importance of the energy efficiency. So we have also a very ambitious plan to develop the energy efficiency in Türkiye.

MATTHEW BRYZA: Thank you. Just to put those numbers in perspective for a second, I mean, so to get up to twenty gigawatts of nuclear power generation, I mean, that’s a huge achievement, right? That’s gigantic. But renewables—I mean, wind and solar—as you said, you’re already at thirty gigawatts. And you’re going to increase by 200 percent before the end of the decade.

AHMET BERAT ÇONKAR: Yes. Sixty gigawatts is in our plans. And this year we are even exceeding this goal.

MATTHEW BRYZA: Wow.

AHMET BERAT ÇONKAR: It’s going to be over five gigawatts this year.

MATTHEW BRYZA: Amazing.

AHMET BERAT ÇONKAR: So hopefully it continues that way.

MATTHEW BRYZA: Really amazing stuff.

AHMET BERAT ÇONKAR: With the new legislation and with the acceleration of the investments, I think we can achieve this.

MATTHEW BRYZA: Yeah, similar, like Minister Bozinovska’s vision too, you’ve got everything, the entire value chain, all taken into account. In a way, I have to say that—having lived here for a while and worked on Turkish energy for, I don’t know, twenty-five years, I’ve never heard until around now such a comprehensive picture.

MATTHEW BALDWIN: It’s very, very impressive, really.

MATTHEW BRYZA: And with SMRs, part of it, let’s ask Mr. Niculescu then about the SMR project in Romania. We heard a bit about it yesterday. It’s such an innovative approach. You’re taking a moribund coal-fired plant, right, a brownfield project, and turning it into an SMR. So, to generate clean electricity. And also I know, because it’s, you know, NuScale you’re working with, an American company, the US Department of Energy is strongly supportive and looking at forming—or, we’ve already formed a strategic partnership between Romania and the US on energy with this NuScale SMR kind of as a centerpiece. So could you let us know the status of that project? And how significant is the SMR project in the overall mix of all those things you’re trying to make happen in Romania’s energy sector?

GEORGE-SERGIU NICULESCU: It’s not an easy job at all. It’s very provocative. It’s very complex. Because we assume the role of being, again, pioneers in this sector. First country in the—in Europe to deploy this type of technology.

MATTHEW BRYZA: And really, the first project in the world, really.

GEORGE-SERGIU NICULESCU: Yes, yes, yes, commercial project, yes. We strongly believe in this project. And I should give you a little bit of context. Romania has huge experience in operating nuclear power plants. We have two reactors in Cernavodă. Both have 1,400 megawatt installed power capacity. And we are planning to double up the size in Cernavodă by adding two more units. You should know the fact that Romania is the single country in the region that is not relying on a Russian, Soviet technology.

We have built these two reactors with Western technology CANDU from Canada. And we are following this tradition in looking into Western technology when deploying also small modular reactors. This is why NuScale was selected. So we have cut off any links with Soviet Union and Russia long time ago. I like to say that nowadays we have saw a divorce between Russian gas and EU economies. We started this nondomestic divorce with resources from Russia a long time ago. In natural gas we produce 85 percent of our needs, so just only 10-15 percent importing.

Coming back to small modular reactors, yes, we are deploying this technology on the land where it used to be a coal-fired power plant. So this is also one step ahead of the transition. The project is doing well. The company—the Romanian company involved in this project told me that engineers are on the site. We heard the extraordinary news from US Ex-Im Bank that they are—they approved finance of around $100 million, again for this project. Very optimistic about reaching the timeline and keeping the project into the timeline that was proposed. From a governmental point of view, huge political backup for this—for this project, in terms of regulator authority, of course, sustaining this project with all that it needs. Also, not only this project, but the full nuclear program that Romania has.

MATTHEW BRYZA: You know, impressive. You really are the pioneers globally on this project. Cosmin Ghita is an old friend of mine. I’ve been following this year, after year, after year. And you’re there. You’re on the edge of actually getting the investment. And just one more point to highlight that you made is how important it is to have the personnel who know how to operate nuclear generation, right?

GEORGE-SERGIU NICULESCU: Of course. Of course.

MATTHEW BRYZA: There’s not many countries that can do that. And those sorts of experts are in really short supply, so.

GEORGE-SERGIU NICULESCU: Yeah, well, we have good universities. We have people that were trained with skills. Of course, the workforce is essential in all the energy sector. And we are making a lot of efforts to stimulate students to follow up these career programs. Cosmin has a lot of programs in which he’s gathering students and guiding them towards this career. And he’s doing a good job.

MATTHEW BRYZA: Yeah. Great to hear. Great to hear. You mentioned timeline. We’re right on time. We have time for some questions, if there are some in the audience, and then there’ll be a coffee break for fifteen minutes, plus whatever time is left over from the questions. So I can’t see so well. Is any—oh, there’s one. Yeah. Is that John?

Q: It is indeed.

MATTHEW BRYZA: Hey, John. Good morning.

Q: Yeah, I know this problem. John Roberts, with the Atlantic Council and with the Institute of Energy in South-East Europe.

Question for Matthew Baldwin. I’ve just been in Azerbaijan several times researching a paper on Azerbaijan’s energy transition. And there’s one clear point that comes through from everybody, from the president down the ministry of energy, both foreign and domestic energy producing companies. Which is, they need investment to develop the gas required to meet the MOU of July 2022 for doubling Azerbaijani exports to the European Union. And, of course, to pay for the expansion of the Southern Gas Corridor that that entails.

And they say that needs long-term agreements which, in effect, means long-term contracts. But that all they get, as one corporate source put it, from the European Union was offers of three to five years, which is not enough to secure the kind of investment they need for the billions of dollars required for production and transportation expansion. Can you tell us what is the EU’s attitude to what is necessary to secure that kind of investment, and therefore the kind of imports that you would be looking to receive from Azerbaijan over the next three to five years?

MATTHEW BALDWIN: Well, again, you’re talking, John, I think about, here, what they’re hearing from companies in terms of commitments to contracts, right? Yeah. I mean, again, it’s one of the most jealously guarded commercial things. Companies do their contracts. I’m not party to them. Member states, governments, are not party to those contracts. So I can’t speak to that.

I would actually refer to the remarks of the Turkish deputy minister, that we need to work closely together, all partners, to secure this very important doubling of the expansion of the SGC. And I would just—you know, Matt, you felt I was making news, which slightly worries me. I don’t think I am making news. The European Union is not a barrier to companies taking longer-term contractual arrangements. Again, and I would observe that it is often the portfolio players, sometimes the big midstream companies, for a reason. They’re absorbing the big commercial risk in taking on—and this applies every bit as much to the Southern Gas Corridor as it is to US LNG projects and elsewhere.

It’s a difficult project. I think everyone’s always acknowledged that. We are working very hard with our partners in Azerbaijan. I know that the companies are working extremely hard too. And I’m encouraged here today to hear the strong commitments from the Turkish side, which it’s a no brainer, but I’m very glad that you’re also working hard on it. So I’m sorry that’s kind of a non-answer, John, to a good question. But that’s all I got.

MATTHEW BRYZA: No, it’s not a non-answer, actually. It’s a good answer, because you make the point that the big portfolio buyers of natural gas are able to balance out their portfolios, yeah. And my point was not that there’s any discouragement by the European institutions of LNG investment or natural gas investment, but it’s just that there’s a political fear that there would some change.

MATTHEW BALDWIN: There will be less gas over time, but there will still be considerable volumes under the—under all of our modeling. And someone was talking what’s the difference in a scenario, and a forecast, and a target? I’m not getting into that. But in all our scenario modeling, you know, there’s a lot of gas to be contracted and used in the European Union through 2049.

MATTHEW BRYZA: Great. Former Minister Palacio. And I think this will probably be the last question, because we’re just—

Q: I have two questions, one for the European Commission and one for the Romanian regulator. For the European commissioner, it’s a follow-up, in fact, to this question. We have had two great reports, one by former Prime Minister Letta, and one by former Prime Minister Draghi—the two Italians. There are other countries—

MATTHEW BALDWIN: They have a monopoly on reports, yeah.

Q: Yeah, on the report. Both of them highlight the need for the European Union to have the energy union. We have been—you have been speaking about just an electricity internal market. We are not there, and frankly we are far.

My question to the European Commission, the origin of that is not other that the treaty keeps the energy mix to each member state does with the energy mix whatever the member state wants. But on terms of environment, climate, this is the—this is—the European Commission decides. How are you going to overcome, convince? What are you going to do to have the member states coming together to have an energy mix? Because you speak about in the European Union gas. I mean, the European Union, gas, each one does whatever each member state wants, for the moment.

My question to you is linked to that. You have highlighted that you have looked successfully for some financing from the Export-Import Bank for your nuclear projects. Have you found any financing from the European Union Next Generation, from the European Investment Bank, or other European sources? And if not, tell us what was your—I mean, I’m giving the answer. Excuse me.

MATTHEW BRYZA: Thanks. We got a minute for each of you. Yeah, please.

MATTHEW BALDWIN: Oh, no question from Ana can we answered in a minute, but I’ll do my best. There’s a tendency now in Brussels, for every sentence to begin: As Mario Draghi says, comma. But he’s put his finger on a true point, as you’ve identified, which is the price of energy is elemental to the competitors of the European Union. It’s elemental in the short term, and, of course, it’s elemental in the long term, which is really one of the key things behind the famous energy trilemma.

We have—the incoming Commission has pledged itself to go further with the energy union—a true energy union is the phrase that’s been used. And part of that is about the governance. And this, I think, gets to your point. There’s going to be no competence grab, as we call it, in the European Union, where we say, right, member states, we will decide on your energy mix. That’s absolutely going to remain for them. But where this meets is in a bureaucratic thing called national energy and climate plans—I think North Macedonia, you’re doing this now—where you identify, each member state, how you’re going to meet the energy needs from energy security perspective and, of course, the mix that’s required to deliver on the ambitious decarbonization targets.

So, I mean, that’s not going to change. We have to work to deliver on this much more closely with every member state. These NECPs, as we call them, have to become investment plans. Back to my point, about the—yes, I’m sorry. But we also have to work with all levels of society—with regions, with cities—to deliver on this. Thank you. Sorry for eating up so much time.

MATTHEW BRYZA: Thank you. Perfect time. Mr. Niculescu—

GEORGE-SERGIU NICULESCU: Regarding financing the SMRs and the Doiceşti project, I’m well aware that—you know by now that this is a pioneer project. It needs a lot of backup, political, governmental backup. And I’m sure that after the project gets mature, a lot of financial institution, banks, international banks, will jump into this project and deliver finance. Until now, it is good that we have Ex-Im Bank on board with this project.

MATTHEW BRYZA: Great. Thank you. Thank you for your succinct, clear, and informative reply. So that’s the end of our panel. We now have a fifteen-minute coffee break before the next session, which is Disruption of Energy Security in Uncertain Times, moderated by our dear friend Mehmet Oğutçu. But before you go, I really want to thank these brilliant, strategic, clear, candid, and practical colleagues here on the panel for a discussion that, I think, enlightened everybody. Thank you very, very much.

Watch the full event

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After accounting for fifty-two-week averages of imports and exports, as well as current inventory levels, the SPR can cover 23.3 weeks’ worth of net oil imports, a historically elevated figure compared to the average of 16.9 weeks since 2009. Nearly 105 million barrels from the SPR could be released without falling below post-2009 historical levels of net import cover. Alternatively, 205 million barrels could be released without falling below the 10.8 weeks of net import coverage that prevailed, on average, from 1991 to 2008.

The United States’ SPR has shifted since the early 2010s, when it held nearly 730 million barrels, covering 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 respond to Russia’s full-scale invasion of Ukraine and its effects on energy markets. Since mid-2023, the United States began slowly restocking the SPR, and it has added nearly 40 million barrels to inventories, which currently stand at nearly 383 million barrels.

While SPR inventories are at 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 import 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 23.3 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 is projected to increase by more than domestic petroleum products demand again in 2025. 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, will remove an important takeaway constraint from the Permian Basin, improving US oil production fundamentals and sending domestic output higher. Finally, US petroleum products consumption in 2025 is expected to increase only slightly, as domestic gasoline consumption may have peaked already. Accordingly, the US Energy Information Administration’s October Short-Term Energy Outlook projects US net crude oil imports will decline to 1.46 million barrels per day in 2025, enabling the United States to draw down inventories even further while still maintaining net import coverage.

In the coming weeks, the unfolding Middle East crisis could dominate oil markets. A significant escalation between Israel and Iran could spike oil prices. Despite uncertainties, US policymakers have ample SPR reserves and should use them if disruptions occur.

Joseph Webster is a senior fellow at the Atlantic Council. This article represents his personal opinion. 

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On September 30, GCH/IPSI nonresident fellow Parker Novak was quoted in The Australian on the strategic significance of the Greater Sunrise project for Timor-Leste and Australia. He noted that despite doubts about the project’s feasibility, Greater Sunrise remains a critical factor influencing the future of bilateral relations. Novak highlighted that this is the most important variable in shaping the Australia-Timor relationship as they work toward developing energy resources in the region. 

Fellow

Parker Novak

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Indo-Pacific Security Initiative Scowcroft Center for Strategy and Security

Australia Democratic Transitions

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The Toropets raid was the latest Ukrainian success in an ambitious campaign of long-range drone strikes that has been steadily gaining momentum throughout the current year. Ukraine launched its air offensive in January 2024, and has since hit dozens of high-value targets in Russia including oil refineries, air bases, armament production facilities, and military sites.

The increasing frequency and effectiveness of these drone attacks would appear to vindicate Ukraine’s earlier decision to focus its limited resources on boosting the domestic development and production of long-range drones. Ukrainian attacks are now visibly expanding in scale as more drones are produced, and are also routinely reaching targets deep inside Russia over one thousand kilometers beyond the Ukrainian border.

In a sign of the rapidly advancing drone technologies that are now becoming available to the Ukrainian military, the country recently unveiled its first missile drone. Dubbed “Palyanytsia” in honor of a traditional Ukrainian bread that invading Russian troops find notoriously difficult to pronounce, this missile drone was welcomed by Ukrainian President Volodymyr Zelenskyy in August 2024 as “our new method of retaliation against the aggressor.”

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Ukraine’s long-range drone strike campaign has a number of goals. The most immediate objective is to undermine the Russian war machine by targeting military infrastructure and the country’s economically vital energy industry.

Strikes on Russian air fields have been credited with damaging a number of military planes used in the Kremlin’s bombing campaign of Ukraine’s cities and civilian infrastructure. Meanwhile, Ukrainian officials believe the recent attack in Tver region destroyed significant quantities of Russian munitions including artillery shells and missiles.

At this stage, Ukraine’s bombing raids on Russian oil refineries remain on an insufficient scale to plunge the Kremlin’s vast energy industry into crisis. However, Ukrainian drone attacks are frequently followed by media reports of decreased Russian refining capacity.

Russian officials have remained characteristically tight-lipped over the impact of Ukraine’s air offensive, but there are some indications that the Kremlin is concerned. In March 2024, Moscow imposed a six-month ban on gasoline exports that has since been extended to the end of 2024 in an apparent bid to prevent domestic shortages and price spikes. Russia’s Federal State Statistics Service has also reportedly stopped publishing oil production data.

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Kyiv’s drone strike strategy also has important political objectives. Since the start of Russia’s full-scale invasion, Ukraine’s partners have imposed restrictions on the use of Western-supplied weapons inside Russia. This includes a ban on long-range missile strikes that is seen as particularly damaging by officials in Kyiv, who argue that it prevents them from targeting the air bases and military sites used by Russia to attack Ukraine.

The caution on display in Western capitals reflects widespread concerns among Ukraine’s partners over a possible escalation in the current war. Moscow has skillfully exploited these fears, using a combination of nuclear threats and talk of Russian red lines to scare Western leaders and ensure that current restrictions remain in place. Indeed, Putin recently warned that allowing long-range strikes against Russian targets would mean that NATO was “at war” with Russia.

By hitting targets deep inside Russia, Ukraine hopes to convince its allies that their fears of escalation are greatly exaggerated and expose Putin’s red lines as a bluff designed to intimidate the West. This argument is supported by numerous other examples of Russian red lines being crossed without consequence, such as the partial destruction of the Russian Black Sea Fleet and Ukraine’s recent invasion of Russia’s Kursk region.

While there has yet to be any breakthrough in Kyiv’s diplomatic push for an end to restrictions on long-range missile attacks, recent reports suggest that it may now be only a matter of time before Ukraine receives the green light for a least some categories of long-range strikes inside Russia. If permission is finally granted, this would dramatically increase the potential impact of Ukraine’s air offensive and create significant logistical headaches for the Russian military.

Russian commanders are currently struggling to provide sufficient air defense coverage to counter the existing threat posed by Ukraine’s increasingly sophisticated drone fleet. With the bulk of Russia’s available air defense systems currently deployed in Ukraine, the Kremlin lacks the additional resources to protect the country’s vast airspace. If Ukraine continues to expand drone production and also secures permission for strikes inside Russia with Western weapons, these air defense shortages will likely become even more apparent.

Ukraine’s drone campaign is already bringing the war home to the Russian public and undermining the Putin regime’s efforts to shield domestic audiences from the negative consequences of the invasion. While the Kremlin maintains tight control over the Russian information space and can easily suppress negative news coming from Ukraine, it is much more challenging to disguise regular air raid alarms and exploding military depots in towns and cities across western Russia.

Ukraine’s long-range drone campaign has been one of the key developments of the war in 2024. It has provided Kyiv with a partial solution to its own lack of domestically-produced missiles, and has helped Ukrainian commanders address the challenges created by the risk-averse West’s fear of escalation. Ukrainians are now hoping that by flying their long-range drones straight through Vladimir Putin’s red lines, they can convince Western leaders to abandon the failed doctrine of escalation management and lift restrictions that protect Russia while preventing Ukraine from defending itself.

Giorgi Revishvili is a political analyst and a former senior advisor to the Georgian National Security Council.

Further reading

UkraineAlert Sep 19, 2024

Compromising with the Kremlin in Ukraine will only embolden Putin

By Kateryna Odarchenko, Elena Davlikanova

JD Vance recently claimed a Trump peace plan would include letting Russia retain occupied areas of Ukraine. But any concessions to the Kremlin will only embolden Putin and invite more war, write Kateryna Odarchenko and Elena Davlikanova.

Conflict European Union

UkraineAlert Aug 21, 2024

Invasion? What invasion? Putin is downplaying Ukraine’s Kursk offensive

By Peter Dickinson

Vladimir Putin’s efforts to downplay Ukraine’s invasion of Russia have severely dented his strongman image and make a mockery of the West’s escalation fears, writes Peter Dickinson.

Conflict Defense Policy

UkraineAlert Sep 5, 2024

Too many still view Ukraine through the prism of Russian imperialism

By Olesya Khromeychuk

Far too many Western newspaper editors, academics, and cultural commentators continue to view Ukraine through the distorting lens of Russian imperialism, writes Olesya Khromeychuk.

Civil Society Conflict

The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

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Strategic assessment

Since the Russian invasion of Ukraine, the European Union has undergone a profound transformation in its energy policy to reduce dependency on Russian natural gas. In this evolving policy landscape, Turkey has emerged as a key partner, strategically positioned to curb Russian commercial influence in Europe and the Black Sea region while maintaining its balancing act. In this vein, the European Union’s (EU’s) regulatory advancements, exemplified by the REPowerEU plan, the EU Toolbox, and the European Green Deal, have significantly reshaped energy procurement strategies, emphasizing diversification and security. Turkey’s recent natural gas export agreements, primarily those with Moldova, Romania, Hungary, and Bulgaria, underline its critical role in enhancing European energy resiliency. Moreover, Turkey’s robust liquefied natural gas (LNG) infrastructure and its potential for future projects fortify the energy security of both European nations and Black Sea littoral states. Crucially, Turkey’s nuanced balancing act in its foreign policy, encapsulated in its natural gas policy, deftly integrates price rationality with geopolitical strategy, enabling it to govern complex international dynamics effectively. Turkey’s approach ensures flexibility in energy sourcing, thus reducing dependency on any single supplier while leveraging the country’s geopolitical position to establish a resilient energy policy. This policy is characterized by agility and adaptability, responding swiftly to regional and global natural gas trade, and enabling Turkey to navigate the fast-changing dynamics in natural gas policymaking. Last but not least, even with flexibility tools like LNG terminals and/or underground storage, high-level dependency in imports on a single supplier poses energy security risks. Since securing LNG and pipe gas quickly is not possible, creating a balanced import portfolio secures countries from short-term energy shocks, which may have destructive effects on market participants. As Turkey has also been developing nuclear projects with Russia, a delicate balance in its energy relations should be carefully maintained.

Preinvasion state of natural gas trade between Europe and Russia

Understanding the evolution of the European natural gas strategy provides important context for Turkey’s ongoing ties with EU nations, especially given the direct implications for EU gas supplies following Russia’s invasion of Ukraine. Prior to Russia’s invasion of Ukraine in February 2022, the EU relied heavily on Russian natural gas, representing 40 percent of imports,¹ or 150 billion cubic meters (bcm), in 2020.

With a total annual gas demand of approximately 400 bcm, the EU sourced only 10 percent domestically, and supported limited LNG infrastructure, before the war in Ukraine. In 2021, the EU imported 155 bcm of natural gas from Russia,² with the number dropping to 80 bcm in 2022,³ and 43 bcm in 2023. As a percentage, the EU’s reliance on Russian gas has decreased from 45 percent of total imports in 2021 to 15 percent in 2023. These radical policy measures, supported by technical and commercial actions, represent the EU’s renewed strategy against reliance on Russian gas.

During this period, the EU initiated a strategic transition from pipeline gas to LNG,⁴ with US LNG imports accounting for 44 percent in 2022 and 48 percent in 2023. Qatar, Algeria, and Nigeria have also become significant LNG suppliers, contributing 12.1 percent, 9.4 percent, and 5.6 percent, respectively. Despite a total reduction in pipeline gas imports, EU countries still received 17.8 bcm of LNG⁵ from Russia⁶ in 2023, representing 6.1 percent of total gas demand. In the infrastructural axis, the EU continues to sustain its ambitious investment plans for expanding LNG import capacity.

In line with the ongoing high investments in LNG infrastructure, the EU increased its LNG import capacity by 40 bcm in 2023, with plans to add another 30 bcm by 2024,⁷ though this infrastructure is still under construction. The share of LNG in the EU’s gas supply rose from 20 percent in 2021 to 41 percent in 2023, reflecting a radical diversification of energy sources in response to the conflict in Ukraine.

Importantly, while the EU continues to purchase Russian LNG via Novatek, the fourteenth sanction package,⁸ which was established in June 2024, fully prohibits all forms of reexport agreements. This measure will prevent Russian LNG carriers from utilizing the EU’s developed LNG infrastructure in the near future.

Finally, the majority of the EU’s dependence on Russian gas was based on long-term natural gas pipelines. Notably, historical pipeline agreements, such as the Gazprom-Naftogaz deal, allowed Russian gas transit through Ukraine. This $7 billion agreement⁹ aimed to transit 225 bcm from 2020 to 2024. Post-invasion reductions led Naftogaz to seek international arbitration against Gazprom, and the collaboration will no longer exist after 2024.

Other widely discussed and criticized projects within the EU were Germany’s Nord Stream pipelines, which have become inoperable. The Nord Stream 1 pipeline began operations in 2011, and the proposed Nord Stream 2 aimed to double the capacity to 110 bcm per year. German Chancellor Olaf Scholz initially supported Nord Stream 2, like his predecessor,¹⁰ Angela Merkel, despite warnings from the United States, which argued that the project created a power asymmetry in favor of Russia. Despite significant technical discussions on this asymmetry within the transatlantic community, the project was halted only following the invasion. The damage to Nord Stream 2 and the cessation of Nord Stream 1 exposed vulnerabilities in Germany’s gas supply, prompting the EU to rapidly increase investments in LNG infrastructure.

The EU’s legislative actions to diminish reliance on Russian natural gas

In October 2021, the European Commission introduced a comprehensive “toolbox”¹¹ designed to help EU member states address rising energy prices and bolster energy supply security by reducing dependence on Russian natural gas. Key measures included enhancing gas storage efficiency, establishing a collective gas purchasing platform, and reassessing the EU’s electricity market with the support of the Agency for the Cooperation of Energy Regulators (ACER).

In April 2022, the EU launched the EU Energy Platform¹² to focus on demand aggregation, joint purchasing of non-Russian gas, efficient use of natural gas infrastructure, and extensive international outreach. This platform aims to mitigate intra-EU competition, diversify supply chains, and reduce reliance on Russian energy sources in a coordinated and multilateral manner.

Following Russia’s invasion of Ukraine in February 2022, European nations, particularly Germany, intensified efforts under the REPowerEU plan¹³ to reduce dependence on Russian gas. Introduced in May 2022, REPowerEU aims to eliminate reliance on Russian fossil fuels by 2027 by emphasizing energy efficiency, transitioning to renewable energy sources, and diversifying natural gas imports. These policy measures include nationalizing Gazprom’s storage facilities to safeguard German national security.

In conjunction with the regulatory restrictions on Russian facilities, the EU updated the Renewable Energy Directive,¹⁴ setting a 45 percent renewable energy target by 2030. The European Commission’s classification of natural gas as “green”¹⁵ facilitated the expansion of LNG import capacity, aligning with REPowerEU’s objectives for non-Russian gas procurement. Clearly, the EU has implemented a comprehensive and systematic policy program that combines the EU Toolbox with the REPowerEU plan.

Evolution of Germany’s natural gas tactics

Reflecting current geopolitical power shifts and energy security concerns within the EU, there exists a concerted multilateral effort and intergovernmental approach to reducing Europe’s reliance on Russian natural gas through a variety of measures. Nevertheless, Germany’s energy policy has notably differed from those of other European nations—reflecting a unique relationship with Russia over time and overlooking the importance of energy diversification in favor of strategic use of materials, primarily pipelines, in its natural gas trade, initially with the USSR and subsequently with the Russian Federation.
 
By 1981, Germany’s natural gas trade with the USSR had reached 17.2 bcm,¹⁶ without any substantial local technical improvements. Another critical twenty-five-year contract in 1981 established an annual export of 10.5 bcm.¹⁷ After the Berlin Wall fell and Germany reunified, the USSR began supplying about 30 percent of West Germany’s natural gas needs. By 1990, Soviet gas exports to Western Europe had grown drastically to 63 bcm.¹⁸

During this period, Germany faced two significant political-economic challenges in its dealings with Russia. First, the USSR engaged in barter trade, exchanging natural gas for steel pipes, pipe-laying equipment, and other related infrastructure materials with Germany via its companies. Second, Germany leveraged its robust domestic iron and steel sectors to secure cheap Russian natural gas, which it then sold to its European allies.

This approach greatly expanded Germany’s economic reach and indirectly subsidized gas prices for other European countries by maintaining dependence on Russia as the primary natural gas source. A similar mindset prevailed in many Germany-Russia natural gas projects—until Russia’s invasion of Ukraine, which prompted a significant shift.

End of an era: Russia’s 2022 invasion cuts historic gas bonds with Germany

Germany’s reliance on Russian natural gas, a legacy of the USSR-era pipe-for-gas agreements,¹⁹ conflicts with the essential principle of energy diversification. It is best exemplified by its pre-invasion support for Nord Stream 1 and 2, which represented a total capacity of 110 bcm yearly and would have made Germany unilaterally dependent on Russian gas as a single source, without alternative investments such as LNG infrastructure and gas storage. Germany’s reassessment led to the implementation of the EU Toolbox and REPowerEU, which are aligned with the Green Deal’s targets and green economic model.

In reaction to escalating energy security concerns, Germany has accelerated its diversification efforts by investing in LNG infrastructure, notably acquiring four floating LNG storage and liquefaction facilities. In aggregate, Europe’s LNG investment is poised for considerable expansion. Currently, there are thirty-seven operational import terminals:²⁰ eight newly commissioned, four expanded in 2022 and 2023, thirteen new terminal projects under construction, and four existing facilities with planned expansions.

Turkey and Germany: Contrasting approaches to natural gas

Within the transatlantic community, Turkey, much like Germany, has faced criticism for its reliance on Russia. Nonetheless, Turkey and Germany, as NATO allies, exhibit starkly divergent strategies in their approaches to natural gas procurement and energy security. Reflecting Turkey’s balancing act in its natural gas policy, Ankara has historically pursued a multidimensional foreign policy that is sensitive to price fluctuations and geopolitical shifts from the Black Sea to Europe.

This approach began in earnest in 1986 under then-President Turgut Özal, whose neoliberal vision led to market-driven strategies that reshaped Turkey’s natural gas trade mindset. A decisive point was reached in 1987, when the state-owned BOTAS Petroleum Pipeline Corporation initiated its first gas imports²¹ from the USSR, marking the start of Turkey’s strategy to procure natural gas internationally. This was followed in 1988 by the beginning of LNG purchases from Algeria,²² diversifying further in 1995 with a long-term LNG contract with Nigeria at Marmara Ereğlisi, Turkey’s first LNG terminal.²³ The deal with Nigeria is widely believed to have been insurance in case of Russian gas cuts.

Turkey’s natural gas procurement history contrasts strongly with Germany’s energy policy, which has been centered on Russian natural gas and offered limited alternatives like LNG infrastructure. Germany’s dependence was highlighted during Russia’s irredentist moves in Georgia in 2008 and Crimea in 2014, and lastly, Russia’s invasion of Ukraine, delineating the vulnerabilities inherent in this reliance. Germany’s turning point came quite late, in 2022, when it implemented the EU Toolbox, REPowerEU, and the Green Deal to diversify its energy sources and develop LNG capabilities.

Amid the varied landscape of energy strategies, it is essential to underscore that Turkey distinctly avoided the trade of strategic equipment, such as Germany’s pipe-for-gas strategy, which set the stage for advancing Russian influence in Europe through its pipelines and storage facilities. For more than fifty years, Turkey’s multidimensional approach has been a cornerstone of state policy, beginning with engagement with international markets in the 1980s. This strategy effectively melds considerations of price rationality and ongoing geopolitical risk assessment, integrating them in the foreign-policymaking process through a meticulously managed balancing act. (See Part 1 for more on diplomacy and dialogue.)

In line with this balancing act, Turkey expanded its LNG import capabilities and infrastructure, demonstrating a proactive and versatile approach that has been adaptable to price volatility since the first day of its natural gas procurement. This multidimensional strategy has always ensured flexibility and security in its energy supply and underlined Turkey’s aim of diversifying its energy sources without becoming dependent on fixed infrastructural ties, the dangers of which can be seen in Germany’s delayed response to diversifying away from Russian natural gas infrastructure.

Turkey’s policy and interests in the Black Sea region

From the 1980s to the 2020s, Turkey’s natural gas policy has consistently involved incorporating delicate balancing acts into its contracts with other nations. Between 2010 and 2023, under the leadership of Hakan Fidan at the National Intelligence Organization (Milli Istihbarat Teşkilatı; MIT), Turkey demonstrably enhanced the technical capabilities²⁴ of its foreign operations within the security sector, making the security bureaucracy one of the key decision-makers of foreign policy. In June 2023, Fidan was named minister of foreign affairs.

Fidan’s vision for Turkish foreign policy is informed by the concept of complex adaptive systems, leading him to move away from traditional definitions²⁵ of international systems, whether unipolar, bipolar, or multipolar. He views the international system’s complexity as a call for agile policymaking, a strategy that echoes Özal’s nuanced approach. Notably, Özal advanced Turkey’s strategic interests by securing pipeline gas agreements with the USSR while diversifying energy sources (e.g., LNG imports, Marmara Ereğli terminal). Fidan, too, combines in-depth geopolitical analysis with a systematic decision-making process, skillfully addressing both economic and security challenges.

Prompted by geopolitical tensions originating in Syria after Turkey downed an SU-24 type Russian jet in 2015,²⁶ a critical reassessment of the nation’s substantial reliance on Russian gas, which had previously constituted over 50 percent of its total gas imports, became a focal point of Turkish foreign policy.

This strategic reconsideration sparked a vigorous public and governmental debate, which in turn accelerated significant investments in Turkey’s LNG import infrastructure. In this vein, the transmission capacity of Turkey’s natural gas networks has expanded, with current daily gas entry capacity exceeding four hundred thousand cubic meters (mcm) daily. Turkey is actively working to increase its natural gas storage capacity to at least 20 percent of its annual consumption.

Significant steps in this direction include the deployment of three floating storage regasification units (FSRUs) and upgrades to the total capacities at LNG terminals, now totaling approximately 156 mcm per day. These developments are also in line with the goals set forth by Turkey’s Ministry of Energy, led by Alparslan Bayraktar, following the election last year,²⁷ to further secure the nation’s energy supply and diversify its sources, ultimately aiming to elevate total capacity to over 500 mcm per day from 2023 onwards.²⁸

Since 2015, Turkey has decisively shifted away from an overdependence on Russian gas. Nonetheless, the implications of Turkey’s balancing act in natural gas contracts may vary in response to price fluctuations and geopolitical assessments, as can be observed in the comparative supply strategies between 2020-21 and 2021-23.

Rising through the ranks of LNG importers in Europe (2020-21)

Turkey’s development of its LNG infrastructure facilitates the implementation of its balancing act in natural gas contracts, enabling it to sign LNG contracts along with pipelines. For instance, during the COVID-19 pandemic between 2020 and 2021, Turkey’s approach to securing its natural gas needs via LNG contracts was notably a consequence of its traditional policy of price rationality. In accordance with that policy, Turkey positioned itself as the fourth-largest LNG importer in Europe with an increase of 1.3 million metric tons in 2020.²⁹

This positioning entailed a shift toward spot market purchases rather than long-term commitments, as global gas prices plummeted due to decreased demand on production cycles. During that time of pandemic lockdowns, Turkey capitalized on these lower prices to enhance its energy security without binding itself to long-term agreements. The flexibility of relying on spot market LNG allowed Turkey to manage its energy costs effectively during a period of high economic and global uncertainty.

Adapting to market shifts brought piped gas to the fore (2021-23)

From 2021 to 2023, Turkey shifted its natural gas procurement strategy, increasingly favoring contracts through pipelines with suppliers like Russia, Iran, and Azerbaijan. In 2022, the total volume of natural gas imports to Turkey reached 54.66 bcm, with a substantial 72.25 percent being transported via pipelines.³⁰ This reflects a strong preference for pipeline-based deliveries over LNG, which accounted for only 27.75 percent of imported natural gas.

By 2023, this preference was evident as Russia became Turkey’s predominant energy supplier, providing 59.14 percent³¹ of its energy imports by October, according to data from the Energy Market Regulatory Authority (Enerji Piyasası Düzenleme Kurumu; EPDK). The shift in a very short period from LNG to pipeline contracts was a clear demonstration of Turkey’s balancing act in a multidimensional era, addressing the complexity of economic and security challenges. It also showcased Turkey’s agile approach to the consistently changing international system. This shift was driven by a combination of factors, including energy market price stabilization, increased demand in the LNG sector, and a gradual increase in natural gas prices.

Examining the nuances of Turkey’s current energy policy

To fully understand the implications of Turkey’s balancing act in natural gas procurement, it is essential to examine the broader context and current dynamics of the Turkish natural gas and energy market. Turkey’s energy policy has undergone a significant evolution across two distinct phases, as defined by Bayraktar,³² each designed to effectively respond to both global shifts and domestic needs.

Energy transition 1.0: Liberalization and privatization (2002-17)

The initial phase began with the ascent of the Justice and Development Party (Adalet ve Kalkınma Partisi) to power in 2002, focusing on liberalizing and privatizing the energy sector. This era ushered in over $60 billion in investments, dismantled monopolistic structures, and cultivated a more transparent and competitive market, thereby enhancing innovation and efficiency.

Energy transition 2.0: Localization, improvement, market predictability (2017-23)

This second phase prioritized enhancing the security of supply, localization, and market predictability. During this period, Turkey significantly expanded its LNG capabilities, incorporated new infrastructure such as FSRUs, and made a major natural gas discovery in the Sakarya gas field, all of which substantially strengthened domestic resources and supply security. Despite these advancements, challenges persisted, notably the continued dominance of state-owned BOTAS in the natural gas sector, which impacted market liquidity and predictability.

Energy transition 3.0: Decarbonization, decentralization, digitalization, and diversity (2023-35)

Currently, under the continual impacts of global regulations on energy markets, some industry experts, including myself, argue³³ that Turkey is in the midst of a third phase, dubbed the smart energy transition, which emphasizes decarbonization, decentralization, digitalization, and diversity (the 4Ds).

This phase aims to ensure secure energy supplies, diversify the energy mix, and position Turkey as a central energy hub between Asia and Europe. A significant objective within this framework is the development of green and blue hydrogen technologies, with a target of achieving five gigawatts (GW) of electrolyzer capacity by 2035, highlighting Turkey’s commitment to renewable and sustainable energy solutions.

Understanding the nuances of each transition era in Turkey’s energy policy is crucial to grasping the strategic shifts made as part of its balancing act and how they have shaped its current energy landscape. As Turkey continues to evolve its energy strategy, appreciating these nuances will be key to achieving a resilient and diversified energy future.

Potential areas of Turkish-European cooperation

Turkey and the EU are on the cusp of developing a deeply interconnected partnership, centered around natural gas and renewable energy sources, and set against a backdrop of shifting regional powers in the international arena. Despite the negative political climate³⁴ that has persisted between the EU and Turkey for almost ten years, their commercial relations continue to strengthen, exemplifying a new model of bilateral governance marked by transactionalism.

Within this governance framework, Turkey’s strategic position as a NATO member enhances its role as a critical energy conduit between East and West, providing a unique opportunity to develop energy cooperation that could significantly impact energy security and economic interdependence throughout Europe.

Meanwhile, as Russia redirects its natural gas exports to new markets like China, India, Pakistan, Azerbaijan, and Turkmenistan, in response to strained relations with European nations, Turkey continues to maintain strong natural gas trade links with both Russia and the EU.

Despite Russia’s attempts to overtake Turkey’s cultural and political ties with Azerbaijan and Turkmenistan to establish alternative gas routes, the robustness of Turkey’s trade relationships emphasizes its key role in the global energy market.

In this geopolitical setting, this intricate chessboard showcases Turkey’s balancing act, as it incrementally challenges Russian market dominance in Europe by negotiating lower gas prices, while serving as a crucial conduit for transporting piped gas through both the Trans-Anatolian Natural Gas Pipeline (TANAP) and the Trans Adriatic Pipeline (TAP), which are carrying only Azerbaijani gas being produced in Shah Deniz field and non-Russian LNG to Europe through non-Russian agreements.

At this juncture, Turkey’s delicate balance between these dynamics not only demonstrates its capacity for multidimensional governance, but also has the potential to diminish Russia’s influence in global markets over the long term as a unique member of the Alliance.

Integrating Black Sea and European energy security: Turkey’s strategic influence

Turkey’s energy policy, including leveraging natural gas and renewables, holds strategic importance. Establishing a Turkey-EU natural gas trade axis could diminish Russian influence/control³⁵ over Eastern and Central Europe while improving and formalizing relations with the EU, potentially opening doors to cooperative ventures in renewable energy. At this point, opening an energy chapter for official negotiations on EU accession will help both sides further harmonize energy regulatory frameworks as well as energy policies. Focusing on enhancing stability in the broader Black Sea region through natural gas, Turkey (via BOTAS) has secured significant natural gas export agreements since 2022 with several Eastern and Central European countries including Moldova, Romania, Hungary, Bulgaria, and potentially Greece through the Bulgarian agreement.
 
Building on this strategy, BOTAS aimed to secure new natural gas export agreements by leveraging its infrastructure investments, advanced transmission system, geographical location, and robust infrastructure to meet the natural gas demand of Eastern and Central Europe. As part of this strategy, BOTAS and Moldova’s East Gas Energy Trading agreed to export two million cubic meters³⁶ of natural gas daily to Moldova starting in September 2023. This translates to approximately 0.73 bcm annually, or about 25 percent of Moldova’s annual natural gas³⁷ consumption.
 
Similarly, Turkey’s strategy to secure Central European energy and increase Romania’s energy resiliency against Russian influence resulted in another export deal with Romania in October 2023. This agreement permits the supply of up to four million cubic meters³⁸ of natural gas per day, and will expire in March 2025. Under this deal, Turkey contributes approximately 1.46 bcm annually to Romania, constituting about 12 percent of Romania’s annual natural gas consumption.
 
On the other hand, BOTAS and Hungarian state-owned energy company MVM signed³⁹ another crucial natural gas export deal in August 2023, marking Turkey’s first nonbordering recipient of natural gas exports. Even though portions are small, it is a remarkable event in terms of Hungary’s efforts to diversify gas import sources.

The most significant agreement to boost Turkey’s commercial influence in the Black Sea regional energy markets is with Bulgaria. In January 2023, Turkey and Bulgaria, via Bulgargaz, sealed a comprehensive thirteen-year agreement enabling the annual transmission of up to 1.5 bcm.⁴⁰ This deal, which supplied approximately 50 percent of Bulgaria’s natural gas consumption⁴¹ in 2023, also grants Bulgargaz access to this capacity at Turkish LNG terminals, notably the new FSRU Saros terminal, with the gas transported through Turkey’s network to the Turkish-Bulgarian border.

Turkey’s economic collaborations with European countries, particularly the littoral nations of the Black Sea like Bulgaria and Romania, underline the establishment of a strategic cooperation to curb Russian commercial influence. This cooperation model could even pave the way for the reactivation of the Trans-Balkan Pipeline (TBP) with a reverse gas flow, further entrenching the alliance in a complex interdependent manner.

In this context, as a policy option, the reverse flow of the TBP—which would allow gas to move from the south to the north, bypassing Russia—could be utilized to strengthen cooperation through pipelines. This would require technical modifications, such as installing bidirectional compressors, an area where Turkey has the necessary expertise and infrastructure knowledge. This policy option would reduce the geopolitical leverage of a single supplier, like Russia, over transit countries. For instance, Turkey could leverage this capability to act as a gas hub, redistributing gas from its LNG terminals or Azerbaijani and/or Turkmen supplies to Europe, further enhancing the region’s energy flexibility and security.