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The future of energy geopolitics is written in patents

Andrei Covatariu — Mon, 30 Mar 2026 14:45:33 +0000

For decades, energy security has been shorthand for access to fuel—and the Strait of Hormuz crisis is a staggering demonstration of this. This limited definition, however, is incomplete.

Crucially, energy security is dynamic and multidimensional. Any assessment represents only a snapshot. Today’s tenuous position can erode further if innovation slows, supply chains shift, or competitors gain technological ground. In that sense, research and development (R&D) is no longer peripheral to energy security; it is central to its future trajectory.

Technological capability shapes geopolitical relevance. Countries that lead in the development of energy technologies—whether in batteries, grid systems, advanced materials, or efficiency solutions—do not simply export products. They shape standards, capture value chains, influence alliances, and reinforce strategic autonomy.

One revealing, if imperfect, indicator of this future positioning is patenting.

What the patent landscape reveals

The International Energy Agency’s (IEA) State of Energy Innovation 2026 offers a stark picture. Energy-related patents now represent roughly 10 percent of all global patents (ahead of other important economic sectors, such as chemicals, pharmaceuticals, or transport)—a figure that underscores how central energy technologies have become to industrial strategy and national security.

The technological center of gravity has shifted decisively toward low-emissions technologies, and particularly toward energy storage. In 2023 alone, batteries accounted for about 40 percent of global energy patenting.

Geographically, the trend is equally striking. China now accounts for close to two-fifths of global energy patenting and has dramatically increased its share of low-emissions technology patents over the past decade. The United States remains a major innovator, though its patenting intensity has fluctuated across sectors.

Europe, however, recorded its third consecutive year of declining energy patenting through 2023, the last year for which consolidated data are available. While the region remains an important source of innovation, its relative trajectory lags behind both China and the United States.

In a world where intellectual property increasingly shapes industrial power, this is not a minor statistical fluctuation. It is a structural signal.

The limits—and importance—of patent data

Patent counts are not destiny. More patents do not automatically translate into technological superiority or commercial success. The value of a patent depends on its strategic relevance and eventual integration into marketable systems. Many patents remain dormant; some represent incremental improvements; a few reshape entire industries.

Moreover, categorizing patents is complex. Technologies often overlap across digital systems, materials science, energy hardware, and software controls. International classification systems attempt to impose order, and legal provisions aim to prevent “double patenting,” but quantitative measures inevitably simplify a more intricate reality.

And yet, even with these caveats, patenting remains one of the clearest early indicators of innovation intensity. International patent families—used in the IEA analysis—capture inventions that applicants consider valuable enough to protect across multiple jurisdictions. They are not a perfect measure of quality, but they do signal intent, ambition, and strategic positioning.

Viewed through this lens, Europe’s relative slowdown suggests something deeper than temporary volatility. It points to a widening gap in the upstream race to define the energy system of the future.

Innovation does not depend on scale. It precedes it.

Europe’s competitiveness debate frequently centers on familiar structural challenges: high energy prices, regulatory complexity, permitting delays, limited economies of scale, and fragmented capital markets. These constraints undeniably affect manufacturing competitiveness and large-scale industrial deployment.

But R&D and patent generation do not require perfect scale conditions. They depend on sustained investment, institutional coherence, strong research ecosystems, and strategic clarity. Innovation is the first stage of the value chain. Manufacturing scale comes later.

Europe’s difficulties in scaling certain industries cannot serve as an excuse for weakening its upstream research output. If anything, in a fragmented geopolitical environment, protecting and expanding intellectual property generation becomes even more critical.

It is also worth dispelling a common misconception: innovation is not confined to clean technologies. Fossil fuel sectors continue to evolve technologically. The shale revolution in the United States fundamentally altered global oil and gas geopolitics through innovation in drilling and hydraulic fracturing. Today’s liquefied natural gas (LNG) expansion, methane mitigation technologies, digital optimization, and efficiency improvements are all R&D driven. Even as fossil fuel patenting has declined relative to low-emissions technologies, it remains a competitive arena shaped by technological progress.

Energy geopolitics, in other words, is a race across multiple technological fronts.

And this is where Europe’s recent patent trajectory raises a deeper concern. Beyond the numbers themselves, the decline suggests something more structural: not simply a funding issue, but a mindset gap. Despite strong rhetoric in Brussels about strategic autonomy, technological sovereignty, and industrial leadership, the measurable outputs of innovation tell a more cautious story. If Europe’s patent intensity is weakening relative to its peers, it may indicate that the broader ecosystem is not yet calibrated to nurture the next generation of disruptive innovators—those capable of producing breakthrough technologies rather than incremental improvements.

Europe’s policy response—and its contradictions

This diagnosis echoes beyond energy circles. In his 2024 European Competitiveness Report, Mario Draghi warned that Europe’s innovation gap with the United States and China reflects deeper weaknesses in public and private R&D investment, coordination, and commercialization—calling for a reorientation of EU competitiveness strategy toward sustained and coherent research and innovation support. Draghi underscored that closing this gap is essential for Europe to maintain industrial strength and strategic autonomy in advanced technologies.

It is important to acknowledge that the patent data featured by the IEA currently extend only through 2023. Since then, the European Union has intensified its focus on strategic technologies. Horizon Europe, EU’s key research and innovation funding program, continues to channel significant funding into climate, energy, and mobility research. Other initiatives including the Strategic Technologies for Europe Platform, the Net-Zero Industry Act, and the Critical Raw Materials Act all reflect recognition that technological sovereignty is now a geopolitical imperative.

Discussions around the next Multiannual Financial Framework (2028–2034) suggest expanded allocations for research and innovation, reinforcing the EU’s ambition to strengthen its industrial and technological base.

However, policy coherence remains fragile.

Recent calls by Italy to suspend the EU Emissions Trading System (ETS), citing competitiveness concerns for energy-intensive industries, illustrate the tension between short-term industrial pressure and long-term innovation strategy. While the political logic behind such arguments is understandable, the strategic implications are more troubling. In its March 19 summit conclusions, the European Council did not endorse a pause; instead, it requested targeted temporary measures for the current price spike induced by the Iran war and invited the Commission to present an ETS review by July 2026 to reduce carbon-price volatility and limit impacts on electricity prices—while explicitly safeguarding the ETS’s role as a market-based signal that drives investment and innovation.

A significant portion of ETS revenues finances innovation mechanisms such as the Innovation Fund—one of the world’s largest programs supporting innovative low-carbon technologies. Weakening the ETS would not only alter carbon price signals; it would directly constrain one of Europe’s primary financial channels for scaling breakthrough technologies.

In an era where patents increasingly reflect geopolitical positioning, reducing innovation funding would compound—not resolve—Europe’s competitive challenges.

A strategic choice

Reversing Europe’s patent trajectory is not a matter of a single policy tweak and will require more than higher budgets. It will demand sharper prioritization, faster translation of research into protected intellectual property, and greater coherence between industrial policy and innovation strategy.

In a system where technological capability increasingly shapes geopolitical leverage, patent intensity is not a peripheral metric. It is an early indicator of who is preparing to shape the energy system of the next decades—and who is preparing to adapt to it.

Andrei Covatariu is a nonresident senior fellow with the Atlantic Council Global Energy Center.

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Ten lessons from the first month of the Iran war

Atlantic Council experts — Fri, 27 Mar 2026 22:02:18 +0000

One month ago, US and Israeli forces launched a military campaign against the Iranian regime that has had profound, globe-spanning consequences ever since—from energy markets to the global economy, and from the Gulf and broader Middle East to Romania, Sri Lanka, Russia, and China.

With scenarios for the conflict’s next phrase ranging from diplomatic off-ramps to military escalation, we asked Atlantic Council experts to identify their biggest takeaways from the war so far.

What we’ve learned about . . .

The Iranian regime

The Trump doctrine

The Iranian opposition

The Gulf states

Israel

The global economy

Global energy markets

Russia and Iran

China and Iran

The Iranian regime

One month into the Iran war, the Iranian regime is bruised, battered, and (perhaps irrationally) bullish about its future. The regime’s apparatus has withstood the decapitation of its leadership and more than 15,000 strikes on its capabilities and infrastructure. At the same time, the regime has executed a premeditated and effective response that has imposed significant costs on US Gulf allies and energy infrastructure. The de facto control of the Strait of Hormuz by the Islamic Revolutionary Guard Corps (IRGC) has been its most potent weapon, inflicting significant pain on the global economy that has netted the regime unilateral concessions from the United States to relieve stress on financial markets.

Internally, the regime appears stable. The Islamic Republic has proven to be much larger than any one individual. There has not been any significant domestic uprising to date. Most notably, there have not been any defections among political and security elites. The most hardline voices within the system have been empowered. All these factors have led many within the regime to believe it is winning the war despite the conditions of the battlefield.

Yet there are significant challenges ahead for the regime that extend beyond the war. It’s increasingly clear that after rejecting talks with the United States, Iran has no clear plan for what comes next. A reported US offer was nowhere near viable, but the rejection of that offer increases the likelihood of US ground troops invading Iranian territory. A messy situation looks primed to get much worse.

Assuming the Iranian regime does survive the war, it still faces a long-term existential crisis. The regime cannot provide the economic or political opportunities its population craves. To stay in power, Iran will either need to consistently and systematically repress dissent or make significant changes to the Islamic Republic’s core ideologies. Those changes seem unlikely to happen in the short term. Therefore, surviving this war will only delay the next crisis.

—Nate Swanson is a resident senior fellow and director of the Iran Strategy Project at the Scowcroft Middle East Security Initiative. Beginning in 2015, he served as a senior advisor on Iran policy to successive administrations, including most recently as director for Iran at the US National Security Council.

A man holds a poster with the image of Iran’s new supreme leader, Mojtaba Khamenei, during an anti-US and Israeli rally in Tehran, Iran, on March 22, 2026. (Majid Asgaripour/WANA via Reuters)

US military capabilities

The United States can execute fast, precise, and integrated multi-domain operations at scale, but it can’t sustain this kind of high operational tempo over time.

Headlines have highlighted new technologies, such as the US military’s use of LUCAS (Low-Cost Uncrewed Combat Aircraft Systems), PrSM (Precision Strike Missiles), and an artificial intelligence–driven battle management system.

The real story, however, is the joint integration of these and other capabilities across at least six combatant commands and thousands of soldiers. The United States is delivering coordinated strikes faster than ever while simultaneously working with allies and partners to effectively defend against Iranian attacks. No other military in the world has demonstrated this level of proficiency. Adversaries can acquire new technologies, but they can’t buy talent and the type of command-and-control culture that empowers US soldiers to act together seamlessly.

Sustaining these capabilities, however, is a perennial challenge. Demand for munitions exceeds available supply, and as Diana Maurer of the US Government Accountability Office noted in her testimony this month: “DOD has been unable to sustain its weapon systems to meet its goals across all domains and faces challenges providing logistical support to US forces, especially in contested environments.”

This is why it’s a national security imperative to invest in domestic capacity. The United States must be able to sustain its military in a longer high-end fight—a topic of Forward Defense’s ReForge Commission.

—Joe Costa is the director of the Forward Defense program of the Scowcroft Center for Strategy and Security at the Atlantic Council. Previously, he served as US deputy assistant secretary of defense for plans and posture in the Office of the Secretary of Defense.

The Trump doctrine

One month into the war with Iran, Trump’s actions have us rethinking his “peace through strength” doctrine. Until this point, it was pretty clear that Trump was okay with short, sharp, decisive actions like we saw with the strike to eliminate Iranian IRGC general Qasem Soleimani in the first Trump administration; Operation Midnight Hammer, which targeted Iranian nuclear sites; and Operation Absolute Resolve, which removed strongman Nicolás Maduro from power in Venezuela. We also know that Trump is uncomfortable with long, drawn-out military campaigns with no end in sight, such as in Iraq, Afghanistan, and Ukraine.

So while I am not surprised by the airstrikes against Iran, I am surprised by the scale of the campaign and by the fact that it now appears Trump is on the verge of sending in ground forces. Some commentators had previously remarked that we were never going to see Trump send the 82nd Airborne Division to the Middle East. But that’s exactly what he did this week.

It is still my prediction that, consistent with Trump’s “peace through strength” doctrine, the US president will ultimately declare victory and end the conflict soon rather than allow himself to get into an extended military quagmire.

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

The Iranian opposition

Amid conflicting messages from the Trump administration about the goal of continued US and Israeli military strikes on Iran (is it for regime change or to only weaken the Islamic Republic’s nuclear and ballistic-missile capacity?) the Iranian opposition has found itself needing to urgently define the path forward.

This weekend, a group of hundreds of ideologically diverse opposition activists are meeting in London as part of the Iran Freedom Congress to discuss Iran’s future and a pluralistic vision for guiding a transition. Critically, they are not positioning this as a challenge to any other opposition figure, including Reza Pahlavi, the son of the deposed shah. Rather, it is intended to “broaden the tent” to ensure that diverse voices are represented in any democratic process moving forward. Pahlavi has also made efforts in recent weeks to expand his reach by holding meetings with a wider set of activists and bringing Nobel Peace Prize laureate and Iranian jurist Shirin Ebadi on to chair a transitional justice committee. Ebadi’s involvement is significant not only for her deep global reach and connections to figures leading transitional justice processes in other countries, but also for the fact that she once supported the 1979 revolution that unseated Pahlavi’s father.

While this show of unity was celebrated by some, it has also been critiqued by others who have even called for Ebadi to be stripped of her Nobel (which is a technical impossibility). Meanwhile, still others contend that no movement for human rights and democracy can move forward without an immediate cease-fire, that the bombs only weaken the civil society that is seeking an end to this regime, and that a meaner, harsher regime may be left standing once the strikes end.

In short, much is yet to be determined but will become clear over the next few weeks—including in light of reports from some on Pahlavi’s team that Iranians have organized a ground game that will be activated soon.

—Gissou Nia is the director of the Atlantic Council’s Strategic Litigation Project and a board member of the Iran Human Rights Documentation Center.

The Gulf states

However the Iran war ends, it will not eliminate all of Iran’s attack capabilities. The Iranian regime’s apparent resilience and resolve suggest that the war will not change Iran’s intent to terrorize the region and assert leverage over the Strait of Hormuz either. The United States and Israel may feel comfortable with the dent the war has put in Iran’s long-range missile capabilities and nuclear program, especially as Trump seeks an exit that will quell global markets and relieve political pressure at home. But the threat to Iran’s Gulf neighbors will remain.

Iran’s attacks on all six members of the Gulf Cooperation Council (GCC) provide an unprecedented opportunity for its member countries to deepen their diplomatic, security, and economic integration in ways that could profoundly strengthen their resilience. GCC solidarity in the immediate aftermath of the attacks demonstrated the potential of such unity, including a historic UN Security Council Resolution.

One month in, however, longstanding fissures are re-emerging, including around how and when to end the war and what the region should look like after the bombs stop. And it appears there is still a rift between Saudi Arabia and the United Arab Emirates that will jeopardize Gulf unity going forward.

Gulf countries do not have a simple solution for navigating heightened security and economic threats after the war. While there may be frustration with the United States, Russia and China’s responses to the war make it clear that there is no replacing US security support. And while the war’s disruption to oil and gas production reinforces Gulf countries’ efforts to diversify their economies, the disruption to air travel, shipping, and investor confidence underscores that no sector is completely safe.

The Gulf solution to these threats is likely to be intense diversification: deepening security partnerships with a range of different partners, reducing strategic redundancy through new trade and energy corridors, and embracing a range of industries that are less vulnerable to disruptions to the movement of goods and people, such as advanced technology.

—Allison Minor is the director of the Project for Middle East Integration with the Atlantic Council’s Rafik Hariri Center & Middle East Programs. She previously served as US deputy special envoy for Yemen and as director for Arabian Peninsula affairs at the National Security Council.

Israel

While US and Israeli forces engage in an unprecedented, combined military campaign in Iran with considerable operational achievements—a high point in bilateral military cooperation—views on the conflict diverge considerably among the American and Israeli publics.

In contrast with US polls that indicate around 60 percent opposition to the war, support for the war effort began and remained high in Israel, with initial polls indicating well over 80 percent support, and over 90 percent among Jewish Israelis. More recent polling suggests slight slippage, as four weeks of being sent to bomb shelters by missile attacks wears on the population, but an overwhelming majority still support continuing the war. That steady backing is understandable, considering the Iranian regime’s long-held and oft-stated commitment to Israel’s destruction, and its hostility expressed in sponsoring terrorist organizations, attacks on Israel with ballistic missiles, and pursuit of a nuclear program that could enable Iran to possess a nuclear weapon.

The global interests that animate so much of the American debate around the war—the fear of overstretch in regime-change wars, the global economic shock caused by the closure of the Strait of Hormuz, and the impact on strategic competition with China and Russia—feature far less prominently in the Israeli discourse.

While Prime Minister Benjamin Netanyahu remains a divisive figure in Israeli politics, his political opponents have nearly universally expressed backing for the campaign in Iran. They have echoed his hope that the campaign will weaken the regime to the point that the Iranian people will overthrow it. But that consensus has not translated into a meaningful boost for the prime minister in polls ahead of a crucial election later this year. In a sense, the Israeli consensus, surrounding the need to strike a dangerous foe at its weakest point and take advantage of the opportunity presented by Trump’s willingness to join the fight, exists alongside, and distinct from, Israel’s longstanding polarized politics.

—Daniel B. Shapiro is a distinguished fellow with the Atlantic Council’s Scowcroft Middle East Security Initiative. He served as US ambassador to Israel from 2011 to 2017 and most recently as deputy assistant secretary of defense for the Middle East.

The global economy

We’ve learned two connected things about the global economy in the month since the Iran war started. The first is that the markets matter for the military. Strikes have consistently ramped up on Friday evenings and over the weekend, while statements about deescalation have often coincided with Sunday evening (when Asian markets open) or Monday morning. This is not a coincidence. There is a direct line of communication between the White House and Wall Street. But Tehran understands this dynamic as well: Many Iranian statements have been crafted precisely to sow confusion in markets at key moments.

But neither market sentiment nor media rhetoric can overcome the hard reality of oil and gas not being transited through the Strait of Hormuz. Time and again, the reality of the closure has rippled throughout the global economy. In the first week, gas prices dominated concerns. In the second, it was helium, a key component for chip-making throughout the world. In the third week, it was fertilizer and the potential strain on the global food supply. Just like the COVID-19 pandemic, the war has reminded us that for all the discussion about resiliency and artificial intelligence, the global economy is still incredibly reliant on a few strategic chokepoints, and the Strait of Hormuz is one of the most vital.

—Josh Lipsky is the chair of international economics at the Atlantic Council and the senior director of the GeoEconomics Center. He previously served as an advisor at the International Monetary Fund.

Global energy markets

Geopolitical risks are and will remain an enduring feature of energy markets, but the next energy crisis could dwarf even the Iran war.

In recent history, Russia’s full-scale invasion of Ukraine in February 2022 sent world energy and food prices soaring, further amplifying inflation already triggered by the COVID-19 pandemic’s effects on global supply chains and revenge consumption. In 2026, the US–Iran war could become the world’s largest energy crisis in living history, with the head of the International Energy Agency warning that the current supply shock could outstrip the two oil crises of the 1970s combined.

While energy-related geopolitical risks are inherently unpredictable, they are generally not unforeseeable. The COVID-19 pandemic was sui generis, but Russian President Vladimir Putin credibly threatened a full-scale military action in Ukraine in early 2021, and analysts have been warning about Iran’s ability to shut down the Strait of Hormuz for decades.

Another, greater foreseeable geopolitical risk looms over global energy markets. If the People’s Republic of China (PRC) attempts to coercively absorb Taiwan, probably via quarantine or blockade, Beijing will likely trigger the greatest geopolitical and energy crisis in history. Both the United States and the PRC are nuclear-armed, of course, but both also hold critical leverage over global energy supply chains.

If the PRC initiates hostilities, Beijing would use its monopoly across critical minerals, including graphite for batteries and possibly petrochemicals, while potentially exploiting cyber vulnerabilities embedded in its energy exports. The United States would seek to constrain the PRC’s imports of crude oil, iron ore, and other commodities, although Beijing is assiduously mitigating its Malacca Dilemma and reducing oil-import exposure via electric vehicles and other measures.

Just as Russia’s full-scale invasion of Ukraine and Iran’s closure of the Strait of Hormuz were foreseeable risks, a cross-Strait crisis, while not inevitable, must be prepared for—starting now.

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

Russia and Iran

Russia has largely been a beneficiary of the war for several reasons. First, US and global attention has shifted from Moscow’s aggression in Ukraine to the war in the Gulf. Second, the United States’ need for weapons in the Middle East may reduce stocks available for Ukraine. Third, the predictable jump in oil prices prompted by the war led Washington to suspend its sanctions on Russian oil, providing a substantial, immediate income boost to Russia’s stumbling economy.

But not every consequence of the war works in Moscow’s favor. The Gulf countries’ air defense, which is heavy on expensive US weapons, has not been fully up to the task of protecting against Iranian drones and missiles, and has prompted some of these countries to make deals with Ukraine for both drones and help in establishing a layered air defense system. This provides money for Ukraine’s growing drone and defense industries, which means more production not just for the Gulf Arab states but also for Ukraine to use against Russia. This has also improved Ukraine’s standing in the Middle East, where many states had leaned in Moscow’s direction.

There is one more important issue related to Russian policy in this war: Russian President Vladimir Putin’s decision to provide Iran with drone components and intelligence that Tehran can use to target US forces, Israel, and the Gulf Arab states. Iran’s drone supply to Russia after Moscow’s full-scale invasion of Ukraine was critical to its campaign against Ukrainian infrastructure and civilians. Russia not only used those drones in its war on Ukraine, but also took the prototype and started improving the drones and producing them in large numbers. Iran has been a beneficiary of these improvements.

Moscow’s aim is clear: To prevent a US victory in Iran, or at least to slow it down and make it more expensive. It also wants the suspension in oil sanctions to continue as long as possible. The perplexing thing here is the Trump administration’s efforts to ignore or explain away this unpleasant fact. While criticizing US allies for not being more supportive in the Middle East—a fair criticism—it lets Russia off the hook for aiding Iran’s attacks on US servicemembers.

This situation is not likely to hold. Washington’s inaction on this matter may be encouraging Russia to provide additional help. According to Western intelligence, Moscow may now be sending drones to Iran. If a Russian drone or an Iranian drone with Russian components strikes and kills US soldiers, that may prompt the Trump administration to take strong measures to force Putin to knock it off. One such step would be to provide Ukraine the weapons it needs to take out Russia’s massive drone factory in Tatarstan.

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

China and Iran

One month into the war, Beijing increasingly views this conflict as a strategic opportunity. On the energy front, it is less dependent on imported oil than many of its neighbors and has massive stockpiles that it can use to offset near-term shortages. It is in Iran’s interest to keep the oil payments from China flowing, so Tehran is carefully avoiding firing on China-flagged tankers transiting the Strait of Hormuz. Those ships are among the few passing safely through, with Iran’s blessing.

Thus far, the downsides for China are minimal, and Beijing is focusing on a major upside: This war is forcing the United States to draw down military assets in the Asia-Pacific region. For China, that is a massive strategic win, and well worth any near-term disruptions to global energy markets. China has long complained about the US Terminal High Altitude Area Defense (THAAD) antiballistic missile system stationed in South Korea. Now, for the first time since its deployment in 2017, the United States is moving some of those interceptors to the Middle East to deal with Iran’s retaliatory strikes.

Across the board, the US military is already running low on munitions, forcing it to consider pulling assets away from Ukraine as well. That will further embolden Russia, which is yet another win for China given that Chinese Foreign Minister Wang Yi has said Beijing needs to ensure Russia does not lose that conflict. The Chinese foreign minister told his European counterparts that Beijing benefits when Russia’s actions toward Ukraine keep the United States tied up in that war and unable to focus on China. The Iran conflict is delivering an even bigger distraction from China than the war in Ukraine.

Chinese analysts do not expect the Iranian regime to fall or the United States to achieve its objectives. Instead, they anticipate that the United States will become mired in a protracted war that further drains US resources. One of China’s leading think tankers recently published a piece framing the war as a “strategic opportunity” for China. China’s censors quickly pulled that article down, most likely to avoid angering Iran or undermining Beijing’s message of outrage over the assassination of Iranian Supreme Leader Ayatollah Ali Khamenei. But make no mistake: That is the inside view. China sees the United States as dropping a rock on its own foot, becoming (yet again) entangled in the Middle East in ways that will make it exponentially harder for the United States and its allies to counter China’s ambitions in the Indo-Pacific.

—Melanie Hart is the senior director of the Atlantic Council’s Global China Hub. She previously served as senior advisor for China in the Office of the Undersecretary for Economic Growth, Energy, and the Environment at the US Department of State.

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The Eastern Mediterranean won’t replace Russian or Gulf gas—but it can be Europe’s energy shock absorber

Hany Ghanem and Chrissy Bishai — Fri, 27 Mar 2026 16:39:31 +0000

WASHINGTON—Europe’s energy system has experienced a massive structural shift in recent years. Since Moscow’s full-scale invasion of Ukraine four years ago, the continent has significantly reduced its dependence on Russian gas, cutting imports by 90 percent between 2021 and 2025, with plans to fully phase it out by November 2027. But this transition has not eliminated risk; it has reconfigured it and even created new vulnerabilities.

Liquefied natural gas (LNG) is now central to European energy security. While diversification has reduced reliance on a single supplier, it has increased exposure to global chokepoints. LNG depends on maritime routes vulnerable to geopolitical shocks. In a post–October 7, 2023, Middle East, disruptions in the Red Sea and current tensions around the Strait of Hormuz have underscored the fragility of these flows. The war in Iran and Tehran’s effective closure of the strait—through which roughly 20 percent of global oil and LNG transits—has driven price spikes and cargo disruptions. Europe must now compete with Asian buyers to secure LNG, raising the risk of shortages before winter.

In this context, a developing gas industry in the Eastern Mediterranean is emerging not as a replacement for Gulf or Russian gas, but as a flexible regional energy corridor that can reinforce Europe’s resilience while advancing regional integration.

A basin of opportunity—within limits

Natural gas discoveries across Egypt, Israel, and Cyprus have transformed the Eastern Mediterranean into a meaningful energy basin. The Levant Basin alone holds an estimated 120 trillion cubic feet of recoverable gas.

At the same time, Europe’s gas demand is structurally declining due to efficiency gains, fuel substitution, and decarbonization policies. European regulatory constraints—particularly methane emissions standards—are also reshaping import dynamics.

The implication is clear: The Eastern Mediterranean’s role will be material but limited. It cannot replace Russian gas at scale, but it does not need to. Its value lies in flexibility, diversification, and responsiveness during market stress.

Egypt: The system’s anchor—and constraint

Egypt sits at the center of this emerging system. It is the only country in the region with operational LNG export infrastructure, with terminals at Idku and Damietta. These facilities allow gas from neighboring producers to be liquefied and exported via the global spot market, providing critical flexibility unconstrained by rigid long-term contracts.

This infrastructure has enabled a functional regional model: Israeli gas flows via pipeline to Egypt, where it is liquefied and exported. Future Cypriot production is expected to follow the same pathway, as building new LNG terminals remains expensive.

Organizationally, Egypt hosts the East Mediterranean Gas Forum (EMGF), which has become the primary platform for coordinating regional gas development. By aligning producers, transit states, and consumers—and involving companies in the conversation via the Gas Industry Advisory Committee—the EMGF has helped foster cooperation in a historically fragmented region.

Yet Egypt is also the system’s primary constraint. Domestic gas demand has risen steadily, while production from key fields such as Zohr has declined from peak levels. As a result, Egypt’s export capacity has tightened, and it has increasingly relied on Israeli imports to meet domestic needs. A recent $35 billion deal to supply an additional 130 billion cubic meters (bcm) of Israeli gas underscores this dependence.

This dual role—as both hub and constraint—characterizes the region’s energy equation. Europe’s access to Eastern Mediterranean gas ultimately hinges on Egypt’s ability to balance domestic demand with export capacity.

Israel: The basin’s supply engine

If Egypt is the system’s anchor, Israel is its primary source of incremental supply. Offshore discoveries such as Tamar and Leviathan have transformed Israel into a regional gas exporter. Leviathan alone holds approximately 600 bcm of recoverable gas, with expansion expected to boost output further.

Israel exports gas primarily to Egypt and Jordan through established pipelines. These flows feed directly into Egypt’s LNG infrastructure, linking Israeli production to European markets.

This arrangement has created a functional regional energy system despite limited political integration. Israeli upstream supply underpins Egyptian exports, while Egypt provides access to global markets.

Cyprus: The next phase

Cyprus represents the next wave of potential supply. Discoveries such as Aphrodite and Cronos indicate that Cyprus could be a substantial resource base. Development strategies increasingly center on integration with Egyptian infrastructure, particularly via subsea pipelines connecting Cypriot fields to Egypt’s LNG terminals. However, without operational LNG infrastructure, timelines remain uncertain due to regulatory, investment, and geopolitical constraints. Cyprus should be viewed as a medium-term option rather than an immediate supply source.

From supply source to shock absorber

Taken together, the Eastern Mediterranean is unlikely to be transformative in scale but is highly valuable as a modular layer of energy resilience for Europe in the coming decade.

Estimates suggest the region could support approximately 30–40 bcm of annual exports to Europe under favorable conditions. While insufficient to replace Russian or Gulf gas, this volume is significant enough to stabilize markets during inevitable disruptions.

Its strategic value lies in optionality—the ability to provide incremental supply, diversify routes, and respond flexibly to shocks.

Connecting to IMEC

The Eastern Mediterranean’s importance for energy becomes even clearer when viewed through the lens of the India–Middle East–Europe Economic Corridor (IMEC).

IMEC envisions an integrated network linking India, the Gulf, and Europe through transport, digital, and energy infrastructure. Within this framework, the Eastern Mediterranean can serve as the energy anchor of the corridor’s western segment, linking regional gas resources to European markets.

This alignment supports broader US and European strategic objectives by strengthening economic ties among aligned partners and reinforcing regional stability.

Securing the Eastern Mediterranean’s role in Europe’s energy future

To accelerate and stabilize Eastern Mediterranean energy development:

Israel and Cyprus should resolve their dispute over the Ishai reservoir to unlock joint development.
Cyprus and investors should finalize regulatory and commercial frameworks for exports to Egypt, including agreements with the Egyptian Natural Gas Holding Company (EGAS).
Egypt should expand renewable energy capacity to reduce domestic gas consumption and preserve export volumes.
Regional governments should leverage the EMGF to coordinate development, align stakeholder incentives, and support investment.
Governments must ensure geopolitical tensions do not disrupt existing cooperation, particularly Egypt–Israel–Jordan gas flows.

Eastern Mediterranean gas will not eliminate Europe’s exposure to global volatility. Rather, its strategic value lies in reinforcing resilience at the margins—providing additional supply during disruptions, diversifying routes, and anchoring a regional energy system that aligns infrastructure with geopolitics.

In an era defined less by abundance than adaptability, Eastern Mediterranean gas may prove more valuable for its flexibility than its scale.

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Amid the Hormuz crisis, an Iraq-Jordan-Egypt oil pipeline can no longer wait

Maisoon H. Kafafy — Wed, 25 Mar 2026 20:28:22 +0000

In the summer of 1983, with Iranian missiles turning Gulf shipping lanes into something resembling a free-fire zone, Saddam Hussein’s government sat down to solve a problem that has never really gone away. Iraq’s oil, the lifeblood of its wartime economy, was moving almost entirely through the Strait of Hormuz—a narrow corridor that an emboldened adversary regularly threatened to close.

The solution his planners devised was elegant in its simplicity: a pipeline running southwest from the oil fields of Basra, through the Jordanian desert, terminating at the Red Sea port of Aqaba. From there, Iraqi crude could reach global markets without passing through a single contested chokepoint. The project was announced, studied, negotiated over, and quietly abandoned. It has been revived since but derailed at different moments by war, occupation, insurgency, and internal Iraqi politics. This cycle repeated itself, with remarkable consistency, for four decades—and the Basra-Aqaba pipeline was never built.

Now the bill for that failure is coming due. This time, Aqaba is not the end of the answer. So long as the Red Sea and the Strait of Hormuz remain similarly volatile, a pipeline that stops short of Egypt and the Mediterranean trades one vulnerability for another.

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A warning unheeded

When Iran moved to close the Strait of Hormuz following the outbreak of conflict with the United States and Israel, Iraq had to face what its planners had known since 1983: that an estimated 90 percent of its crude exports flow through a waterway it has no power to protect. The consequences cascaded almost immediately. Baghdad began shutting production at its largest fields—Rumaila and West Qurna 2—making the deepest cuts in a generation, not because of any direct military threat to the fields themselves, but because southern storage facilities (designed for operational throughput rather than long-term holding) simply ran out of space. In the absence of viable alternative export pipelines, estimates suggest that Iraq is losing between $260 million and $280 million in revenue each day.

Despite over a decade of talks, construction on the Basra-Aqaba pipeline never meaningfully advanced. The failure to advance the project had no single cause: It can be attributed to the Iran-Iraq War, the Gulf War, the US invasion, ISIS’s territorial expansion, and even resistance by pro-Iran Shia factions in Baghdad, who opposed the pipeline on the grounds that it would bring Iraqi oil into proximity with Israel.

Now, Baghdad is improvising. After acrimonious negotiations—and a formal threat of legal action from Baghdad accusing Erbil of breaching the Iraqi constitution—Iraq and the Kurdistan Regional Government struck a deal on March 17 to restart crude flows through the long-dormant Iraq-Turkey Pipeline to Turkey’s Mediterranean coast. Exports resumed at an initial capacity of 250,000 barrels per day, with the two sides agreeing to form a joint committee to oversee operations and return revenues to the federal treasury. That figure is a rounding error against the roughly 3.5 million barrels Iraq was exporting daily before the crisis.

With output from Iraq’s main southern fields having already plunged 70 percent, the northern pipeline restart, even if volumes climb in coming weeks, recovers only a fraction of lost export capacity. The Basra-Aqaba pipeline, had it been completed to its phase one capacity of 2.25 million barrels per day, would have offset the majority of what the Hormuz closure took offline, providing a genuine and immediate alternative without the dormancy, the standoff, or the frantic eleventh-hour diplomacy. A second phase, running from the Iraqi city of Haditha to Aqaba with an additional capacity of one million barrels per day, would have brought total corridor capacity to 3.25 million barrels—nearly matching Iraq’s pre-crisis export volumes in their entirety. Instead, with the northern pipeline restart, Iraq is celebrating a partial fix to a problem that should never have been left unsolved.

Egypt’s compound exposure

There is a dimension of this crisis that has received far less attention than it deserves, and it runs through Cairo. When the Basra-Aqaba pipeline discussions gained momentum in 2016, Egypt was formally brought into the conversation with the longer-term vision of positioning Cairo as an active hub in a land-based Gulf energy corridor reaching Mediterranean and global markets. The original Basra-Aqaba proposal, designed to terminate at Jordan’s Red Sea port, had by then been expanded to include Egypt—extending the corridor’s ambition westward to the Mediterranean. That vision was soon shelved along with everything else. Egypt now finds itself absorbing the costs of the current crisis from every direction at once, with none of the structural revenues that corridor integration would have provided.

The picture is one of compounding fragility. Suez Canal revenues, which had been projected to recover toward eight billion dollars in 2026 following the Gaza cease-fire, are once again under pressure as major carriers weigh the risk calculus of Red Sea routing against the longer but safer passage around the Cape of Good Hope. At the same time, Israel has halted natural gas flows from the Tamar and Leviathan fields to Egypt, a supply that the country had come to rely on for both domestic consumption and liquefied natural gas (LNG) re-export revenues. Egypt’s budget for this fiscal year was calculated assuming oil at seventy-five dollars per barrel, a figure that now bears little relationship to market reality, forcing the government to chase spot LNG cargoes at elevated premiums it can ill afford.

Meanwhile, Egypt faces $27 billion in external debt service due in 2026 against roughly $53 billion in international reserves. An estimated two billion to six billion dollars in foreign holdings of Egyptian government debt instruments has already exited the market, renewing pressure on a currency that took years of painful International Monetary Fund–guided adjustment to stabilize.

Against this backdrop, Egyptian Mediterranean ports have quietly become an improvised transit lifeline, with cargo being offloaded and moved overland to Red Sea ports for onward delivery to Gulf destinations. Egypt is already performing the corridor functions that a formal Basra-Aqaba-Egypt pipeline architecture would have institutionalized, only now it is doing so informally, without the infrastructure investment, long-term agreements, or revenue arrangements that would make the role sustainable. The country’s geographic value is being recognized in a crisis that its economy is simultaneously struggling to survive.

A foundation without a roof

The corridor logic, however, has never been purely theoretical—nor has it lacked institutional foundation. Since 2019, Egypt, Iraq, and Jordan have convened a series of trilateral summits under the Amman-Baghdad-Cairo framework, with energy integration and pipeline connectivity among the agreement’s explicit pillars. The precedent runs deeper than recent diplomacy. During the Iran-Iraq War, Jordan served as Iraq’s primary import-export conduit while Egypt supplied over a million laborers to fill jobs vacated by Iraqi conscripts—making Iraq, at that moment, Egypt’s single largest source of remittances. These three countries have an economic interdependence that keeps reasserting itself in moments of regional stress, and they have been trying, with the tools available to them, to give it permanent form. The summits exist. The framework exists. And the political will among the three governments, however constrained by Baghdad’s internal divisions, Amman’s fiscal limits, and Cairo’s institutional pressures, has proven more durable than the results suggest.

Iraq, Jordan, and Egypt should build the pipeline, extend it through Egypt to the Mediterranean, and treat it as the strategic infrastructure it has always been. The financing question, which has too often been regarded as a reason to delay rather than a problem to solve, is more tractable than it appears. It is the politics, not the funding, that has always been the harder obstacle. Iraq has already allocated federal budget funds for the first leg and structured the second phase for private investment. The missing ingredient is the sustained engagement of international partners—Gulf sovereign wealth funds, multilateral development institutions, and Western governments with a direct interest in regional energy stability—willing to bring the institutional weight that transforms a framework agreement into a pipeline in the ground.

Every year the Basra-Aqaba-Egypt corridor remains unbuilt is a year in which the region’s most crisis-tested economic relationships remain hostage to infrastructure that was never completed. Iraqi planners understood the problem in 1983. The pipeline that they all agreed was necessary has still never been built, and the region is paying the price. Until it is, the next crisis will find the same vulnerabilities in the same places.

Maisoon H. Kafafy is a senior advisor to the Atlantic Council’s Middle East programs, where her work focuses on Middle East and North Africa security, regional cooperation strategies, and geoeconomics.

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How the US can turn an energy emergency into an opportunity for resilience

Troy Warshel — Wed, 25 Mar 2026 16:22:32 +0000

When the White House declared a national energy emergency last year, it wasn’t political theater, it was a warning. The US grid is under strain, demand is outpacing supply, and national security depends on how the country adapts to current and emerging power requirements. The United States is facing a national energy crisis brought on by an aging grid and infrastructure and a significant increase in demand. Energy resilience is not just an economic concern, it is also needed to project military power from the homeland, raising it to a national security imperative.

Rising demand pressure largely comes from consumers like data centers, which are projected to require twice the amount of energy in 2035 compared to 2024. Growing demand contrasted with ever increasing grid fragility creates risks that should be readily apparent, even to those outside of the energy sector. Without significant action, the risk to the energy supply is going to continue to increase, leaving the country and its defense even more vulnerable. Natural and man-made disasters, including cyberattacks, continue to increase in frequency and severity. Continued load growth from data centers, artificial intelligence (AI), electric vehicles, and industrial electrification have created unprecedented demand that only adds to the potential for severe disruptions.

The United States must look differently at today’s energy challenges to avoid wide-scale disruptions that will have a significant impact on the economy, the public, and military readiness. Policymakers and the Pentagon have to act together to ensure energy security for the nation and enable the armed forces to project power no matter what challenge they face.

A roadmap to secure energy supply for both the grid and the military

Policymakers, the power sector, and the public must look at the problem though a different lens. The energy system must shift to distributed generation close to the point of operational need. Advanced nuclear, storage, and renewables must play a part if we are to address real resilience, and this change needs to happen now.

Shifting electricity generation to a decentralized model

To achieve this goal, policymakers and utilities must embrace the concept of “distributed resilience,” which involves creating a system of microgrids and hybrid systems to allow local sourcing of power through systems that combine solar, storage, generation, and dispatchable backup power with the capability to island. These types of systems are available now and could help meet demand and increase resilience. To take advantage of new technology, the Department of Defense (DOD) should look at Energy as a Service where the military departments work with individual bases to contract with a private provider that guarantees resilient power, ideally inside the fenceline, and get away from pulling power from the commercial grid, subject to all of the risks and hazards of the aging infrastructure. A longer-range solution, and the one being championed by the US Army, is the use of advanced nuclear and small modular reactors to provide clean, continuous power while freeing the base from the risks and market fluctuations of fossil fuel generation.

Siting electricity generation on base

To take this approach a step further, the Pentagon could consider siting this distributed energy infrastructure on base through enhanced use leases and offtake agreements from power providers. With ample land area on many bases and heightened security, military installations provide an ideal location to build energy resilience. Experts have argued that nuclear power on installations can advance national security. The Army is already embracing the idea through its Janus Program and has announced plans to build ten to twelve small modular reactors on Army bases in the next ten years. By not relying on power from outside the fence line, military installations ensure their ability to operate 24/7 to defend the nation regardless of disaster or grid condition.

Powering data centers with on-base generation

Further building on this model can also address the growth in data center power demand and the strain and cost it is expected to place on existing infrastructure and consumer electricity bills. To meet the energy needs of future data centers, tech companies could build facilities near military bases and power them with on-base generation resources. The US Air Force has recently gone on record saying they are going to locate data centers on five bases, but the military services should look at co-located power generation to really make this work. On-base generation will provide mission assurance to the base and power to the data center while at the same time alleviating pressure on the public grid and driving down rates for customers.

The advantages, hurdles, and next steps to achieve this model

America is undergoing a rapid energy intensification. With the proliferation of AI, edge computing and 5G/6G, the power demand per square foot is rising rapidly. By co-locating commercial data centers on or near bases that have resilient power, the US grid, consumers, and the tech sector would realize several benefits. First would be low latency connectivity and secure communictions for the installation. Security for the data center would be improved and overall mission assurance for both parties increases. The solutions may be simple, but that doesn’t mean they aren’t hard. Addressing these challenges will require some design and development considerations but, if systems are designed with enough head room at the outset, all of these challenges are surmountable, and if we prioritize advanced nuclear power generation, bases and data centers could support internal power requirements for years.

Ultimately, the United States cannot afford to remain vulnerable to grid disruptions, cyberattack, or weather impacts. Energy is a force multiplier, and the executive order stresses the importance of change and provides the tools necessary to drive that change. Success requires the government to pull together a coalition of stakeholders including DOD, Department of Energy, utilities, data center operators, regulatory bodies, local governments, and financial partners to collaborate and develop actionable solutions. The Army and the Air Force have started to take the first steps, but joint bases would be the next optimal step. Interservice collaboration could combine the Air Force effort to pull in data centers and with the Army’s work to site advanced reactors. This will develop the framework for a distributed, resilient, mission-focused energy architecture that supports national security and digital competitiveness which will benefit all Americans. The time is now to act and secure our energy future.

Troy Warshel is executive vice president at Potomac International Partners. A former senior DOD official and US Marine Corps F/A-18 pilot, he works at the intersection of defense, energy, and innovation, advising on operational energy, emerging technologies, and strategies to strengthen US and allied security.

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Kafafy for Foreign Policy: Empty Words Don’t Open Straits

Atlantic Council — Wed, 25 Mar 2026 13:19:09 +0000

Original Source

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The Strait of Hormuz crisis will ripple across plastics and food supply chains, helping Beijing and Moscow, hurting Americans

Joseph Webster and Kate Burnett — Mon, 23 Mar 2026 15:12:26 +0000

Every day that the Strait of Hormuz remains closed brings the world economy closer to a crisis. While the closure has acutely affected oil and gas supplies and prices, it could soon send convulsions through supply chains for other commodities, such as plastics and fertilizers, that are foundational to the global economy and food supplies. This cascade of effects could strengthen China and Russia’s geopolitical influence over impacted supply chains, while hurting consumers around the world, including in the United States. If the Strait of Hormuz closure persists for even a few more months, it could become the single-largest and most consequential energy and supply chain disruption in modern history, all but ensuring a global period of stagflation.

The geopolitical fallout: China and Russia could gain leverage in petrochemicals and fertilizers

Amid outages in the petrochemical complex across ex-China Asia and the Middle East, the crisis could enable Beijing to establish new chokepoints over the near-term or more enduringly. Similarly, Beijing’s close partners in Moscow and Minsk will become more powerful across food supply chains.

Petrochemicals, the feedstock for plastics and other products

The direct and second-order consequences of a Strait of Hormuz closure could reverberate through petrochemical markets with major economic and geopolitical implications. In the upstream segment, the Middle East normally supplies about 30 percent of global seaborne exports of liquefied petroleum gas, which can be used for petrochemicals feedstock. Drewry analyst Anshika Prajapati estimates that prolonged closure of the Strait would reduce 24 percent of global seaborne naphtha, another key petrochemical input. These exports are now largely cut off from global markets.

In addition to the upstream outage, downstream facilities in East Asia could face closure due to insufficient electricity, while Middle East petrochemical export facilities are facing massive disruptions. South Korea, Taiwan, and Japan hold significant petrochemical export capacity. But petrochemical plants are highly electricity-intensive, and powering the electricity grids of these East Asian democracies relies heavily on a now severely constricted liquefied natural gas (LNG) market. Accordingly, if Middle East LNG production outages force these countries to ration electricity, they could choose to curtail certain petrochemical products in favor of higher priority use cases for LNG, such as air conditioning or the manufacturing of semiconductors or high bandwidth memory for artificial intelligence (AI) supply chains.

Conversely, while the oil and gas shortage could harm already-suffering South Korean, Taiwanese, and Japanese petrochemicals industries, it could help Chinese companies consolidate parts of the supply chain. While the profitability of Chinese petrochemical firms could take a short-term hit, they have access to abundant electricity—and China’s partner, Russia, is a major supplier of its petrochemicals feedstock, including naphtha, an ingredient that Asian petrochemical companies are scrambling to obtain. In the wake of the crisis, South Korean petrochemical producers are cutting run rates by up to 50 percent; impacts in Japan are also severe, as about 42 percent of its naphtha supply comes from the Middle East. Thus, the Middle East crisis and its ripple effects could ultimately see the petrochemical sector concentrate in China, giving Beijing yet another leverage point over global supply chains. For example, China, which shifted from a net importer of global polyvinyl chloride (PVC) to a net exporter, now accounts for 78 percent of global incremental PVC capacity additions. Chinese PVC producers largely use a coal-based process that requires no imported oil or naphtha, while top producers in Japan, Taiwan, and South Korea are already cutting output over fears of losing feedstock and electricity. Therefore, while Chinese petrochemical producers will be hit by the crisis, they could yet emerge on top.

The United States, whose shale-based petrochemical producers are insulated from the Hormuz disruption, will likely gain market share if prices spike. Nevertheless, certain nodes of the global petrochemical supply chain could be concentrated in China if the crisis persists, and as the allied industrial base is degraded.

If global petrochemical constraints persist due to upstream supply issues and petrochemical closures, consumer prices will rise, or even soar. US consumers will be disproportionately impacted, as the average US resident used 255 kilograms of new plastics in 2019, versus a world average of 60.1 kilograms.

Fertilizers and food prices

Not only has the Strait of Hormuz closure interrupted global energy trade, but it has also suspended the movement of fertilizer representing roughly 30 percent of globally traded ammonia-based nitrogen fertilizer that is vital before planting season. While the United States is one of the largest fertilizer producers, it relies on ammonia imports to lower costs and meet demand; it has previously relied on imports for roughly half of domestic urea use. Although US ammonia imports do not primarily route through the Strait of Hormuz, the closure constricts global supply, driving up prices that US markets cannot escape. Fertilizer supplies are already significantly lower than normal, and prices are surging. The cost of urea at the import hub in New Orleans rose 32 percent in just one week, from $516 to $683 per metric ton.

The United States will feel the economic impact of rising input costs on multiple fronts. When the cost of producing crops increases, farmers and food processors will pass those expenses through the supply chain, directly increasing the final price consumers pay for goods. Farmers may also be less incentivized to grow nitrogen-intensive crops, such as corn. This could also have cost implications for livestock feed, and thus meat and dairy products for consumers.

Disrupted fertilizer supply chains hold important geopolitical consequences. China, the second largest fertilizer exporter, is shielding its farmers and consumers from price shocks by constricting sales abroad, for now. As China withholds fertilizer exports, countries that previously sourced from Chinese and Middle Eastern suppliers will scramble for alternatives, further tightening global markets.

In the near term, Russia and Belarus are well-positioned to fill any gap left behind. Russia remains the world’s largest exporter of fertilizer, and Belarus is a major agricultural player in potash, a nutrient used for fertilizer. If Russia and Belarus face no export constraints, they are well-placed to exercise greater influence across global fertilizer markets.

China largely uses domestically-sourced coal as feedstock for ammonia and fertilizer production, so its output will not be directly constrained by a Strait of Hormuz closure. Over the medium term, Beijing may selectively step back into export markets if the geopolitical and commercial benefits outweigh domestic food security risks.

If global supply chain outages persist, Beijing, Moscow, and Minsk may cooperate more closely on global fertilizer distribution.

The economic fallout: A long-duration Strait of Hormuz closure will bring waves of economic pain

This analysis is not comprehensive: as during COVID, many acute supply chain vulnerabilities will only reveal themselves with time. However, this analysis on key commodities does reveal that outages in the Strait of Hormuz will quickly translate into waves of economic pain.

The first two waves will crest in the form of higher refined product prices. This is already happening: jet fuel has low storage inventories and is therefore sensitive to supply outages. Accordingly, jet fuel and air ticket prices are soaring, especially in Asia. The rest of the world will quickly follow. Other refined products, such as diesel and gasoline, will be in the next wave.

The third wave of price increases will ripple throughout the US and global economy in the form of higher agricultural prices. As ammonia, fertilizer, and diesel input prices rise, farmers will plant less and crop yields will fall, sending consumer food prices higher. If Beijing, in partnership with Moscow and Minsk, selectively restricts agricultural-related exports, then US and global inflation will run higher.

The next inflation wave may be less visible, but more insidious. Food packaging, medical supplies, clothing, and virtually every manufactured good rely on petrochemicals in some way. Accordingly, petrochemical outages in the Asian democracies would trigger broad-based price increases in the United States. If China imposes export controls on certain petrochemical products (just as it does for critical minerals), US inflation will likely run higher.

Finally, the combination of these waves, along with other latent vulnerabilities, may trigger broad-based, sustained price increases. In turn, the commodity price spike may shape longer-term inflation expectations for consumers. If the Federal Reserve loses its hard-won credibility on containing prices, consumer inflation expectations will rise. All else being equal, this would lift inflation and real interest rates.

Every day the Strait is closed brings higher prices and new risks for the United States and its allies. As allied industrial capacity tightens, especially in petrochemicals and fertilizers, China and Russia will increasingly be able to secure new geopolitical leverage across global supply chains. Every day the war continues gives them more cards to play.

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

Kate Burnett is a young global professional at the Global Energy Center.

This analysis reflects their own personal opinions.

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Oil waivers risk sustaining Russia’s war effort amid the Iran war

Linas Kojala, Vytautas Leškevičius — Fri, 20 Mar 2026 18:21:39 +0000

VILNIUS—On March 12, US Treasury Secretary Scott Bessent announced that the Trump administration would ease some US sanctions on Russian crude oil. The Treasury Department issued a general license allowing the purchase and delivery of otherwise sanctioned Russian oil already loaded on vessels as of March 12, and it will apply until April 11. In doing so, the Trump administration has made it easier for Moscow to keep barrels moving at a moment when the war in the Middle East has pushed oil markets into turmoil. Bessent described the move as “narrowly tailored” and “short-term.” But it is still sanctions relief for Russian oil.

This announcement did not come out of nowhere. On March 5, the White House first gave India a thirty-day waiver allowing it to buy Russian oil already at sea. It has now widened that relief to other cargoes loaded before the new cut-off. The aim is to get more supply onto the market fast and limit the shock from the Iran war on global energy markets.

That matters because in oil markets, signaling is often nearly as important as regulation. Once the United States shows flexibility, traders, insurers, and refiners start recalculating risk. Indian refiners have responded quickly, buying at least twenty million barrels of Russian oil since being granted the first waiver.

Make no mistake, the United States loosening its sanctions helps Russia, which is looking for additional funds to finance its war on Ukraine. Before the recent decision, economic pressure on Moscow was biting. The Oxford Institute for Energy Studies calculated that Russia’s 2025 oil and gas federal budget revenues fell to 8.5 trillion roubles, or about $101.4 billion, accounting for only 23 percent of total federal revenues, the lowest share in roughly two decades. Most of the revenue was oil-related.

Make no mistake, the United States loosening its sanctions helps Russia, which is looking for additional funds to finance its war on Ukraine.

In fact, Russia’s overall budget picture was worse than Moscow admitted. Officially, Russia said its 2025 federal deficit was 2.6 percent of gross domestic product. Germany’s Federal Intelligence Service, the BND, put the real figure closer to 3.6 percent. And this year looked worse still for Russia’s economy. Its oil and gas revenues halved year-on-year in January to 393.3 billion roubles. In February, according to the International Energy Agency, Russia’s oil and fuel export revenues fell to the lowest level since the start of Moscow’s full-scale invasion of Ukraine. Sanctions were constraining Russia’s current cash flow, which is essential for its war effort.

The Iran war has changed the equation. Brent crude was trading above $100 a barrel on March 13 and headed for roughly a 9 percent weekly gain despite the US waiver. Russia is benefiting both from the higher oil prices and from the US sanctions waiver, which lowers the commercial risk of Moscow’s energy exports. Russia does not need a full rollback of sanctions to feel relief. It only needs a short-term mix of firmer prices, more willing buyers, and less fear among intermediaries.

Temporary emergency measures to stop an oil panic are understandable. But they must remain exactly that—temporary, narrow, and clearly tied to cargoes already afloat. Turning them into a broader easing of sanctions would reward Russia just as financial pressure was beginning to constrain its room for maneuver in its war against Ukraine. The International Monetary Fund forecasts Russia’s 2026 economic growth at just 0.8 percent, with the fiscal deficit staying elevated because of weaker export revenues. That pressure should be maintained, not diluted.

The danger is not confined to Washington. Once the United States starts loosening the screws, some Europeans will argue that Brussels should do the same. That pressure is already visible. The European Union (EU) is looking into emergency options to contain energy prices, even as European Commission President Ursula von der Leyen has warned that returning to Russian energy would be a “strategic blunder.” Hungary and Slovakia are already testing how far they can push on sanctions, demanding, inter alia, Ukraine renew the flow of oil through the damaged Druzhba pipeline. Because EU sanctions require unanimity among member states, even a limited US waiver might shift the political calculus in Europe. That is why any relief for Russian oil must remain short-term and exceptional. Otherwise, it will make it easier for Europe’s weakest links to argue for a broader review of sanctions on Russia.

Beyond the technicalities, any relief granted—even if temporary—risks triggering a vicious circle: It inevitably influences the debate toward renewing a broader political dialogue with Moscow. And any such dialogue naturally invites further talk of lifting sanctions. Ultimately, these two tracks begin to sustain one another, making it increasingly difficult to break free from the circle.

For Ukraine, the implications are clear: It would be better if the active phase of the war in Iran ended soon. The longer the disruption in the Gulf lasts, the more chances Russian President Vladimir Putin has to refill Russia’s war chest. Washington may need short-term flexibility to calm markets. But it should not confuse market management with strategic policy. One is an emergency response. The other risks rewarding the aggressor in Ukraine at exactly the wrong moment.

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Demand destruction has begun: What Sri Lanka reveals about the global energy crisis

Phillip Cornell — Fri, 20 Mar 2026 16:04:40 +0000

GALLE—For the past two years, I have been based largely out of Sri Lanka, closer to Asian clients, while still working regularly from Washington and London. The experience has been an education in emerging market resilience. This is a society in recovery from conflict and natural disaster that remains exposed to external shocks, challenged by entrenched interests, and subject to the influence of larger neighbors. Forged in this crucible, Sri Lanka’s tightly knit communities are highly adept at managing uncertainty. But over the past two weeks, that resilience has been tested in ways that are both familiar and deeply alarming.

Since the US and Israeli strikes on Iran, Sri Lanka has been an unlikely subject of headlines. It provided emergency rescue to Iranian sailors after the US torpedoed their ship off the coast near the city of Galle, where I live. It also gave refuge to a second crew and impounded their vessel in a remote port to keep it away from sensitive commercial traffic around Colombo. A relatively new popular government is desperate to remain neutral and focus on the reforms it was elected for. Yet painstaking economic recovery is now colliding with a massive energy crisis and its immediate effects.

The disruption to flows through the Strait of Hormuz, through which roughly one fifth of global oil and shipped gas transits, has triggered a rapid and systemic shock to energy markets. Prices have surged and availability has tightened severely. A crippling shortage of liquefied petroleum gas (LPG) means there is little fuel for cooking. Restaurants and small businesses are shuttering. The lack of fertilizer shipments is thwarting the critical March planting season in this heavily agricultural country. Petrol stations faced strain initially from panicked hoarding behavior (memories of the 2022 crisis are still fresh), and, more recently, from restricted distribution.

Sri Lanka is just a small example of the energy havoc spreading around the world. Within days of the conflict’s outbreak and the disruption in the Strait of Hormuz, much of South and Southeast Asia have moved from price pressure to physical constraint. Asia is particularly reliant on oil and gas from the Gulf, with around 60 percent of its crude oil imports and nearly a third of its liquefied natural gas (LNG) moving through the strait. Almost all countries in the region import most of their fuel and gas, and some only have enough supplies to last a few more weeks. Several Southeast Asia–based refineries, including facilities in Singapore and Malaysia, have cut back ‌output due to constrained crude availability. Panic fuel-buying has spread to the Philippines, Indonesia, Thailand, Vietnam, and Myanmar. Household reliance on imported LPG is on another scale altogether in India, where hundreds of millions of customers wait for days to replace canisters.

This is what a real energy shock looks like on the ground.

Governments are now scrambling to secure supply, drawing on limited reserves, issuing emergency tenders, and in many cases trying to reduce demand.

In recent days, the Sri Lankan government has taken extraordinary steps. It introduced a four-day workweek, and it began moving schools to remote learning on Wednesdays. Transport and public services are being curtailed. On March 15, the government reintroduced a mandatory petrol rationing program that saw millions of subscribers crash the registration website. These are emergency responses to address a fuel-import dependent system under stress.

Lines form to purchase gas near Galle, Sri Lanka, on March 17, 2026. (Phillip Cornell)

Sri Lanka is not alone. Across Asia, governments are implementing emergency measures. Countries are prioritizing household LPG over commercial use. Industrial activity in sectors such as petrochemicals is being curtailed. The Philippines has shortened the workweek. Pakistan has closed schools. Myanmar introduced mobility restrictions.

Air travel is highly sensitive to fuel prices, and airlines are now cutting routes as jet fuel prices rise sharply. This is compounding the air travel chaos caused by closed airspace over the major Gulf “superconnector” airline hubs, with direct impacts on Asian tourist destinations. Across southern Sri Lanka, hotel bookings have dried up.

The latest pressures have been on the power system in Sri Lanka. The Ceylon Electricity Board is a traditional integrated utility; less than 10 percent of its generation is from liquid fuel. But fuel still provides key flexibility, and local diesel generators are common. After a dry season that reduced hydroelectric capacity, and labor disputes in the face of critical power sector reforms, the fuel shortage is adding to existing system stress. Rolling curtailments and power outages began in earnest this week, forcing hotels and critical services like hospitals to draw further on diesel stocks to feed emergency generation.

The economic effects of these various price and supply shocks are quick to materialize. Higher fuel costs are feeding through into transport and food systems, contributing to inflation and growth pressures. Prices for daily goods at our local markets have already gone up as shopkeepers anticipate supply chain disruptions. Economies like Sri Lanka are particularly exposed due to weaker currencies, limited fiscal space, and dependence on imports. The International Monetary Fund has warned that sustained increases in energy prices could raise inflation and reduce growth globally, with emerging markets especially exposed.

Perhaps the most important development is that demand destruction is already underway. The Financial Times, citing JPMorgan analysis, shows that refined fuel shipments in Asia have fallen by 30 to 35 percent, while global oil demand could drop by around one million barrels per day as a result of both price increases and policy measures. The speed of adjustment makes the current crisis unique. During the 2022 energy shock following Russia’s invasion of Ukraine, for example, the effects unfolded over months as supply chains reoriented. In this case, disruption to a central maritime artery has compressed the timeline. Physical shortages, policy responses, and economic contraction are occurring in rapid succession.

Rationing and demand suppression can provide temporary relief, but perceptions and expectations of duration are already causing changes in behavior. Business owners are contemplating risk-mitigation investments such as solar panels and batteries. A neighbor has become the local agent for Sri Lankan–built electric three-wheelers to replace the classic tuk-tuk. There is a real sense of preparing for a structural change.

Motorists line up to purchase gas near Galle, Sri Lanka, on March 17, 2026. (Phillip Cornell)

Resilience is a word often used to describe technical systems, but it is ultimately about people. Sri Lanka has endured considerable hardship in recent decades, but a very real sense of community and shared responsibility provide informal social safety nets that kick into action during tough times. Even as only a guest of the country, I have felt embraced by the community. Invitations to communal iftar dinners, shared use of barbecues or microgrids, and conviviality during hour-long waits for petrol are just small examples of a community solidarity that feels different.

In developed economies, economic disruption is often framed in terms of price increases and inflation. In markets where the impact on daily activities such as cooking, transport, and work is immediate and tangible, disruption becomes a test of crisis behavior.

Sri Lanka is not an outlier but an early warning, and a reminder that the global energy system remains deeply vulnerable to disruption, especially for those who depend on it most.

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Temnycky in Forbes: Hungary creates rift with EU and Ukraine over Russian energy sanctions

Atlantic Council — Fri, 20 Mar 2026 15:05:25 +0000

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Cohen in Forbes: Top 5 Russian energy trends to watch in 2026

Atlantic Council — Fri, 20 Mar 2026 14:36:35 +0000

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Cohen in Forbes: Questions remain about Russian oil in US-India trade deal

Atlantic Council — Fri, 20 Mar 2026 14:30:26 +0000

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Why the Iran war energy shock is different

Atlantic Council — Thu, 19 Mar 2026 19:53:05 +0000

JUST IN

Call it a crude awakening. On Thursday morning, the price of Brent crude shot past $115 per barrel, up roughly 50 percent in the past month. This latest surge followed an Israeli strike on Iran’s South Pars gas field and an Iranian attack on a major Qatari gas hub, which raised fears that attacks would spread to other critical energy infrastructure in the region. All told it’s been a rollercoaster week for financial and energy markets, as Iran has maintained its chokehold on the Strait of Hormuz and the conflict in the region has spread and shown no signs of ending. Below, Atlantic Council experts identify the throughlines in the ups and downs—and forecast what to expect next.

TODAY’S EXPERT REACTION BROUGHT TO YOU BY

Landon Derentz: (@Landon_Derentz): Vice president for energy and infrastructure at the Atlantic Council and former director for energy at the White House during the first Trump administration
Lisa Basquel: Program assistant for European energy security at the Global Energy Center and former staffer with the Delegation of the European Union to the United States
Khalid Azim: Director of the MENA Futures Lab within the Atlantic Council’s Middle East Programs and former global capital markets banker
Josh Lipsky: (@joshualipsky): Chair of international economics at the Atlantic Council and former International Monetary Fund advisor

What’s happening?

The Wednesday attacks on facilities at Qatar’s Ras Laffan Industrial City—a site that accounts for roughly 20 percent of global liquefied natural gas (LNG) supply—“have heightened market concerns that the conflict could spiral into a structural supply disruption,” Landon says. “Such a scenario would carry lasting consequences for global energy affordability, rather than proving a transitory shock that subsides once hostilities end and the Strait of Hormuz reopens.”
The disruptions resulting from the extensive damage to Ras Laffan are hitting “just as Europe begins its critical summer storage refill season,” Lisa adds. There’s little prospect for prices to come down as long as Qatari supply remains offline and Europe and Asia compete for limited LNG cargos, she explains.
“From a market perspective, the issue is uncertainty, both around the path forward and the duration of the shock,” Khalid tells us. “When the fear of loss outweighs the prospect of gain, capital starts to come off the table. Expect fund managers to lock in gains and increase hedges in the absence of clearer policy direction.”
Khalid points to warning signs coming from leveraged private credit markets. “The risk is not the shock itself, but the point at which it forces adjustments across the most leveraged parts of the financial system,” he tells us.
Yet markets are not in freefall. Josh interprets that reaction as many investors continuing to believe that Trump will find a way to resolve the crisis, possibly looking at his pullback from high tariff levels last year and resolution of the Greenland dispute this year as examples of the president’s nose for an offramp. “But it is also possible markets are mistaking geopolitical resilience for immunity,” he adds.

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What’s different about this energy shock?

Since the 1970s, the world has experienced an energy supply shock at least every decade. But Josh offers one explanation for why the rise in energy prices is more severe now than during past shocks: “The concentration of energy exports through the Strait of Hormuz” is coinciding with “ongoing disruptions from Russia’s war in Ukraine,” which has prompted efforts to limit Moscow’s oil and gas exports.
“Markets are starting to realize that a greater share of global energy production is involved in these conflicts than at any time since World War II,” Josh says.
The eleven countries directly involved in the Iran war and the war in Ukraine, Josh notes, account for 51 percent of global crude oil production and 56 percent of global gas production—a larger share than during the first Gulf war.

What can be done?

“Reopening the Strait of Hormuz is the single most consequential step coalition forces can take to stabilize energy markets,” says Landon. “Achieving this will require neutralizing Iran’s stockpile of anti-ship cruise missiles and its asymmetric drone capabilities—the latter also posing a significant threat to regional energy infrastructure.”
Israel and the United States, Landon adds, are targeting drone-production sites and military installations along Iran’s coastline as they “seek to curtail Tehran’s ability to strike critical energy assets in the Gulf and disrupt international shipping through the strait.”
With Gulf states already reducing oil production, Khalid notes, JPMorgan estimates that supply cuts could reach twelve million barrels of oil per day by the end of the week, accounting for around 10 percent of global demand.
The adjustment mechanism for such a supply shock is reducing energy consumption, says Khalid. But in the short term “energy demand is highly inelastic.” Meaningfully reducing demand “requires a structural shift in consumer behavior,” he explains. And that, in turn, “takes time.”

Read more analysis on the Iran war’s energy and economic impact from Landon, Lisa, Josh, and Khalid.

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The Iran war tests Taiwan’s energy resilience

Kevin Li — Thu, 19 Mar 2026 14:15:49 +0000

The unfolding global energy crisis triggered by the US-Israel war against Iran threatens to expose Taiwan’s long-standing energy weaknesses. Taiwan relied on imports to meet 95 percent of its energy needs in 2025, including over 99 percent of its demand for oil and natural gas. Furthermore, before the war, it received over 38 percent of its annual natural gas supply and approximately 70 percent of its crude oil from the Middle East, according to data from Kpler.

To address the supply shortfall the war has created, Taiwan has assured the public that it has about 150 days of oil supply in reserve and has secured sufficient supplies of liquefied natural gas (LNG) to meet consumption needs through April. However, the expected summer surge in electricity demand could create severe energy shortages if shipments through the Strait of Hormuz don’t resume soon. In this scenario, there are measures Taiwan can take to ease the severity of the economic impact—but only slightly. An extended crisis could see large energy price spikes or even power rationing, potentially disrupting semiconductor manufacturing and cascading through global supply chains. Over the longer term, this energy shock serves as an urgent reminder that Taiwan should expedite its renewables build-out and promptly commit to restarting its nuclear power plants to alleviate its overreliance on fossil fuel imports.

Taiwan’s oil reliance has declined, but remains high

The oil intensity of the Taiwanese economy has decreased steadily over the past two decades, matching the larger global trend. This decline is attributable to energy efficiency improvements, the reduced role of oil in power generation, and the expansion of the services and semiconductor industries, which have diminished the relative weight of the oil-dependent petrochemical sector within the Taiwanese economy. However, Taiwan remains more oil-intensive than other major economies, leaving it comparatively more vulnerable to oil supply shocks. In the long run, oil intensity should continue to fall as semiconductors grow to represent a larger share of Taiwan’s gross domestic product (GDP).

Taiwan’s pivot toward natural gas creates new vulnerabilities

While oil intensity has fallen, the relative importance of natural gas within Taiwan’s electricity mix has surged, intensifying dependence on another form of imported energy. The share of natural gas in Taiwan’s power generation has expanded from around 17 percent in 2006 to nearly 48 percent in 2025. This growth was accelerated by the Democratic Progressive Party (DPP)’s policies to reduce coal usage and fully phase out nuclear power, a goal achieved in May 2025. Furthermore, although the semiconductor industry has contributed to declining oil intensity through its growing economic importance, the high energy-intensity of chip manufacturing will likely continue to increase overall demand for electricity as the sector expands. Indeed, the broader category of electronics and electrical equipment manufacturing already accounts for nearly a quarter of electricity consumption, with the Taiwan Semiconductor Manufacturing Company (TSMC) alone accounting for almost 10 percent.

Taiwan has mitigated the risks of its reliance on natural gas imports by diversifying LNG suppliers and expanding procurement from like-minded partners such as Australia and the United States. Nevertheless, Qatar still accounts for around a third of the island’s LNG imports, meaning an extended Strait of Hormuz closure or QatarEnergy production stoppage could be especially damaging for Taiwan. The current crisis presents a test for the Taiwanese government’s ability to respond effectively to supply disruptions. Taiwan only has 11 days of natural gas inventories in reserve, which is much lower than other LNG import dependent East Asian countries such as South Korea and Japan. The Ministry of Economic Affairs recently secured enough alternative shipments to meet demand through April and has publicly ruled out the possibility of a natural gas shortage. The Taiwanese government is seeking to source additional shipments from Australia and the United States from May onward, and has already announced new supply contracts to increase US LNG imports beginning in June. In the long run, Taiwan should continue to increase imports from not only the United States, but also Southeast Asia and other regions.

Rising electricity demand in the summer could lead to severe shortages

If Iran-related energy import disruptions continue into the summer, it could become increasingly difficult for Taiwan to replace its supply of Qatari LNG. This is especially true given that electricity demand will likely surge going into July and August. Demand in July has historically been up to 40 percent higher than in February. In addition, Taiwan’s other LNG import-dependent neighbors such as South Korea and Japan would also need to replace their Middle Eastern LNG shipments, possibly creating competition for limited alternative supplies. While the Minister of Economic Affairs has stated that there is currently no need for power rationing, an extended shortage paired with summer heat could create difficult tradeoffs between household demand and industrial needs, such as those required for semiconductor manufacturing.

The current crisis heightens urgency for long-term action to strengthen energy security

Despite ongoing efforts to diversify its energy mix and import sources, Taiwan’s structural energy challenges remain largely unresolved. While energy import dependency has fallen slightly over the past few years, the pace of change remains far too slow to mitigate the risks of extended global supply shocks. The Taiwanese government’s current strategy for seeking alternative LNG shipments is prudent, but it may prove insufficient to avert an energy shortage as summer demand peaks. Given this immediate risk, Taiwan may need to substantially expand its ongoing emergency response through LNG spot market procurement and short-term contract renegotiation, all of which will likely come at higher costs. Beyond the current moment, however, nuclear and renewable energy present the only realistic options for Taiwan to achieve some level of energy self-sufficiency given the island’s inherent geographic limitations. Expanding investment in its energy security will also better prepare Taiwan for a potential cross-Strait contingency. How Taiwan chooses to address these vulnerabilities based on lessons learned from the current energy shock will determine how well it responds if confronted by more acute challenges in the future.

Kevin Li is a young global professional at the Atlantic Council’s Global Energy Center.

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The post The Iran war tests Taiwan’s energy resilience appeared first on Atlantic Council.

Attacks on desalination plants in the Iran war forecast a dark future

Ginger Matchett — Wed, 18 Mar 2026 19:27:31 +0000

WASHINGTON—The ongoing conflict in Iran has focused global attention on surging energy prices caused by supply-chain disruptions in the Strait of Hormuz. As devastating as these oil and gas constraints are to both the Middle East and global markets, the war also poses a threat to another critical resource that keeps the Gulf afloat: water. Several limited attacks on desalination plants in both Iran and Bahrain in the past two weeks offer a glimpse at the potential danger if this infrastructure were intentionally and systematically targeted. Either in this war or a future Middle Eastern conflict, water resources could prove an attractive target for anyone seeking to cause harm and destabilize communities.

On March 7 and 8, desalination plants in Iran and Bahrain were targeted in the ongoing conflict. Iranian Foreign Minister Abbas Araghchi accused the United States of attacking a desalination plant in Iran, while Bahrain’s interior ministry said that its plant was struck by an Iranian drone. The damage to the Bahraini desalination plant reportedly affected water supply in as many as thirty villages. Kuwait and the United Arab Emirates (UAE) have also reported missile-related damage to desalination plants during the conflict. Though it is unclear if Iran deliberately targeted all of these plants, this infrastructure is critical to Gulf states and within a short striking distance of Iran. It could become a tempting target for Tehran if the conflict persists.

Countries in the Middle East face arid conditions and frequent water shortages, often relying on desalination infrastructure to turn saltwater into freshwater. Without such technology, which removes salt through reverse osmosis, roughly 100 million individuals in the Middle East would have no regular access to drinking water. There are around five thousand desalination plants across the Middle East, more than four hundred of which are in the Gulf. And a smaller number of plants are responsible for a large share of the output. More than 90 percent of the Gulf’s desalinated water, for example, comes from just fifty-six plants. This concentration and proximity to Iran makes the Gulf’s desalination infrastructure particularly vulnerable as the exchange of missiles and drones intensifies.

In Kuwait and Bahrain, desalinated drinking water accounts for around 90 percent of the countries’ supply, along with roughly 86 percent in Oman, 80 percent in Israel, about 70 percent in Saudi Arabia, and 42 percent for the UAE. In Qatar, it is upwards of nearly 99 percent.

A deliberate series of strikes on desalination plants could deepen regional instability and trigger further humanitarian disasters or migration crises in the Gulf.

If Iran successfully destroyed the Gulf’s desalination infrastructure, then the consequences could be devastating. The effects of a significant strike would likely ripple across cities, disrupting water supplies to local and state-operated public facilities, businesses, houses, hotels, and agricultural operations. This infrastructure is also integrated into national electrical grids, meaning damage could cascade into city-wide power outages or necessitate calls for complete evacuations.

Though not as dependent on desalination plants as some Gulf countries, Iran, too, is experiencing a water crisis. The country is currently in its fifth year of drought, and strikes on Iran’s currently operating plants would likely cause far-reaching pain. This would be made worse by Iran’s constraints on repairing and building additional desalination plants due to international sanctions and rising energy costs.

Moreover, the Gulf’s reliance on desalinated water is only projected to grow. The accelerating effects of climate change are increasing the value of this water source as shallow groundwater supplies—the only renewable water source in the Gulf region—dry up. Saudi Arabia, for example, has announced plans to invest around $80 billion in building additional plants in the coming years.

To date, international humanitarian and water laws haven’t safeguarded civilian water infrastructure, as demonstrated by attacks on targets vital to water supply in Ukraine and Gaza. The Gulf itself has suffered attacks on desalination plants in the past. During its invasion in 1990 of Kuwait, for example, Iraq targeted desalinations plants. It took Kuwait years for the country to restore the infrastructure. More recently, the Houthis in Yemen attacked plants in Saudi Arabia in 2022. The toll is often quick and the consequence potentially long: US intelligence reports have indicated that striking water infrastructure and critical equipment in Gulf states could cause them to lose the majority of their drinking water in days and face national water crises lasting months.

Since 2006, Gulf countries have invested at least $53.4 billion in developing desalination infrastructure. They have also created contingency plans to defend the plants with pipeline networks, massive storage reservoirs, and protective barriers to shield intake valves. Currently, the strategic resiliency capacities of Saudi Arabia and the UAE are significantly greater than Bahrain, Qatar, and Kuwait.

The consequences of a full-scale water war would extend beyond the Gulf, as the region supplies 40 percent of the world’s desalinated water. As the Gulf’s population grows, continues to rapidly urbanize, and consumes increasing volumes of water, a natural resource crisis there could lead to water scarcity in communities throughout the Middle East and beyond. Studies indicate that by 2030, there could be a 40 percent global shortfall in freshwater resources while demand increases by more than 20 percent, making desalination technology all the more essential. Many threats to water supplies need to be considered, including climate change, pollution, agricultural production, and ecosystem degradation. But safeguarding water supplies also requires investing in the defense of water infrastructure and technologies. Perhaps most urgent are anti-drone capabilities.

As the Iran war continues, there is a serious risk that a deliberate series of strikes on desalination plants could deepen regional instability and trigger further humanitarian disasters or migration crises in the Gulf. All parties to the conflict should avoid escalating what is already a regional war into an even deeper conflict over the Gulf’s water supply.

The post Attacks on desalination plants in the Iran war forecast a dark future appeared first on Atlantic Council.

How the Iran war could trigger a European energy crisis

Lisa Basquel — Tue, 17 Mar 2026 16:22:41 +0000

WASHINGTON—With the conflict in the Gulf well into its third week, a difficult reality is setting in across Europe: Even if a cease-fire were agreed today, the continent is likely already heading toward an energy crisis.

The ongoing US-Israeli strikes on Iran, along with Tehran’s retaliation across the Gulf, have produced one of the most severe disruptions to global energy markets in decades. At the center of the crisis is the Strait of Hormuz, the most critical chokepoint in the global energy trade. Before the current conflict, roughly 20 percent of the world’s oil supply transited the strait each day. The looming threat of Iranian sea mines and missile attacks has brought commercial tanker traffic through the Strait of Hormuz to a near standstill, as some operators opt to anchor outside the waterway rather than risk passage.

While the effective closure of the strait has sent shockwaves through global oil markets, Europe’s immediate vulnerability lies elsewhere: liquefied natural gas (LNG). Approximately 20 percent of global LNG trade passed through the strait before the current conflict, much of it originating in Qatar, the world’s second-largest LNG exporter. There is no viable alternative export route for this LNG.

For Europe, the timing could scarcely be worse.

Preparation for winter starts now

Europe is entering the critical period when underground gas storage must be replenished ahead of winter. Yet European countries are beginning this process in one of the weakest positions in years. Refilling these reserves now depends heavily on LNG imports, following Europe’s rapid shift away from Russian pipeline gas following Russia’s full-scale invasion of Ukraine in early 2022. According to the Aggregated Gas Storage Inventory database, European storage levels are currently below 30 percent, a five-year low. A colder-than-average winter, combined with increased gas burn in the power sector, pushed European gas demand up nearly 7 percent since the start of the year. At the same time, pipeline year-over-year exports from the European Union (EU) to Ukraine surged more than tenfold, further accelerating withdrawals.

Under EU regulations, storage levels must reach at least 90 percent capacity by December. Given current conditions, Europe will need to inject nearly 60 billion cubic meters (bcm) of gas during the upcoming refill season just to meet this target. For context, that translates to about 586 terawatt-hours (TWh) of energy—enough to power around 57 million US homes annually, based on average household consumption data from the US Energy Information Administration. Crucially, not all gas imports can be directed into storage; much of it must first satisfy ongoing daily consumption. Even before the escalation in the Gulf, Europe’s depleted storage position was forcing it to plan record LNG imports in 2026.

Further squeezing the LNG market is the March 2 Iranian drone strike on QatarEnergy’s Ras Laffan facilities, which forced an immediate shutdown of production. Two days later, the company declared force majeure, meaning that QatarEnergies is temporarily suspended from its contractual commitments of LNG shipments to customers. This declaration has added significant uncertainty to the timeline for restoring Qatari output. Even if the conflict were to end today and the strait were to reopen, full restoration of production could take weeks or even months. Markets know this: QatarEnergy’s announcement triggered an abrupt spike in European gas benchmarks, with prices jumping by more than 50 percent on March 2. It was the largest single‑day increase since the 2022 energy crisis following the Russian invasion of Ukraine and the ensuing disruption of Russian pipeline flows. These market pressures affect far more than just Europe; they risk reigniting competition between European and Asian importers for scarce LNG cargoes.

Between Asia and Europe

In the past, Asian importers dominated global LNG markets through long-term contracts with exporters, while Europe relied heavily on pipeline gas from Russia. When those flows collapsed after Russia’s 2022 invasion of Ukraine, European buyers drove LNG prices sharply higher, drawing cargoes originally contracted for Asian markets toward European terminals. This dynamic characterized the 2022 energy crisis, when Europe repeatedly outbid Asian buyers for flexible supply. The current crisis, however, may reverse that pattern. As the loss of Qatari supply tightens global LNG markets, Asian buyers may be willing to outbid Europe for available cargoes—particularly the four major East Asian economies of China, Japan, South Korea, and Taiwan. Together, these four accounted for approximately three-quarters of all LNG imported across Asia in 2025, according to data sourced from Kpler. China alone relied on Qatar for 29 percent of its LNG imports in 2025, making it the world’s top LNG importer that year.

Early signs of this dynamic may already be emerging, with reports in recent days that a US LNG tanker originally bound for Belgium changed course toward China—a potential signal that this competition for cargoes is one Europe will likely lose on cost. US LNG exports have become one of Europe’s most important diversification tools since 2022, but even if US producers increase output, it is unlikely to fully offset the loss of Qatari supply in the near term. US liquefaction facilities are already operating near capacity, and the JKM–TTF spread, the price differential between Asian and European LNG markets, has fluctuated sharply in recent months. The spread could significantly widen as Asian buyers compete for alternative supply.

The scale and cost of this supply gap are further amplified by Europe’s decision to phase out Russian pipeline gas and LNG imports by the end of 2027. The EU is set to ban short-term Russian pipeline contracts beginning in June of this year, with all remaining long-term flows required to cease by the end of September 2027. While Russian LNG accounts for a relatively small share of Europe’s supply, it remains a meaningful component: In 2025, the EU imported roughly 17 bcm of Russian LNG, representing approximately 13 percent of total gas imports. European policymakers had anticipated replacing this volume primarily with US LNG, but given the ongoing Middle East conflict, Europe’s plans to fill this gap are increasingly fragile, placing immense strain on both supply security and cost.

Back where it was in 2022

Brussels has yet to offer a meaningful solution for the energy shock. European Commission President Ursula von der Leyen has indicated that the EU is exploring measures such as the expanded use of power purchase agreements, temporary state aid mechanisms, and potential gas price caps. During the 2022 crisis, proposals for a gas price cap faced strong opposition from Germany and the Netherlands, which argued that artificially limiting prices could undermine Europe’s ability to attract scarce LNG cargoes and allow Asian buyers to outbid European importers. Today, too, similar measures are likely to face contention and stoke further divisions among the EU member states.

The current crisis has reignited a debate that emerged in 2022 regarding Europe’s energy strategy and dependence on external suppliers. From 2022 to 2024, Europe undertook an ambitious push to diversify its energy mix and accelerate the deployment of nuclear and renewable capacity. However, these efforts were partially overshadowed by reliance on US LNG and related trade negotiations, in effect trading one dependency for another. Analysts have long cautioned against this pattern of dependence, yet after years of shutting down continental energy projects, most notably the near-complete collapse of German nuclear energy, Europe now finds itself back where it was in 2022: heavily reliant on US LNG, exposed to global price competition, and bringing a policy knife to a global production gun fight. To break this cycle, Europe would need to invest more in its own production capacity. But further deployment of clean energy infrastructure or nuclear development is a multi-year process, and thus it is not a solution to the current crisis.

The Russia question

The energy shock has also reopened the question of Russian sanctions. Notably, the United States appears to be signaling a change in tone. Last week, the White House temporarily loosened restrictions to allow India to import Russian crude oil stranded at sea—a shift from what was agreed to during US-India trade negotiations in February. On March 12, the administration went further, issuing a broader temporary exemption in permitting the sale of Russian seaborne oil currently in transit. The administration’s rationale was that this will help ease pressure on global energy prices. Though framed as a short-term measure, the move underscores how quickly sanctions policy can shift under acute energy market pressure. US Treasury Secretary Scott Bessent further justified the measure by arguing that Russia taxes production rather than sales, so licensing completed shipments therefore does not provide significant financial benefit to the Kremlin. This argument is difficult to sustain: Since February 2022, Moscow has repeatedly restructured its oil and gas tax regime to maximize state revenues, and there is little reason to believe it would not do so again.

The Group of Seven (G7) price cap could tell a similar story. The mechanism works by using Western control over global shipping insurance and finance as leverage: tanker operators and insurers who want access to Western financial services must certify that the oil was sold below a set price ceiling, forcing buyers to demand a discount from Moscow. When the cap was set at sixty dollars in 2022, it was just below the market price for Russian oil. But Russian crude has since fallen well below that level, meaning the cap no longer constrains prices. In response, the EU and the United Kingdom lowered their ceiling to around forty-seven dollars to restore its bite, but the United States declined to follow, creating a gap that operators can exploit, and particularly undermining the EU’s move. The Trump administration has never been enthusiastic about the mechanism, and a decision to stop enforcing it entirely cannot be ruled out. If that happens, then one of the few remaining tools limiting Russian energy revenues effectively collapses.

So far, European leaders have mostly remained firm in their commitments to diversify away from Russian energy. On March 11, von der Leyen warned that returning to Russian energy would be a “strategic blunder” that increases Europe’s vulnerability. At a recent meeting, French President Emmanuel Macron, German Chancellor Friedrich Merz, and Italian Prime Minister Giorgia Meloni joined other Group of Seven (G7) leaders in rejecting calls to ease sanctions despite the turmoil in global oil markets. Merz has also publicly criticized the US decision to temporarily lift sanctions, calling it “wrong.” However, Belgian Prime Minister Bart De Wever broke openly with the EU’s agreed position this past weekend, arguing that Europe “must normalize relations with Russia and regain access to cheap energy.” He added that European leaders privately agree with him but are unwilling to say so publicly. Hungarian Prime Minister Viktor Orbán remains another strong European voice publicly urging a reconsideration, though his position carries little weight among his peers because of his long-standing alignment with Moscow.

Could the EU extend the window of continuing Russian supply past the current deadlines? Perhaps, but doing so would require reopening a complex political and legislative process between the Commission, the European Parliament, and the Council. Even under accelerated or emergency procedures, such a move would be politically fraught. In practice, this would mean revisiting the sanctions architecture that has been painstakingly constructed since 2022. Beyond the legal and institutional challenges, such a move would undermine the EU’s geopolitical strategy and effectively finance Russia’s continuing war in Ukraine. For Brussels, this option remains politically untenable. But pressure from individual member states may continue to intensify if prices rise sharply.

The European dilemma

What this conflict has made clear is that while higher oil prices will raise energy costs globally, Europe’s more immediate challenge is securing sufficient LNG cargoes to refill its depleted gas storage. Toward this end, the calendar is working against European importers. With the refill season running from April to November, losing even two months to a Qatari production halt means forfeiting roughly 25 percent of the injection window before a single additional cargo arrives. European countries could attempt to suppress demand for gas through conservation measures and reduced industrial energy consumption, though the scale required would be politically and economically difficult to sustain.

More realistically, European buyers will be forced to wait until Asian demand is satisfied, and then pay whatever price remains. Unlike emerging market economies, which may be priced out entirely, Europe has the financial depth to outbid most competitors. But that calculation carries its own cost: securing supply at any price means passing that cost onto households and industry, with all the economic and political consequences that follow.

Ultimately, the crisis reduces to a binary—scarce cargoes mean physical shortages; available but expensive supply means an extraordinary price shock. An obvious release valve—importing Russian pipeline gas once again—remains politically toxic. Reopening that faucet would undercut two years of painful European energy diversification, hand Moscow a significant revenue stream at a moment when the war in Ukraine remains unresolved, and reintroduce precisely the strategic dependency that left Europe exposed in the first place. Either way, this episode has exposed structural weaknesses in Europe’s energy supply chain. Finding a way out of this dilemma will dominate the continent’s political and economic agenda for months to come.

The post How the Iran war could trigger a European energy crisis appeared first on Atlantic Council.

The Iran war is good for the Russian economy but bad for Putin’s prestige

Maksym Beznosiuk, Will Dixon — Tue, 17 Mar 2026 15:50:23 +0000

Two weeks since the outbreak of the Iran war, commentators around the world are already declaring Vladimir Putin the winner. It is easy to see why so many seem to believe that the Russian President will emerge as the main beneficiary of escalating hostilities in the Middle East. After all, from energy exports to the invasion of Ukraine, Putin clearly has much to gain.

The Russian economy has been showing signs of severe strain in recent months as the combined toll of international sanctions, Ukrainian airstrikes, and ballooning defense spending negatively impact the Kremlin coffers. The Iran war now threatens to transform this picture in Moscow’s favor.

With energy prices already spiking and the Strait of Hormuz blocked, the world is entering a fuel crisis that could reinvigorate Putin’s war economy. The United States has already relaxed sanctions on the Kremlin in a bid to ease energy pressures elsewhere. If the current conflict becomes a prolonged campaign, Moscow may be able to repair much of the economic damage done over the past four years.

The Iran war could also provide a more direct boost for Russia’s ongoing invasion of Ukraine. With the Trump administration now firmly focused on the Middle East, the Kremlin will face significantly less diplomatic pressure to engage in US-led peace talks with Ukraine, while Kyiv will struggle to keep Russia’s invasion high on the international agenda.

Crucially, the US is expected to prioritize the supply of air defense interceptor missiles to the Middle East over Ukraine. With limited numbers of missiles produced annually, this means Ukrainian air defense crews might soon find themselves short of the ammunition required to defend their cities and infrastructure against Russian ballistic missiles. The consequences for the civilian population could be disastrous.

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Despite these potential advantages, there is little sign of celebration in the Kremlin. While Russia appears well-positioned to benefit economically and militarily, the US-led war with Iran has also served to highlight Russia’s declining international influence and has underlined Moscow’s limitations as an ally.

Since the onset of hostilities at the end of February, the Kremlin has restricted itself to a limited number of statements and has largely refrained from any strong condemnation of the United States. While reports indicate that Moscow is providing Iran with military assistance including targeting data and drone warfare expertise, the Russian response has been strikingly muted and has fallen far short of America’s very public support for Ukraine following Putin’s 2022 invasion.

Putin’s cautious reaction is particularly noteworthy in light of the support Iran has provided to Russia over the past four years. Since 2022, Tehran has supplied Moscow with large quantities of drones, missiles, and ammunition. This backing proved especially important during the early stages of the war, before Russia was able to expand domestic production and diversify its lines of supply.

Despite much speculation over an emerging “Axis of Autocrats” including both Russia and Iran, Putin has so far proved unwilling or unable to repay Tehran for its earlier backing. While Russian and Iranian officials hailed the signing of a “comprehensive strategic partnership agreement” in January 2025, this has not translated into significant Russian aid since the current conflict erupted.

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Russia’s failure to robustly support its Iranian allies is the latest in a series of similar geopolitical setbacks since the beginning of the full-scale Ukraine invasion more than four years ago. In late 2022, Kremlin credibility was dented by Moscow’s inability to prevent a renewal of hostilities between Azerbaijan and Armenia, leading to the collapse of Russia’s traditional security role in the South Caucasus. US President Donald Trump has since stepped into the void to lead peace efforts in the region.

The fall of Kremlin-backed Syrian dictator Bashar al-Assad was to prove an even more humiliating blow for Putin. For almost a decade, Moscow had invested significant military and diplomatic resources to keep Assad in power. This engagement was touted by Moscow as proof of Russia’s return to great power status. However, when the Assad regime began to rapidly unravel in late 2024, Russia was unable to intervene. Instead, the Kremlin limited itself to offering the ousted Syrian leader asylum.

Likewise, Russia proved powerless to assist Venezuelan President Nicolás Maduro when he was captured by the United States in early 2026. Moscow was seen as a key strategic partner of Maduro and had provided Caracas with a wide range of financial and security backing. Days before the American operation, Russia was still voicing its “full support” for Venezuela. However, the Kremlin ultimately took no action when US forces swooped.

From Armenia and Syria to Venezuela and Iran, Moscow’s obvious inability to aid its allies in times of crisis has seriously damaged Russia’s reputation as a global power. While the Kremlin is still capable of supplying weapons and spreading propaganda, these limited tools are no substitute for the kind of substantial security support that potential partners seek.

For Putin, this matters. Throughout his reign, he has carefully cultivated a strongman image and sought to reassert Russia’s claims to superpower status. However, the world’s leading powers do not maintain their influence through rhetoric alone.

Following the full-scale invasion of Ukraine, Russia’s repeated failure to defend its international allies has revealed the underwhelming reality behind Putin’s posturing. This loss of prestige has very practical implications for Moscow’s ability to attract partners and project strength on the world stage. Putin hoped that by conquering Ukraine, he could return Russia to the dominant role it occupied during the Cold War. Instead, he has become bogged down in an invasion that has ruthlessly exposed modern Russia’s geopolitical limitations.

William Dixon is a senior associate fellow at the Royal United Service Institute specializing in cyber and international security issues. Maksym Beznosiuk is a strategy and security analyst whose work focuses on Russia, Ukraine, and international security.

The Strategic Partnership Declaration that Dan and Zelenskyy signed in Bucharest formalizes a relationship that has been intensifying since the start of the war. The framework covers defense cooperation, energy interconnection, economic collaboration, education, and minority rights. These areas suggest that both governments are seeking to anchor their partnership in long-term strategic interests rather than temporary wartime coordination. The progress made on sensitive issues such as minority rights also suggests that both capitals increasingly view their bilateral relationship through the lens of regional security.

The most strategically consequential outcome of the visit is the agreement on joint drone production in Romania, financed through the SAFE program with an estimated allocation of around €200 million. The logic of the project reflects a new model of cooperation: Ukraine contributes battlefield-tested technological know-how developed during the war, while Romania provides NATO territory, industrial capacity, and access to European defense funding. In practice, this represents a shift from traditional military assistance toward co-production of defense technologies, integrating Ukraine’s wartime innovation into the European defense industrial ecosystem.

Energy cooperation represents another structural dimension of the agreements announced on March 12.

Since late 2022, when Russia began to systematically target Ukraine’s energy infrastructure as part of its military strategy, Romania has been one of Ukraine’s most important European energy partners. It has, for example, advocated within the European Network of Transmission System Operators for Electricity, known as ENTSO-E, for greater power exports to Ukraine. It has also scrounged Romania’s system for spare parts that could be used for grid and generation repair, and it has leveraged Romania’s long history with civilian nuclear power to support the heroic efforts of Ukraine’s nuclear operator, Energoatom, to maintain safe operations under the most severe stress imaginable.

Romania is likely to become one of the main operational gateways for reconstruction projects and postwar economic cooperation.

In parallel, Ukrainian companies are increasing their footprint in Romania, illustrating how the country’s private sector is adopting an increasingly European focus. For instance, DTEK*, Ukraine’s largest private energy company, is growing its renewables portfolio through new build and acquisitions in Romania’s wind and solar sectors, aiming for a one-gigawatt portfolio by 2030. Projects in this effort include the 60-megawatt Ruginoasa wind farm, the 53-megawatt Glodeni I solar park, and the 126-megawatt Vacaresti solar farm commissioned this past December. Metinvest, DTEK’s sister company, has acquired ArcelorMittal’s Tubular Products plant in Iași, near the Romanian border with Moldova. This cluster of energy and metals investment will now be complemented by defense industry—and in any post-conflict scenario the role of Romanian ports and rail in supporting Ukrainian logistics will grow exponentially.

Meanwhile, Romania’s longstanding support to Moldova—whose grid is umbilically tied to Ukraine—has played an indispensable role in helping both countries to weather four winters of Putin’s energy war and the end of Russian gas deliveries to Transnistria. Plans to accelerate electricity interconnections—such as the Suceava-Chernivtsi line—and to expand cooperation on gas routes and storage capacity point toward a deeper integration of Ukraine into the regional energy network.

Romania is also playing a leading role in advancing the commercial understandings necessary for the Vertical Corridor, a planned gas route from Greece to Ukraine. This effort is opening opportunities for increased US liquefied natural gas (LNG) exports to the region, and it helps position southeastern Europe for the European Union’s 2027 phase-out of all Russian gas. Meanwhile, Romania’s status as the European Union’s largest gas producer—anchored in the offshore Neptun Deep project—points to the future role of Black Sea resources in helping to replace gas formerly sold by Russia. Strategically, this would strengthen Ukraine’s resilience while reinforcing Romania’s ambition to position itself as a regional energy hub linking Ukraine and Moldova with European Union member states.

But Zelenskyy’s visit also showed how the Vertical Corridor is about much more than energy molecules. The discussions in Bucharest point to a broader role for Romania beyond wartime support, with Bucharest increasingly preparing to assume a key role in the reconstruction of Ukraine, particularly in ports, infrastructure, logistics, and cross-border economic integration. With its geographic proximity, access to European Union funding mechanisms, and growing strategic partnership with Kyiv, Romania is likely to become one of the main operational gateways for reconstruction projects and postwar economic cooperation.

Bucharest is steadily moving from a supportive neighbor to a strategic enabler in shaping the security architecture of the Black Sea region and NATO’s eastern flank.

Note: DTEK’s parent company, System Capital Management, is an Atlantic Council donor.

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By threatening the Strait of Hormuz, Iran turns geography into a global economic weapon

Alex Mills — Thu, 12 Mar 2026 20:48:17 +0000

Following US-Israeli strikes against Iran, Tehran has threatened to attack any vessel that passes through the Strait of Hormuz. Though no formal blockade is in place, the warning has effectively shut down one of the world’s busiest energy shipping lanes.

This disruption adds to existing security pressures on key maritime corridors in the region, including cargo routes through the Red Sea and the Suez Canal, where Houthi attacks have forced many operators to reroute and driven up insurance and freight costs.

Beyond the immediate economic fallout, however, Iran’s de facto blockade highlights a broader strategic challenge: it shows how a single country can hold critical shipping lanes hostage and exert geopolitical pressure at relatively low cost.

Tehran’s chokehold on global trade

Iran has long understood its unique geographical position and the critical importance of maritime trade. Over several decades, the Iranian government and industry have utilized aspects of the maritime sector to protect economic security and circumvent sanctions. This includes the longstanding use of shadow fleets, the manipulation of Automatic Identification Systems (AIS) data, and a general disregard for established maritime law and regulations.

Now, Iran is turning its geographic advantage into a lever for global economic pressure. Following the Iranian threat against vessels in the Strait of Hormuz, major shipping companies—including Maersk, Hapag-Lloyd, and CMA CGM—have halted their routes through the strait. Last week, this was further compounded by Maersk’s decision to completely suspend its FM1 service, connecting the Far East to the Middle East, and its ME11 service, which runs from Europe to India via the Suez Canal and the Red Sea. The ME11 had only recently been relaunched and was advertised as significantly reducing transit times.

Iran is now utilizing its de facto control over shipping lanes and its years of experience in evading sanctions through maritime trade to escalate the conflict into a potential global economic turning point.

Insurance is technically available for vessels in the area, but likely prohibitively expensive even for firms willing to take the risk. As a result, vessels are weighing anchor in regional ports, hoping to avoid the worst.

The most immediate impact is on energy pricing, as Middle Eastern oil and gas can no longer be safely transported via these routes. Waiting in port may allow operators time to reassess the situation, but given the scale of the conflict, it could still leave vessels vulnerable.

Oil tankers aren’t the only vessels in the area, however. Many operators utilize this route for Asia-Europe trade, providing additional port calls and refueling opportunities.

Energy prices are just the tip of the iceberg

From a maritime perspective, solutions are few and far between. Vessels caught on either side of the Strait of Hormuz when the conflict began are now waiting in nearby ports for safe passage.

Vessel routes are determined far in advance—often several months ahead—making it difficult to redirect and find suitable berths to either unload or wait out the conflict, further compounding logistical pressures. Ports are now congested as vessels overstay their scheduled berth bookings, while additional ships weigh anchor, hoping for a swift resolution and reopening of the strait.

Safety remains a major concern for vessels—not just due to missiles or drones, but also due to GPS jamming, which disrupts navigation systems. Though the source of the jamming remains uncertain, the impacts are direct, with vessels unable to accurately broadcast their location. Combined with ships intentionally “going dark” by turning off AIS, it is increasingly difficult for vessels to track each other.

This creates risks not only for vessels in transit but for all ships operating in the area. The large vessels utilized for transport in the Middle East cannot quickly change direction. Being unable to accurately locate other ships dramatically increases the risk of collision—and considering many vessels in the area transport petroleum or chemical products, an accident could trigger a major ecological disaster.

Redirection creates additional challenges

As other routes are utilized, there will be longer delivery delays and higher costs for transport and insurance.

The “solution” for many shipping firms has been to redirect vessels around the Cape of Good Hope. This adds not only additional transit times but also higher fuel costs due to longer periods at sea and more challenging weather and sea conditions.

Depending on how long the conflict lasts, additional bookings will create a crunch. Vessel numbers and capacity are limited, and many capable ships are already committed months in advance. Redirecting ships already en route will take time, energy, and money.

The closure of Middle Eastern shipping routes has a particularly acute impact on Europe, as these corridors serve many of the continent’s major ports. The already high costs of detours and delays are compounded by the fact that the European Union has been working to lower maritime emissions by including them in its Emissions Trading System, adding another layer of cost.

Longer detours around the region further drive up transport expenses, and even a swift end to the conflict would offer little relief. These costs are already baked in, with the ripple effects of rerouted shipping, repriced services, and recalculated insurance premiums well underway.

A playbook for creating economic havoc

The larger issue this raises is the continued demonstration of how a single country can shut down critical shipping routes traversing its territory.

Despite severe bombardment and decades of sanctions that have crippled its economy, Iran can effectively hold the Strait of Hormuz hostage. Maritime traffic has virtually halted without the need for an intensive naval presence or significant additional military expenditure.

The Strait of Hormuz is only one of several major shipping line chokepoints. Similar congestion points exist naturally, such as the Strait of Malacca, while others—like the Panama Canal and the Suez Canal—are major feats of engineering.

With over 80 percent of the world’s trade conducted via ship, halting even one of these routes for a short period can create economic shocks—and a prolonged closure could easily trigger sustained global disorder at best, and a major crisis at worst.

Iran is demonstrating that mass-produced drones, limited firepower, and credible threats may be enough for any country positioned along a critical maritime chokepoint to shut down major shipping lanes. The consequences could be far more severe if such leverage were wielded by a nation with a stable economy or a state-of-the-art navy.

The ability to hold and maintain control of shipping lanes creates immense economic pressure with few practical countermeasures, quickly turning global trade into a geopolitical hostage situation, not just for those directly involved in the conflict, but for the global economy at large.

The damage has already been done

This disruption comes at the same time that European countries face increased energy costs due to the ongoing Russian invasion of Ukraine. The United Kingdom, for instance, is expected to see a sharp increase in inflation figures, which will be further exacerbated as energy prices rise. Alongside increasing oil prices, the cost of transporting goods via ship will also increase.

From the operating side, how vessel owners and operators act in the coming weeks will be telling. In the immediate term, vessels could increasingly “go dark” and attempt to maneuver their way around the conflict. This has been done before but is a risky approach, considering it obscures visibility not only for hostile actors but also for other vessels in a high-traffic area.

If the conflict drags on, vessel flagging could become more important. Vessels have been using Chinese designations, for instance, to dodge Houthi attacks in the Red Sea. It is possible this will become necessary for traversing the Strait of Hormuz as well. However, changing flags also comes with its own complications: it alters the regulatory and legal regime for the vessel, as well as the flagging countries’ protection obligations.

Regardless of how long the Iran war lasts, the economic damage has already been done. Oil prices continue to push above $100 per barrel, vessels remain stranded, and shipping costs remain high. Iran has shown how easily a strategically positioned country can create global economic shocks. The geopolitical genie is out of the bottle: by capitalizing on geography to disrupt global trade, countries can strengthen their strategic position at relatively low cost.

Alex Mills is an international trade expert specializing in financial services, maritime law, and ESG. They have a decade of experience across the private and public sector, including in UK and US government.

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Energy under attack: What the Gulf can learn from Ukraine and Iraq

Matthew Keating — Thu, 12 Mar 2026 20:36:55 +0000

WASHINGTON—On March 2, two days after US and Israeli forces began air strikes on Iran, Iranian forces struck back by targeting energy infrastructure in Qatar’s Ras Laffan Industrial City and a Saudi oil facility in the kingdom’s Eastern Province. Just this week, Iranian drones set ablaze Oman’s Salalah port oil storage facility. The attacks offered a reminder that energy infrastructure—once treated primarily as economic assets—has become a frontline target in modern conflict.

The stakes are significant. Saudi Arabia exports roughly seven million barrels of crude per day, while Qatar accounts for about one-fifth of globally traded liquefied natural gas. Nearly 20 percent of global oil consumption passes through the Strait of Hormuz.

For decades, Gulf energy infrastructure developed in a strategic environment shaped by the US security umbrella and the assumption that major export facilities would not be deliberately targeted by state adversaries. As a result, oil terminals, pipelines, and liquefied natural gas plants were engineered primarily for scale and export efficiency.

In other words, they were not designed to be part of a battlefield.

As a result, energy security in the region has often been treated primarily as a corporate security problem managed by national oil companies, rather than as an integrated civil-military planning challenge. That assumption has come increasingly into question since the 2019 strikes on Saudi Arabia’s Abqaiq and Khurais facilities. Iran’s attacks this month only underscore the point.

How should Gulf states respond? Two recent conflicts—one involving a major energy exporter and the other a country fighting to keep its power grid running—offer useful lessons. Iraq provides lessons for maintaining export flows—pipelines, terminals, and maritime routes that allow oil to reach global markets despite persistent sabotage. Ukraine illustrates the challenge of domestic resilience: how a national electricity system can continue functioning even while large portions of the grid are repeatedly struck. For Gulf states, which are both export heavyweights and share a regional electricity network through the Gulf Cooperation Council (GCC) Interconnection Authority, the challenges that Iraq and Ukraine have faced—and their responses, both successful and not—are worth studying.

Iraq and export resiliency

Iraq provides one of the clearest examples of how an energy exporter adapts when infrastructure becomes a sustained target. Following the US invasion in 2003, insurgent groups quickly discovered the vulnerability of Iraq’s energy system. To this day, the country remains on a road to resiliency, and its path in recent years has been far from smooth. Pipeline sabotage has remained frequent, and the security forces tasked with protecting energy infrastructure—including the pipeline police—have struggled with corruption and uneven training. Yet the country still produced several practical ideas that other energy exporters may find useful. Three lessons in particular stand out:

1. Dedicated pipeline protection forces

Following the 2003 invasion, coalition authorities and Iraqi ministries created specialized units to protect energy infrastructure. These units include an Oil Protection Force comprising roughly 14,000 guards responsible for pipelines, pumping stations, and export facilities. While these units faced challenges related to corruption and the quality of their training, the institutional principle remains important: Protecting energy infrastructure requires dedicated forces organized specifically for that mission rather than general military units temporarily assigned to infrastructure protection.

2. Drone surveillance and thermal monitoring of pipeline corridors

In late 2025, Iraq’s Energy Police Directorate announced the deployment of nearly fifty drones to conduct daily reconnaissance and transmit real-time data to a central command center in Baghdad. Officials also reported the installation of thermal cameras along parts of the pipeline network in cooperation with the Military Industrialization Authority. These systems help detect abnormal heat signatures associated with leaks, fires, or potential sabotage and allow operators to identify suspicious activity along infrastructure corridors that are difficult to patrol continuously.

3. Offshore loading buoys that create alternative export pathways

Iraq has expanded its maritime export capacity through a network of buoys known as single-point moorings (SPMs), which are connected to subsea pipelines. These buoys allow large tankers to load crude oil several miles from shore without docking at fixed terminals. These floating loading points function as distributed export nodes. If major port terminals come under attack or are forced offline, tankers can still load through offshore moorings.

These adaptations did not eliminate attacks on Iraq’s energy sector. Northern export infrastructure—particularly the Kirkuk–Ceyhan pipeline to the Mediterranean—has been repeatedly sabotaged. Iraqi oil exports continued largely because both production and shipments shifted through the country’s southern maritime export system in the Gulf near Basra. Multiple terminals and offshore loading buoys allowed tankers to continue loading crude even when parts of the system were disrupted.

Ukraine’s lessons in keeping the lights on

If Iraq offers lessons in protecting energy exports, Ukraine provides a stark illustration of how governments can keep domestic energy systems running even while infrastructure is under sustained attack.

Since Russia’s full-scale invasion in 2022, Ukraine’s power grid has faced sustained missile and drone attacks against generation plants, substations, and transmission infrastructure. Yet despite widespread damage and recurring blackouts, the system has continued operating under extreme strain.

The war has produced several practical ideas about how governments can keep national energy systems operating during sustained strikes. Four lessons in particular stand out:

1. Hardening critical grid infrastructure

Ukrainian operators have reinforced substations and transformers with protective barriers and blast walls. In some locations, particularly vulnerable equipment was relocated or buried underground.

2. Rapid-repair brigades and pre-positioned spare parts

Ukrainian grid operators developed specialized teams capable of quickly restoring electricity after strikes. These brigades travel across the country replacing damaged transformers and reconnecting transmission lines—often restoring service within hours or days.

3. Cross-border grid integration and emergency electricity imports

Ukraine accelerated synchronization with the European ENTSO-E electricity network in March 2022, allowing electricity imports from neighboring countries when domestic generation capacity was damaged.

4. Cross-border gas diplomacy and reverse-flow supply routes

Ukraine has strengthened energy resilience by expanding cross-border gas connections with European partners. For decades, most pipelines in Central and Eastern Europe were designed to carry Russian gas westward through Soviet-era transit networks. After Russia’s gas disputes with Ukraine in 2006 and 2009, European countries began modifying these systems so gas could flow in the opposite direction—allowing supplies from European markets to move east toward Ukraine. Finally, a growing north–south transmission route linking liquefied natural gas (LNG) terminals in Greece with pipeline networks through Bulgaria, Romania, and Central Europe—often referred to as the Vertical Gas Corridor—is further expanding the region’s ability to move non-Russian gas to Ukraine during the war.

Ukraine’s experience highlights a harsher reality about infrastructure resilience in modern conflict. Preventing damage entirely is rarely possible. The more realistic objective is to limit disruption and restore service quickly enough for the system to keep operating.

What Gulf governments can learn

Drawing on lessons from both cases, several priorities emerge for Gulf planners, particularly in Saudi Arabia and Qatar.

1. Conduct vulnerability mapping and pursue “low-tech hardening”

Gulf governments should conduct comprehensive vulnerability assessments across oil, gas, and electricity systems to identify the most critical infrastructure nodes and the most likely points of attack. Above-ground pipeline segments, exposed substations, and single export corridors represent predictable vulnerabilities. Gulf states should prioritize simple physical protections that reduce infrastructure vulnerability at relatively low cost. Burying exposed pipeline segments, reinforcing pumping stations, and installing protective structures around substations can significantly reduce damage from drone or missile debris.

2. Institutionalize cross-ministry energy protection procedures and establish emergency operations centers

Energy protection should not rely solely on corporate security departments or temporary military deployments. Gulf governments should establish dedicated structures to coordinate defense ministries, energy agencies, and infrastructure operators. These structures should include 24/7 emergency coordination and monitoring cells focused specifically on energy infrastructure during conflict or crisis, linking civilian energy operators with military authorities, police, fire services, and other government agencies.

3. Expand monitoring of pipeline corridors and remote infrastructure

Energy infrastructure in the Gulf spans thousands of kilometers of terrain that cannot be guarded continuously. Governments should deploy drone surveillance, thermal sensors, and fixed monitoring systems along pipeline routes and critical infrastructure corridors. These systems help detect abnormal heat signatures associated with leaks, fires, or sabotage and allow operators to identify suspicious activity along infrastructure corridors that are difficult to patrol continuously.

4. Pre-position strategic spare parts and repair capacity

Gulf governments should pre-position critical spare parts—including transformers, control systems, and pipeline components—and maintain specialized repair teams capable of restoring operations under emergency conditions.

5. Expand offshore loading infrastructure to create alternative export pathways

Expanding offshore loading infrastructure—particularly SPMs connected to subsea pipelines—can create additional export pathways. Because SPMs are smaller and located offshore, they are harder to target than large terminals and allow tankers to load crude offshore—often up to ten miles away—providing additional distance and warning time from drone or missile attacks. (It is worth noting that this SPM option does not exist for LNG exports, which require specialized liquefaction plants and cryogenic infrastructure to cool gas to roughly –162°C before shipping.)

6. Pursue “grid diplomacy” through deeper regional electricity integration

Cross-border electricity interconnections should be treated as strategic infrastructure. The Gulf already possesses a regional power network through the GCC Interconnection Authority linking Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Bahrain, and Oman. Expanding contingency power-sharing agreements within this network could allow Gulf states to support one another during infrastructure disruptions.

With the norm of not attacking civilian energy infrastructure seemingly eroded in modern conflict, governments must take a proactive and whole-of-society approach to energy security.

For Gulf states at the center of global energy markets, resilience will depend on protecting both domestic energy systems and the export infrastructure that connects them to the world. In future conflicts, the ability to keep energy flowing may prove just as decisive as the ability to defend territory.

The post Energy under attack: What the Gulf can learn from Ukraine and Iraq appeared first on Atlantic Council.

Why Gulf security is critical to global security

Omran Al-Kuwari — Thu, 12 Mar 2026 14:58:48 +0000

The urgency is not abstract. The drone strikes on civilian infrastructure, the missiles fired toward populated coastlines, the tankers seized in open water, the deliberate targeting of the arteries on which the world depends—these are not distant conflicts. They are live attacks on the living standards of every continent. And they are, to a significant degree, risks manufactured by a handful of state and non-state actors who have shown neither regard for the region’s stability nor any reckoning with the global consequences of their actions. The instability threatening the Gulf today is not some natural condition of the area—it is a political choice made by the few, at the expense of the many. To understand why it touches everyone—and what the world stands to lose—requires understanding what the Gulf actually represents.

The world has a category for things that many people depend on and cannot afford to lose. Power grids. Undersea cables. Financial clearing systems. When these fail, the consequences cascade across borders and sectors, reaching people who never knew they were exposed. The Gulf belongs in that category. The Strait of Hormuz moves a fifth of the world’s oil and a fifth of its traded gas every single day. The region’s fertilizer exports underpin food production for billions. Its sovereign wealth funds have steadied Western financial markets in moments of acute crisis. Its aviation hubs are the connective tissue of intercontinental travel. Gulf stability is critical global infrastructure—and like most critical infrastructure, it has no adequate backup and no governance framework to match its importance.

What that means is best understood through lives, not statistics. The woman in Detroit filling her tank before the early shift. The rice farmer in Thailand watching fertilizer prices eat through his margin for the third season running. The nurse in Nairobi whose hospital MRI has been out of service for weeks—because Qatar supplies a third of the world’s helium, the element that keeps those machines running. And consider a family in Middlesbrough—one of England’s most economically pressured towns—already stretching a budget that has no slack, heating a home on a grid that runs, in part, on Qatari gas. I know that route and project well. I was part of the team that helped bring the South Hook liquefied natural gas (LNG) project into being—one of Europe’s largest import facilities, purpose-built to carry Qatari gas into British homes. The gas warming that family’s house began its journey in the North Field off the Qatari coast, was liquefied, loaded onto a tanker, shipped through the Strait of Hormuz, and piped into their boiler thousands of miles later. The chain is direct, and it is fragile at exactly one point: that 33-kilometer strait. When it is threatened, they pay in heating bills, food prices, delayed diagnoses.

This ripple effect reflects a structural failure in how the world manages its own dependencies. Mature democracies have built governance frameworks around their critical infrastructure—protocols, doctrines, contingency plans. No equivalent exists for Gulf stability. The Strait of Hormuz carries more economic consequence per nautical mile than any comparable geography on Earth, yet no international framework treats its security accordingly. Bypass pipelines cover barely twenty percent of Hormuz oil flows. For liquefied gas, there is no bypass at all. When analysts describe a Hormuz closure as the worst supply shock in history, they are not being dramatic. They are doing arithmetic.

That gap is visible from the Gulf in ways it is not from Washington or Brussels. Qatar has built LNG infrastructure that now supplies gas to European homes and Asian industry. Gulf states have hosted the military facilities from which coalition operations across the region have been coordinated for two decades. Sovereign wealth funds from the GCC have deployed capital into Western markets at moments of acute instability, when private capital had withdrawn. These are not gestures—they reflect a clear-eyed understanding of what regional stability produces for the world. The reasonable expectation in return is that the world’s governments apply the same clarity: that Gulf security is a shared interest, not a regional favor, and that it be treated accordingly in policy and in practice.

The system is broader than energy alone. A quarter of all long-haul flights cross Gulf airspace—Dubai and Doha function less as destinations than as hinges connecting South Asia to Europe, East Africa to North America. Gulf ports move pharmaceuticals, electronics, and consumer goods across three continents; when they seize, shelves empty in cities that rarely appear in foreign policy discussions. The region’s sovereign wealth funds are now among the most consequential long-term investors in clean energy, artificial intelligence, and healthcare infrastructure globally. Strip away any one of these threads and the damage is significant. Combine them in a single disruption and the world confronts something without modern precedent.

The policy implication is straightforward, even if acting on it is not. Governments that accept Gulf stability as critical global infrastructure must engage with it that way—consistently, multilaterally, and not only when oil prices spike. The frameworks the world has built around cyber security, pandemic preparedness, and nuclear risk did not emerge from goodwill alone. They emerged from a shared recognition that certain vulnerabilities are too consequential to manage bilaterally or reactively. Gulf security belongs in that conversation. This means treating Gulf stability as a standing agenda item in global security institutions—from NATO energy security planning to Group of Seven economic coordination—rather than a crisis discussed only when tankers are burning. Reckless acts in the Gulf, pursued for narrow political ends, carry a global price. It is the woman in Detroit, the family in Middlesbrough, the farmer in Thailand who pay it. The international community has both the standing and the obligation to say so plainly. Gulf security is not a courtesy extended to a wealthy region. It is a condition of the world’s own stability—and it is time the world governed it that way.

Omran Al-Kuwari is CEO of Forta Advisors, a nonresident senior fellow at the Atlantic Council’s Global Energy Center, and a senior fellow at the University College London’s Institute for Sustainable Resources.

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The United States and OPEC in a polarized oil order

Mahmoud Rashed — Thu, 12 Mar 2026 13:57:04 +0000

The price of Brent crude oil continues to rise amid the escalating conflict between the United States, Israel, and Iran, reflecting a significant geopolitical risk premium as shipping through the Strait of Hormuz, the chokepoint for roughly 20 percent of global oil flows, is severely constrained and tankers have halted movement through the waterway. This is just one of several examples illustrating that geopolitics is now the dominant driver for price formation rather than fundamentals alone. Intervention strategies to mitigate short-term price spikes, including releases from strategic petroleum reserves, have also evolved, and, amid the heightened tensions of today’s crisis, lessons from the past few years underscore the importance of a measured, rather than reactive, approach.

Following Russia’s full-scale invasion of Ukraine, oil policy dynamics evolved into a pattern of competing price control mechanisms, with the Organization of the Petroleum Exporting Countries (OPEC) cutting output production to defend price floors and consumers led by the United States, deploying Strategic Petroleum Reserve (SPR) releases to cap prices. These opposing interventions amplified volatility, weakened market discipline, and, in many markets across the Middle East and beyond, undermined perceptions of US policy consistency and credibility as a reliable producing partner. However, as geopolitical risks play a growing role in price formation, if prices spike further due to the crisis in the Gulf Council Countries (GCC), repeated intervention risks reinforcing the concept that policy reacts to shock instead of shaping stability. This dynamic can complicate US–OPEC policy coordination and create uncertainty for US oil and liquefied natural gas (LNG) exporters that depend on stable price signals and predictable market expectations.

Rather than stabilizing markets, this pattern of intervention has contributed to what many analysts describe as an increasingly fragmented global oil order, where overlapping political constraints, sanction dynamics, and episodic risk premiums shape pricing more than fundamentals alone. In this context, the United States faces a strategic test: Whether to return to reflexive price management or to rebuild credibility by allowing market institutions and producer coordination to absorb shocks, reserving the SPR for genuine supply disruptions instead of reactive price smoothing. In the current escalation, restraint itself is a policy choice. Short-term price spikes driven by geopolitical risk premiums do not necessarily warrant immediate countermeasures.

From price manager to strategic stabilizer

In the past few years, the United States appeared to step away from the role it played in 2022–2023 as an active price manager. During that period, more than 180 million barrels were released from the SPR to counter inflationary pressure amid an extraordinary convergence of shocks. The drawdown reduced inventories to their lowest level since the early 1980s and blurred the line between emergency response and price management.

Since then, the DOE shifted its emphasis to reserve refill as a long-term resilience strategy not a near-term price tool. That repositioning has carried strategic weight because emergency reserves function through expectations as much as through physical deployment. If used too frequently for price moderation, the SPR risks losing credibility as insurance against genuine supply disruptions.

A premature or unwarranted SPR release could also carry unintended consequences for US energy strategy. Frequent intervention risks dampening investment signals for domestic producers and reinforcing the perception that the SPR functions as a political price management tool rather than a strategic emergency buffer. At the same time, sustained geopolitical disruptions in the Middle East, particularly involving the Strait of Hormuz, could drive prices above $120 per barrel, fueling inflationary pressures in the United States and globally, and increasing risks to economic crisis and social instability. A balanced approach is therefore required, one that preserves the credibility of the SPR while retaining the flexibility to act if extreme price spikes begin to threaten broader economic resilience.

In the current environment of Gulf escalation and shipping disruptions, restraint is therefore deliberate. Short-term price spikes driven by geopolitical risk premiums do not automatically justify intervention. Market participants are already adjusting through inventories, rerouting, and demand recalibration. Immediate countermeasures by either OPEC or the United States could amplify instability rather than contain it. However, strategic restraint is conditional, not absolute. Should the crisis persist and prices move decisively above $120 per barrel in a sustained manner, generating broader inflationary pressure and threatening global economic resilience, a calibrated SPR release then would become appropriate. In that scenario, deployment would serve as a temporary stabilization bridge, not as an attempt to override producer policy, and would remain clearly tied to systemic risk rather than political discomfort with high prices.

This sequencing, therefore, is not intervention nor passivity but adaptation. As the oil market becomes more geopolitically exposed, leverage increasingly flows from strategic consistency and selective engagement rather than from attempts to suppress prices directly.

For OPEC producers, this situation signals institutional respect rather than confrontation. In periods of stress, collaboration between Washington and OPEC will matter more than competitive signaling and reinforces the view that instability should be absorbed through market mechanisms and producers’ coordination. This approach aligns with OPEC’s preference for predictable policy environments and limited political interference in price formation.

Toward conditional coordination in a fragmented oil order

Current restraint on reserve releases, with calibrated tolerance of incremental sanctioned supply, reshapes how OPEC production decisions interact with consumer policy. When output adjustments were no longer met by automatic countermeasures, the cycle of competitive price control begins to resolve. OPEC retains space to manage supply without provoking reflexive consumer intervention, especially in a crisis time, while in return, the United States preserve its emergency tools for real supply or inflationary stress.

In other words, the trade-off is clear. Restraint limits the ability to suppress prices during periods of geopolitical stress, particularly if OPEC production cuts coincide with geopolitical shocks. Short-term consumer relief is sacrificed in favor of restoring institutional credibility and investment confidence. Over time, predictable policy frameworks support capital allocation, upstream investment and supply security more effectively than episodic intervention.

However, credibility is not built on inaction alone. If sustained escalation pushes prices beyond systemic thresholds, coordinated stabilization becomes necessary. In such circumstances, a temporary SPR deployment aligned with producer dialogue would function as a crisis buffer rather than a competitive countermeasure. The objective would be to prevent inflationary spillovers and protect global economic resilience, not to undermine production discipline.

In a more fragmented and geopolitically exposed oil market, stability is no longer achieved through opposing acts of intervention than from conditional coordination. OPEC’s production discipline and US reserve policy now have to function less as tools of price control. In this environment, limited sanctioned supply would also serve as a marginal stabilizer, easing extreme price spikes without triggering renewed escalation in producer-consumer dynamics. By allowing market institutions to operate within clearer and more predictable boundaries, both producers and consumers can coordinate to reduce volatility, support investment, and preserve energy security without turning geopolitical risk into a competitive price management conflict.

Mahmoud Rashed is the assistant general manager of exploration studies with the Egyptian General Petroleum Corporation. He has more than 18 years of experience in Egypt’s petroleum sector, working at the intersection of upstream exploration, investments, petroleum agreements, and government energy policy.

The views in this article are his own.

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1. Is the US accomplishing its goals in the war?

The post The United States and OPEC in a polarized oil order appeared first on Atlantic Council.

Twenty questions (and expert answers) about the Iran war

Atlantic Council experts — Wed, 11 Mar 2026 20:37:41 +0000

The US and Israeli militaries are hammering Iran for a second week. Iranian forces and proxies are striking back across the Middle East. Global financial and energy markets are full of volatility. And questions abound about the future trajectory of this conflict and its wider consequences.

Below, Atlantic Council experts pierce the fog of war with clarifying answers to twenty of the most pressing questions about these fast-moving events.

Click to jump to a question

2. Is Israel achieving its aims in this conflict?

3. Will the US put boots on the ground in Iran?

4. What would be an acceptable end to this war for the Iranian regime?

5. What would be an acceptable end to this war for the US?

6. What do we know about Iran’s new supreme leader?

7. What happens if the Iranian regime collapses?

8. How is the Iranian opposition responding to the conflict?

9. Is Iran’s nuclear stockpile a danger?

10. What threat does Iran pose to the US homeland?

11. What impact is this war having on US weapons stockpiles?

12. What’s the economic impact on Americans?

13. How is this conflict changing global energy markets?

14. What happens if Kurdish groups launch an armed resistance in Iran?

15. What impact will this conflict have on China?

16. What impact will this conflict have on Russia?

17. Will the Houthis in Yemen get involved?

18. How will this conflict impact Gaza?

19. How will the war impact US-Gulf relations?

20. What other countries could get involved if this war expands?

1. Is the US accomplishing its goals in the war?

Washington’s stated goals have included degrading Iran’s nuclear program, ballistic missiles, navy, drones, and control of its terror proxies. The United States is well on its way to achieving these objectives. All of these capabilities are badly degraded with, for example, more than fifty Iranian naval vessels resting on the sea floor. Going after remaining missile and drone manufacturing capabilities will likely take a couple of more weeks, at which point US President Donald Trump will be able to declare victory.

A better government in Iran that is more cooperative internationally and that respects the human rights of its people is also desirable, but that outcome is largely in the hands of the Iranian people.

Regardless of who governs next, Iran will be much weaker for years to come and less able to threaten the United States.

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

2. Is Israel achieving its aims in this conflict?

Israel almost certainly has set as a strategic objective the collapse of the Iranian regime. That is an expansion of initial goals following the June 2025 twelve-day war. In that conflict, Israeli and US strikes significantly set back the Iranian nuclear program. But some Iranian ballistic missile attacks also managed to penetrate Israeli and US missile defenses. Given the limited stockpile of interceptors, and Iranian ambitions to ramp up production of ballistic missiles that could reach Israel from roughly two thousand to ten thousand—meaning that they could overwhelm Israeli defenses and pose a strategic threat—Israel was prepared to strike at this threat later in 2026.

But that changed following the popular protests against the regime in January, when it appeared that the Islamic Republic’s internal weakness matched the damage to its nuclear program and deterioration of its regional position and proxy network over the past two years. So in addition to degrading the missile threat by striking launchers, storage sites, and production facilities, Israeli targeting since the beginning of the war has included regime leadership (starting with the supreme leader and others in the conflict’s opening minutes), state security organs that participated in the crushing of the protests (the Islamic Revolutionary Guard Corps, Basij militia, and police), and oil storage tanks in Tehran described as essential to the regime’s war machine.

It is understandable that Israelis would seek the demise of the regime. For decades, they have lived with a major regional player openly and ideologically committed to Israel’s destruction, seeking strategic weapons to advance that aim, and arming and funding proxy terror groups that have spilled no small amount of Israeli blood. Tens of thousands of rockets and missiles have been launched against Israeli civilian targets over the past twenty years by Iran and its proxies. Seeing an opportunity to change this reality, which much of the world has taken for granted, has broad appeal in Israel. So far, with a few deadly Iranian missile attacks but Israel’s defenses otherwise holding, the campaign seems to most Israelis to be both necessary and being conducted at a tolerable price.

What is less clear is how well the Israeli goal of regime change matches the United States’ objectives, or if it does, how long that will remain the case. Trump and his administration have offered inconsistent explanations of the war’s strategic objectives, but at least some of those calls—for “unconditional surrender” and creating the conditions that allow the Iranian people to take over their institutions—are consistent with Israeli goals. But as oil prices spike, markets dip, shipping and supply chains are disrupted, and Iran continues to find gaps in its Arab neighbors’ air defense and cause economic and infrastructure damage, it is possible to imagine Trump seeking an earlier off-ramp with a claim of having significantly defanged the regime. Further, the prospects of regime collapse followed by chaos, civil war, instability spilling over into neighboring countries, and refugee flows is of potentially far greater concern to the United States and its Arab partners than to Israel. If such a gap between Israeli and US goals opens up, expect Trump to be the determiner of when the war ends and to impose that endpoint on Israel, even if it is short of regime change.

3. Will the US put boots on the ground in Iran?

The United States is not mobilizing conventional ground forces either in the region or in the United States. Iran is a massive country with very difficult topography and would require hundreds of thousands of troops to occupy. Any use of ground forces would likely be limited to special operations forces for specific missions. Trump has espoused military objectives that are achievable through air and sea power without the need for a ground invasion. The military can seed the conditions for regime change by accomplishing its objectives, but a transition to an organic protest movement that the military doesn’t control or a negotiated settlement with the current regime is a political objective.

Looking back to the Iraq war, Trump has cited the deployment of conventional ground forces and the disbanding of the Iraqi army and government as the reasons the United States became ensnared in a costly insurgency. He is seeking to avoid that by not deploying ground forces and preferring to work with a member of the existing government—if the regime is willing to change its approach. If those conditions come together, Trump can achieve his military objectives and leave at a time of his choosing without a transition to a new government.

—Alex Plitsas is a nonresident senior fellow with the Middle East Programs’ Scowcroft Middle East Security Initiative and leads the initiative’s Counterterrorism Project. He previously served as chief of sensitive activities for special operations and combating terrorism in the Office of the Secretary of Defense.

4. What would be an acceptable end to this war for the Iranian regime?

There is an assumption among some in Washington that Iran will stop fighting when Trump and Israel want to end this war. This is the same reasoning that led the Trump administration to assume Iran would capitulate in nuclear talks and not respond forcefully to the war that Trump and Israel initiated on February 28. This is a very different conflict than the twelve-day war in 2025 or other conflicts in which Iran rapidly de-escalated.

The Iranian regime perceives that it is in an existential conflict, and it does not appear to be interested in an immediate off-ramp. From Iran’s perspective, a cessation of hostilities would merely be a temporary respite, before the United States or Israel restart the conflict once they have replenished their military supplies.

Therefore, a slow, protracted, war of attrition is probably Iran’s intended outcome. Iranian leaders are calculating that their country is more willing to take casualties and absorb pain than either the United States or Gulf countries. Therefore, if Iran retains the military capability (including asymmetric threats) to inflict pain on the United States and the Gulf, as well as keep energy prices high, then Iran is more likely to determine the end of the conflict than the United States is. In fact, Iran may only accept an off-ramp if it ensures there is not another near-term war. This would likely entail compelling Trump to enforce a cease-fire that Israel adheres to. This type of belligerent approach is a risky gamble for Iran, as it increases the chances that the United States doubles down on the war and that it draws in the Gulf, but it is also probably a risk the remnants of the regime are willing to take.

5. What would be an acceptable end to this war for the US?

The United States is going to come out ahead in this war in almost every conceivable outcome. The president has smashed Iran’s missile capabilities, supported the destruction of some additional nuclear facilities, and killed scores of Iran’s top leaders. Tehran was unwilling to trade its uranium enrichment capability and has never countenanced negotiations on its missiles or proxies. Now it has less of all three.

Iran, of course, also has a vote on ending the war, but once the threat to the regime is gone—and it looks like it’s receding—Iran will eventually return to business as usual. It could keep the Strait of Hormuz closed, but that would require continuing to expose itself to attack and pressure, and it does need oil revenue, too. Israel could conceivably continue the war alone but would likely scale down—think Gaza—once the United States indicated its desire to stop.

Perhaps the only unacceptable outcome for the war is if a sustained opposition movement emerges and either suffers more brutality on the streets of Tehran or manages to liberate some territory and then is violently suppressed by the regime. The conditions required for a US win also change if there is a mass casualty terrorist attack at home or overseas directly related to the war, which the United States would need to justify with a more acute strategic objective. If the regime thus wanted to inflict harm on the United States, it might well strike at the homeland, goad Washington into making a sustained effort to replace it, and then try to make the United States suffer further as a result.

—Andrew L. Peek is the director of the Adrienne Arsht National Security Resilience Initiative of the Scowcroft Center for Strategy and Security. He was previously the senior director for European and Russian affairs at the National Security Council and the deputy assistant secretary for Iran and Iraq at the US Department of State’s Bureau of Near Eastern Affairs.

6. What do we know about Iran’s new supreme leader?

Iran’s new supreme leader, fifty-six-year-old Mojtaba Khamenei, is the son of the recently deceased Supreme Leader Ali Khamenei. Many analysts believe that Mojtaba will be a continuation—and potentially more extreme version—of his father. However, less is known about the younger Khamenei, as he rarely speaks or appears in public.

What we do know is that the new supreme leader was trained by a string of hard-line, anti-Western clerics, played a prominent role in past repression of protesters, and was recently embroiled in a corruption scandal. As a former member of the Islamic Revolutionary Guard Corps (IRGC) and an active participant in Iran’s intelligence and defense, he was reportedly the IRGC’s favored candidate. However, his selection is controversial even within the remnants of the Islamic Republic. According to reports, his appointment contravened his father’s written wishes and was opposed by senior political figures in Iran. In this sense, Mojtaba Khamenei’s selection is about more than just succession. It is about stabilizing a system at a moment when uncertainty poses a strategic risk to the regime.

Iran’s new supreme leader, Mojtaba Khamenei, attends a rally in Tehran, Iran, on May 31, 2019. (Hamid Forootan/ISNA/WANA via Reuters Connect)

In the short term, Mojtaba Khamenei will likely be focused on Iranian defense, ensuring relative domestic stability, and power projection. Israel and the United States have already expressed opposition to his ascension, leaving open the possibility—perhaps even likelihood—that he will be targeted in future US or Israeli military actions.

—Nate Swanson

7. What happens if the Iranian regime collapses?

The end of the regime is less likely to foster democracy as it is to birth what some are calling “IRGCistan”—a military-dominated state in which the new supreme leader, Mojtaba Khamanei, is a partner but not the final or ultimate authority, as his father was, and with power firmly vested in the hands of the IRGC. Such a result would provide three pathways forward.

An IRGC-run Iran could initially be a bigger regional and domestic threat, staking out even harder-line stances in seeking to consolidate power and focused on ensuring no other insider can outflank it. Second, it could seek to quickly gain the support of the Iranian people by showing greater flexibility for a deal with the United States in exchange for an economic boost in the form of sanctions relief. Third, it could lead to a period of confusion and jockeying for power in which Western states will have to decide how much to try to jump into the fray and influence the outcome.

—Jonathan Panikoff is the director of the Scowcroft Middle East Security Initiative and a former deputy national intelligence officer for the Near East at the US National Intelligence Council.

Dispatches

Feb 28, 2026

Experts react: The US and Israel just unleashed a major attack on Iran. What’s next?

By Atlantic Council experts

Atlantic Council experts assess the unfolding Operation Epic Fury and where it goes from here.

Conflict Iran

8. How is the Iranian opposition responding to the conflict?

Many in the Iranian opposition both inside and outside of Iran had welcomed targeted military strikes on regime officials and targets in the lead-up to the war. The thinking was that there was no other way to dislodge a violent regime that over forty-seven years had resisted international pressure, sanctions, and multiple internal nationwide anti-regime protests. The war’s opening salvo in killing then Supreme Leader Ali Khamenei and top regime officials was celebrated widely in Iran and seen as an optimistic start to what many believed would be certain regime change. But with Israel’s strikes on oil depots in Tehran that sent a black smoke cloud over the sky in the second week of the war, along with the destruction of cultural heritage sites, moods have started to shift. Some question how much they are willing to sacrifice for a free Iran and whether the regime—which so far has proved resilient—will actually fall, or whether all the war did was replace one Khamenei with another Khamenei who is thirty years younger.

But bright spots remain. Many Iranians say there is no turning back now and that the regime has to go or else it will emerge more brutal than ever before. There are reports of people organizing to take to the streets once the bombing stops. Reza Pahlavi, the son of the deposed shah, continues to offer to act as a transitional leader for Iran to guide the country to free and fair elections and has attracted new key constituencies to broaden his tent. Inside Iran, seventy opposition activists have joined to form a new group called the Strategic Council of Republicans Inside Iran. Their names have not been declared publicly, but they have made their leadership known to Western governments. And outside Iran, opposition figures are meeting to discuss core transitional issues and encourage pluralistic politics.

—Gissou Nia is the director of the Atlantic Council’s Strategic Litigation Project and a board member of the Iran Human Rights Documentation Center.

9. Is Iran’s nuclear stockpile a danger?

Since Israel’s attacks on Iran’s nuclear facilities in Natanz, Isfahan, and Fordow in June 2025, it has been difficult for experts to assess how much of Iran’s nuclear stockpile remains accessible and potentially dangerous. Prior to those attacks, Iran’s stockpile had been estimated at about 440.9 kilograms of 60 percent enriched uranium.

According to the International Atomic Energy Agency, the existing stockpile is “mainly” at Isfahan, while other parts of the stockpile may have been destroyed last year. Some experts believe that the stockpile is largely inaccessible and buried underground. After receiving a briefing from the Trump administration, US Rep. Bill Foster (D-IL) raised concern that the administration “never had a plan for that nuclear stockpile of enriched uranium—to destroy [it], to seize it, or to put it under international inspection.”

If the nuclear stockpile is still accessible, then its future may parallel the political future of Iran; a regime that is compliant with US requirements may wish to take measures to safeguard the stockpile and could even allow inspections to resume. However, if the regime feels that it remains under threat, then it could be more motivated to rebuild military and nuclear weapons capabilities. Additionally, if Iran devolves into political chaos and civil war, then the stockpile could fall into the hands of rogue elements with nefarious purposes.

—Jennifer T. Gordon is the director of the Nuclear Energy Policy Initiative and the Daniel B. Poneman chair for nuclear energy policy at the Atlantic Council’s Global Energy Center.

10. What threat does Iran pose to the US homeland?

Iran’s long history and experience in asymmetric warfare—including being a state sponsor for terrorism and perpetrator of cyberattacks—suggests that the kinetic portion of this conflict could be just a start. In retaliation for the death of IRGC Quds Force Commander Qasem Soleimani in 2020, for example, Tehran sought to murder both Trump and then National Security Advisor John Bolton. While no specific threats have been identified, the Federal Bureau of Investigation and the Department of Homeland Security (DHS) appear to be on high alert. Press reports indicate that the DHS warned of potential lone wolf attacks, which are notoriously difficult to identify in advance, in response to the conflict.

Iran’s proxies across the Middle East are another arrow in Tehran’s quiver. Tehran has cultivated, armed, trained, and financed a network of non-state armed organizations operating across the region with links to Africa and parts of Latin America. These groups include Lebanese Hezbollah, Palestinian militant organizations such as Hamas and Palestinian Islamic Jihad, Shia militias in Iraq and Syria, and Yemen’s Houthi movement. Together and individually, they enable Iran to project influence, deter adversaries, and retaliate asymmetrically while preserving a degree of paper-thin plausible deniability.

Currently, Iran’s proxy network remains operational, although increasingly constrained. Hezbollah retains significant military capabilities, though persistent Israeli attacks and the potential that Lebanese authorities work to limit the group’s activities could challenge its efforts to mount a campaign. In Iraq, Iranian-backed militias wield influence yet risk nationalist backlash and sanctions. The Houthis have demonstrated reach but face sustained military pressure.

—Ingrid Small is the deputy director of the Scowcroft Middle East Security Initiative at the Atlantic Council. She previously served as a senior analyst and analytic methodologist in the US intelligence community for over three decades.

11. What impact is this war having on US weapons stockpiles?

The problem of prioritizing near-term requirements over long-term priorities is not new. This is why the recently released National Defense Strategy rightly called for being clear-eyed about available military resources and emphasized a ruthless prioritization on homeland defense and China, along with rebuilding the US defense industrial base.

But now the Iran war is degrading US military readiness for homeland defense and China.

While the cumulative readiness impacts of this decision are difficult to quantify in the near-term, the war in Iran will likely drain inventories of critical munitions and parts, with knock-on effects across the force from training schedules to unit strength.

Major assets employed for the war in Iran that are also relevant to homeland defense and/or China include air defense systems, long-range standoff weapons, naval vessels, strategic airlift and aerial refueling, and intelligence, reconnaissance, and surveillance assets. Moreover, military planners must consider the resources required to monitor, deter, or fight North Korea, Russia, and China simultaneously in the event they join a Pacific conflict or a worst-case homeland defense scenario.

How quickly the United States can regenerate readiness for homeland defense and great power competition remains an open question and will depend both on the Trump administration’s decisions and factors outside the administration’s control.

—Joe Costa is the director of the Forward Defense program of the Scowcroft Center for Strategy and Security at the Atlantic Council. Previously, he served as deputy assistant secretary of defense for plans and posture in the Office of the Secretary of Defense.

12. What’s the economic impact on Americans?

Most Americans are likely to feel the war in two ways—gas prices and groceries. Nearly 20 percent of the global oil supply transits through the Strait of Hormuz and right now movement is at a standstill. It’s true that the United States is far less reliant on energy imports than it was during the previous two Gulf wars, but the nature of the energy market is that a price spike quickly impacts everyone around the world. And that’s exactly what has happened.

After some wild swings, the price of oil as of Wednesday is sitting at about ninety dollars a barrel—up from sixty dollars in December. Many Americans are driving by gas stations and seeing a first number starting with a “3.” It may not be long before that becomes a “4”—and it could get worse, depending on how long the crisis lasts. This is something that will be particularly painful for Americans who already list cost of living as one of their top concerns in surveys. The administration is taking a series of actions to try and relieve the pressure: It’s coordinating with allies to put more oil on the market. It’s providing shipping insurance to convince tankers to make the passage. And it’s even temporarily relieving some sanctions on Russian oil. But none of those steps will stop prices from surging higher as long as transit remains blocked and oil production in the Gulf continues to be a target of Iranian drones.

High gas prices would be bad enough, but expect the cost of other items to tick up, too. Everyday grocery items could soon become more expensive as goods transited across the country on trucks face higher diesel fuel costs.

All of this creates a headache for Trump’s choice to chair the Federal Reserve, Kevin Warsh. Up until the start of the conflict, inflation pressures had been cooling. But if the war continues and Warsh is confirmed, he will face a president who wants lower interest rates but an economy facing price pressures. That means all those looking for relief on mortgage rates and car loans may have to wait a little longer.

13. How is this conflict changing global energy markets?

The conflict is forcing energy markets to price in geopolitical risk that, until recently, was largely theoretical. For years, governments have assessed the energy security vulnerability posed by the Strait of Hormuz, a chokepoint responsible for roughly one fifth of global oil and gas flows. Today, that vulnerability is no longer a contingency exercise. Even in an otherwise well-supplied market, traders are confronting the real consequences of supply chains tied to a region capable of removing millions of barrels per day from the global market. Oil may be relatively fungible, but the world cannot quickly replace a sudden loss of fifteen million barrels per day. As the conflict persists, the economic knock-on effects compound, and Tehran may be gaining a new layer of deterrence if even the threat of short-range drone or missile attacks can trigger geoeconomic disruption by intermittently halting traffic through Hormuz.

Natural gas markets are even less flexible. Liquefied natural gas (LNG) export infrastructure takes years—often more than a decade—to move from concept to first cargo, leaving Europe and East Asia structurally exposed. Emerging economies may increasingly forgo planned gas buildouts in favor of alternative energy sources. At the same time, upstream capital may pivot toward the Western Hemisphere—particularly the United States, Guyana, and Canada—where geopolitical risk is perceived as lower. That shift could further entrench North America as a global energy powerhouse while simultaneously accelerating political support in vulnerable capitals for technologies less dependent on Hormuz, including solar and battery storage.

—Landon Derentz is vice president, energy and infrastructure, senior director, and Morningstar Chair for Global Energy Security at the Atlantic Council Global Energy Center. He previously served as director for energy at the White House National Security Council.

14. What happens if Kurdish groups launch an armed resistance in Iran?

The Kurdish coalition’s entry into the war could hand Tehran a political opening even as it creates a military problem. Kurdish fighters might stretch Iranian forces and expose weak control in the northwest. But Tehran could also use the specter of separatism to rally Persian nationalism, split the opposition, and frame the war as foreign-backed dismemberment rather than domestic revolt, giving itself a justification for mass arrests and violence against Kurds inside Iran.

If Kurdish forces receive sufficient support, they could serve several strategic purposes. They might pin down Iranian security forces in the west, giving space for unarmed protesters in major cities to demonstrate without being massacred. They could stretch the regime’s resources thin and reduce pressure on the Gulf states and Israel. And if the Kurds were to take and hold territory in northern Iran, they could create a buffer zone beneficial to Israel and the West.

For all these reasons, any support for the Kurds should go beyond military backing. It must include political support for Kurdish autonomy in a post-regime Iran, so that the Kurds do not end up being used once again as expendable forces.

—Yerevan Saeed is a nonresident senior fellow with the Iraq Initiative in the Atlantic Council’s Middle East Programs.

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Our experts explain the goals of the various Kurdish groups the United States is reportedly backing for an attack against Iran and how their involvement could impact the wider war.

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15. What impact will this conflict have on China?

Beijing is in wait-and-see mode. China was Iran’s major oil buyer, but that dependence was mainly one-way: China was buying around 80 percent of Iran’s oil exports, but those purchases accounted for less than 15 percent of China’s total imports.

Chinese leaders have always known that, as a net oil importer, the straits of Hormuz and Malacca (two narrow sea lanes that ships must traverse to deliver oil from the Middle East to China) presented a major energy security risk. Beijing has long feared that Washington would target Chinese oil tankers in a future US-China crisis, and it has been working furiously to reduce those risks. Today, due to that contingency planning, China is less dependent on imported oil than many observers realize. China is working to electrify the nation’s auto fleet and making shocking progress (electric vehicles can run on coal-fired power, which China has in abundance). And Chinese leaders took advantage of the past few years of low oil prices to go on a buying spree, beefing up their domestic reserves to plan for a future supply crisis such as the one they are now facing.

Overall, China is perhaps more prepared than any other major economy to face the energy crisis that could emerge from the situation in Iran. And Chinese leaders are very good at strategic planning. They will be looking for ways to turn this situation into an opportunity. Already, for example, the United States is reportedly moving some of its most advanced missile defense units from the Indo-Pacific to the Middle East—removing systems that, in Beijing’s view, directly threatened China’s security interests in the region. It is impossible to overstate the degree to which those movements are a massive win for Beijing. And if the United States ends up stuck in another Middle Eastern quagmire that cedes the Indo-Pacific to China, the wins will keep coming.

16. What impact will this conflict have on Russia?

The conflict in the Middle East is already playing into Russia’s hands.

The war in Iran has created global anxiety around the supply and availability of crude oil coming out of the Gulf. Earlier this week, oil prices surged to the highest they have been since 2022. To quell oil market fears, the Trump administration eased sanctions on Russian oil. Last Thursday, the US Treasury’s Office of Foreign Assets Control issued a general license to allow for the delivery and sale of sanctioned Russian oil to India for thirty days. Meanwhile, reporting indicates that the administration is considering additional sanctions relief for Russia to enable the sale of Russian Urals.

This is a win for Russia. Russia’s economy has been in a steady decline since its 2022 invasion of Ukraine. Low oil prices combined with significant Western economic pressure including sanctions on oil majors and shadow fleet vessels as well as the oil price cap, reduced Russia’s energy revenue. US sanctions relief helps Putin sell Russian Urals, generating income for Moscow’s war machine.

It’s important to note that US sanctions relief does not equate to sanctions relief from the United Kingdom, the European Union, or other Western partners. If the United States eases sanctions on Russian oil but its partners do not, then there could be significant confusion in the compliance space. Financial institutions and the private sector will have to navigate a complex sanctions landscape and may risk exposing themselves to British or European sanctions if they facilitate the sale of Russian oil. Hopefully, the US administration is considering these challenges and coordinating its decisions with its coalition of partners that have sanctioned Russia in response to the war in Ukraine.

Meanwhile, Qatar’s LNG capacity remains offline. Russian LNG is not sanctioned, and Russia remains a global supplier of LNG. If the Middle East conflict continues and Qatar is not able to restart its LNG infrastructure quickly, then we could expect to see Russia increasing its LNG exports in attempts to fill the gap and generate income.

—Kimberly Donovan is director of the Economic Statecraft Initiative within the Atlantic Council’s GeoEconomics Center. She is a former senior Treasury official and National Security Council director.

17. Will the Houthis in Yemen get involved?

Coming to Iran’s defense does not provide the Houthis with the same domestic and reputational benefits that their involvement in the Gaza war did. It also carries new risks, particularly related to the detente the Houthis have had with Saudi Arabia since 2022. The Houthis could still decide to get involved in the Iran war, especially if they calculate that it makes sense to break that detente as Saudi Arabia doubles down on its support to the Houthis’ main rival inside of Yemen, the internationally recognized Yemeni government.

There are three scenarios for Houthi involvement:

Limited strikes on Israel to demonstrate solidarity with Iran;
Limited strikes on Red Sea shipping as they seek to test whether this is a new red line for Saudi Arabia or extract new concessions, given that Riyadh is depending on the Red Sea to maintain some oil production with the Strait of Hormuz effectively closed; or
Widespread Houthi attacks on Red Sea shipping, Saudi Arabia, and/or ground offensives inside of Yemen aimed at finally seizing Yemen’s oil and gas resources. This third scenario risks reigniting the Yemen war after years of calm and opening up a major new front in the region.

MENASource

Mar 10, 2026

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18. How will this conflict impact Gaza?

Hamas would not have been what it is over the past twenty years without direct financial and material support from the Islamic Republic of Iran, which turned the terror group into one of its chief proxies, given its presence at Israel’s doorstep. Despite differences in religious orientation and doctrine between the Muslim Brotherhood offshoot and the primary Shia force in the world, Tehran has effectively used Hamas to ensure that there wouldn’t be peace or long-term stability between Palestinians and Israelis, prolonging the conflict, which is foundational for the theocratic regime.

Iran helped undermine the Oslo process of the 1990s, militarize the Second Intifada in the early 2000s, and turn post-2005 Israeli withdrawal from Gaza into a “resistance” citadel. Thus, the October 7, 2023, attack on Israel and Gaza’s subsequent decimation would not have occurred without cumulative Iranian involvement. Furthermore, the regime is constantly meddling in the West Bank, supporting rogue Palestinian militants and plots to destabilize the Palestinian Authority and encourage heavy-handed Israeli military actions, hoping this could trigger chaos and a “Third Intifada.”

A severely weakened regime in Tehran that lacks financial means and reach will likely roll back Iran’s involvement in the Palestinian issue and minimize meddling and sabotage by IRGC agents and officers. This would have various political implications, making groups like Hamas much more vulnerable and unable to rely on Iranian support for armed resistance, while weakening the pro-Iran faction within the group’s politburo.

Alternatively, there is a small but not insignificant risk that the battered and angry remnants of the regime may deploy its limited resources in support of extreme terror activities in Israel and Gaza and the West Bank by using Palestinian elements either sympathetic to Tehran’s cause or purely lured in by financial incentives. Nevertheless, Iranian-aligned elements of Hamas and other Palestinian groups will experience significant setbacks that compound the calamity faced by the Palestinian national project in the aftermath of October 7, further strengthening Israel’s position in the conflict and bolstering its desires for how Gaza’s future trajectory and prospects should unfold.

—Ahmed Fouad Alkhatib leads Realign For Palestine, an Atlantic Council project that challenges entrenched narratives in the Israel and Palestine discourse and develops a new policy framework for rejuvenated pro-Palestine advocacy.

19. How will the war impact US-Gulf relations?

The war will have lasting impacts on US-Gulf relations, but those impacts are still evolving in the war’s second week. In the near term, Gulf countries will seek stronger US security support, including munitions and other air defense support to help defend against Iranian attacks. They will also want clearer US security guarantees over the long term. How the United States responds to these requests will shape Gulf countries’ calculus as they grapple with whether the benefits of housing US military bases are worth the growing risks those bases bring.

Another critical factor will be what the Iranian threat looks like after US operations conclude and the degree to which the United States coordinates with its Gulf partners as it concludes its operations. Early signs suggest the Iranian regime will prove resilient, and Iran has demonstrated that it can terrorize its neighbors with low-cost drones and disruptions to the Strait of Hormuz that are difficult to eliminate with an air campaign alone. Alternatively, regime collapse and a civil war inside Iran could have lasting consequences for Gulf security. If the Iran that emerges from this war poses a long-term threat to Gulf national security and economic growth, and if Gulf countries assess that the United States is not doing enough to help them combat that threat, then it will create a crippling strain on US-Gulf relations.

—Allison Minor

20. What other countries could get involved if this war expands?

While the United States and Israel are leading operations against Iran, it is Arab Gulf countries that have found themselves on the front lines. The vast majority of Iranian missile and drone attacks have targeted Gulf countries, particularly the United Arab Emirates (UAE). Gulf countries are weighing how best to deal with the Iranian threat both now and in the long term, but it remains unclear if they will choose to confront Iran militarily, pursue targeted actions to restore a degree of deterrence, or seek to negotiate a new detente with Iran. Thus far, the Gulf countries have not responded militarily to Iranian attacks and have refuted claims suggesting otherwise. The UAE is reportedly considering non-kinetic means to restore deterrence with Iran, while Oman is actively pursuing negotiations.

Lebanon and Iraq are also being pulled into the conflict: Israel launched a major campaign in Lebanon following attacks from Hezbollah that included airstrikes in southern Beirut and an expanded Israeli military presence in southern Lebanon. The Lebanese government sees the campaign as a threat to its efforts to navigate Lebanon out of an economic and political crisis and is actively pursuing negotiations with Israel and the United States while demonstrating that it is willing to crack down on Hezbollah in new ways.

The United States is conducting strikes on Iran-backed militias in Iraq in response to attacks on US bases and diplomatic facilities inside the country, and the stoppage of traffic through the Strait of Hormuz has forced Iraq to halt oil production. All this comes as Iraq navigates difficult government formation negotiations and threatens to disrupt an era of relative stability in the country.

—Allison Minor

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Navigating change: US-Turkish defense relations in 2026

Atlantic Council Turkey Program — Wed, 11 Mar 2026 13:00:00 +0000

Foreword

As we enter the second year of the Trump Administration, US-Turkish relations and developments in regions critical to both have been dramatic and fast-paced. Events in Syria and Libya are trending towards state consolidation and strategic opportunity for both Washington and Ankara, while the continuing Russian invasion of Ukraine at NATO’s doorstep, the volatile situation in Gaza, and the unfolding war in Iran present challenges both sides seek to navigate in complementary ways.

Technological and geopolitical developments have increased the need for close consultation between the NATO allies, and bilateral coordination has been evident across a range of issues. Yet strategic cooperation remains constrained by a variety of factors. This issue of the Defense Journal takes up several of the regional, military-technical, and policy issues of interest to readers in both countries and to those tracking US-Turkish relations. In an era of positive relations between the two countries’ presidents, parliamentary relations and policy influence also carry great weight—and in this issue we are pleased to have interviews with US Congressman James Walkinshaw and the chairman of the foreign affairs committee of the Turkish Parliament Fuat Oktay to add the legislative perspective to bilateral strategic ties.

Rich Outzen and Can Kasapoglu, Defense Journal by Atlantic Council Turkey Program co-managing editors

Articles

Foe or friend? US-Turkey bilateral relations seem set to improve as interests align

By Rich Outzen

Is Syria on the right path?

By Asaad Sam Hanna

Q&A with Rep. James Walkinshaw (VA-11)

By Atlantic Council Turkey Program

Q&A with Turkish Member of Parliament Fuat Oktay

By Atlantic Council Turkey Program

Ankara and Washington can build on recent groundwork to improve relations and stability

By Murat Yeşiltaş

As Ankara rethinks its Libyan policy, the Haftar family stands to gain

By Karim Mezran and Alissa Pavia

Air defense in the age of saturation: Europe after the post-Cold War peace dividend illusion and Turkey’s Steel Dome

By Can Kasapoğlu

Honorary advisory board

The Defense Journal by Atlantic Council Turkey Program‘s honorary advisory board provides vision and direction for the journal. We are honored to have Atlantic Council board directors Gen. Wesley K. Clark, former commander of US European Command; Amb. Paula J. Dobriansky, former Under Secretary of State for Global Affairs; Gen. James L. Jones, former national security advisor to the President of the United States; Franklin D. Kramer, former Assistant Secretary of Defense for International Security Affairs; Lt. Gen. Douglas E. Lute, former US Ambassador to NATO; and Dov S. Zakheim, former Under Secretary of Defense (Comptroller) and Chief Financial Officer for the Department of Defense.

Gen. Wesley K. Clark

Chairman and CEO of Wesley K. Clark & Associates & Board Director, Atlantic Council; former Supreme Allied Commander Europe of NATO

Amb. Paula J. Dobriansky, Ph.D.

Senior Fellow at Harvard University JFK Belfer Center for Science & International Affairs; Board Director, Atlantic Council; former Under Secretary of State for Global Affairs (2001-2009)

Gen. James L. Jones

President, Jones Group International and Executive Chairman Emeritus, Atlantic Council; former National Security Advisor to the President of the United States

Franklin D. Kramer

Distinguished Fellow & Board Director, Atlantic Council; former US Assistant Secretary of Defense

Lt. Gen. Douglas E. Lute

CEO, Cambridge Global Advisors & Board Director, Atlantic Council; former US Permanent Representative to NATO

Dov S. Zakheim

Senior Advisor, Center for Strategic and International Studies; Senior Fellow, CNA Corporation; Board Director, Atlantic Council; former US Under Secretary of Defense

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Within the Atlantic Council’s longstanding commitment to strengthening the transatlantic relationship, the Atlantic Council Turkey Program conducts research, provides thought leadership, and offers a platform for strategic dialogue between the US, Turkey, and NATO allies to address the region’s toughest challenges and explore opportunities, including in the fields of energy, business & trade, technology, defense, and security.

The post Navigating change: US-Turkish defense relations in 2026 appeared first on Atlantic Council.

As Ankara rethinks its Libyan policy, the Haftar family stands to gain

Karim Mezran, Alissa Pavia — Wed, 11 Mar 2026 13:00:00 +0000

Libya remains mired in a protracted civil conflict that has divided the country between rival factions in the West and East, each attracting foreign military and economic support. Ankara, which had strongly backed one side, recently modified its foreign policy to pursue rapprochement with neighbors in the region, which has significant implications for Libya and its own influence in a shifting landscape there.

For years, Turkey has backed the Tripoli-based Government of National Unity (GNU), led by Abdulhamid al-Dbeibah, which is recognized by the United Nations as Libya’s legitimate authority. Egypt and the United Arab Emirates, on the other hand, have long supported the eastern faction, the Libyan National Army (LNA), led by warlord and former CIA asset Khalifa Haftar. Interestingly, Turkey and the Tobruk-based LNA have entered a chapter of significant engagement after being sworn enemies for much of the last decade.

Turkey, for its part, seeks to expand influence over the entirety of Libya for economic and geopolitical gains, wanting to gain access to Libya’s vast oils fields in the eastern zone and aiming to impose its stance in an ongoing maritime dispute with Greece and Egypt over the Eastern Mediterranean, where both countries claim maritime territory. Meanwhile, Haftar and his sons seek recognition from regional powers such as Turkey to legitimize the family’s rule and become the de facto leadership of Libya.

Why this matters

These developments represent a significant shift in domestic and regional dynamics. Domestically, it strengthens Haftar’s LNA as it vies for that prime governing role. The LNA is contending for greater international recognition than the GNU, and a buy-in from a powerful actor like Turkey would surely tip the scales, granting the LNA a level of international legitimacy that could surpass that of the GNU.

The international community (as expressed through the UN) sees the GNU as the legitimate force, but will have to come to terms with Dbeibah’s weakened political hand. Dbeibah himself is well aware of the stakes involved, and while publicly he has endorsed what he sees as Turkey’s “backing of Libya’s stability,” it would be naïve to think he welcomes such efforts. Additionally, it will embolden the Haftar family to continue pursuing an aggressive push for regional integration under its command, potentially leading to de facto unification, albeit under leadership with an abysmal human rights record and dubious allegiance to the West.

Why the LNA welcomes Turkey’s support

In 2019, when Haftar launched his military offensive to gain control over Tripoli, the capital city, Turkish President Recep Tayyip Erdoğan sent military support to the GNU, including troops, ships, drones and advisers, for its defense, signaling Turkey’s strong commitment to the Western-backed government. Today, however, Turkey’s goal of repositioning itself regionally spurred a strategic cost-benefit calculus. Isolated after attempting to become a regional hegemon, Turkey has sought to reestablish itself in the region through strategic reengagement with countries like Egypt, Saudi Arabia, and the UAE.

For its part, the LNA stands to benefit considerably from Ankara’s strategic repositioning. First, a potential defense partnership between the LNA and Turkey is quickly taking shape, and it stands to deliver substantial benefits to the Haftar family. In April 2025, Saddam Haftar, the son of Khalifa and deputy commander-in-chief of the Libyan Ground Forces, met Turkey’s general chief of staff, Selçuk Bayraktaroğlu, to discuss a mutually beneficial defense agreement which would include joint military training, capacity building, information sharing, and the procurement of weapons and unmanned aerial vehicles (UAVs). Earlier that month, Saddam Haftar paid an official visit to Ankara, marking a new chapter in relations between the nation and the Libyan faction. A subsequent visit by a military delegation from Libya’s eastern forces to Turkey confirmed that this shift is underway, and soldiers from Haftar’s LNA have recently begun training at bases in Turkey, as forces associated with the government in Tripoli have done beginning of 2020.

Secondly, Ankara is looking to deepen its energy ties by investing in gas exploration over disputed water with Libya’s eastern faction. In 2019, Ankara signed an exploratory agreement with Libya’s western faction in Tripoli, but the agreement failed to take off due to eastern opposition. Today, Libya’s eastern powerbrokers look poised to sign it—if, that is, they are granted oversight control over the outputs, after complaining for multiple years of being excluded from key revenue streams and leadership opportunities. If signed, the explorations could provide significant financial benefits to Libya’s eastern area, which suffers from recurring fuel shortages due to its lack of refining capacity. It would also help boost Haftar’s legitimacy by aiding him with key supplies for the local population under his control, strengthening his position both domestically and internationally.

Third, a rapprochement with Ankara would give the Haftars valuable leverage with Russia and Turkey, enabling them to extract greater concessions from both nations. The Haftars have long been supported by the Russians, especially since their Tripoli offensive in 2019; in turn, they’ve allowed Russian Africa Corps troops to run wild in parts of the country, furthering Russia’s footprint on the continent. While Russia once held greater leverage over the Haftars, this dynamic shifted after the fall of the Assad regime in Syria in January 2025, which prompted Moscow to withdraw its military equipment there and seek new military footholds in Libya. Now, with the Haftar family having the upper hand, the family can try to leverage this renewed position of strength to expand its alliances without fearing repercussions from Russia, Turkey’s long-standing rival in the region. It also can hope to exact concessions from both parties, extracting both economic and military benefits which would help consolidate domestic authority.

Implications for the Eastern Mediterranean

The engagement between Libya’s eastern faction and Turkey will likely have ripple effects across the region. First, it could sour the relationship between Egypt and Turkey over the disputed maritime zone agreements. Currently, Egypt rejects the maritime zone set between Ankara and Tripoli, considering them an infringement of Egyptian maritime sovereignty as they cut across water lines. Egyptian President Abdel Fattah al-Sisi has made it abundantly clear he will reject any association agreement between Libya and Turkey, potentially reigniting tensions after their historic 2023 rapprochement. Egypt claims that any oil exploration will infringe on its territorial seas, denouncing them as an infringement of international law. Such tensions would have enormous consequences for the Mediterranean region writ large.

Second, Haftar, could use any growing tension between Egypt and Turkey to extract greater concessions for himself by playing Ankara against Cairo. By publicly signaling deference to Egyptian authority while quietly advancing his ties with Turkey, Haftar stands to emerge stronger, consolidating his family’s hold on power and potentially paving the way for unifying Libyan territory under their control.

Karim Mezran is director of the North Africa Initiative and resident senior fellow with the Rafik Hariri Center and Middle East Programs at the Atlantic Council.

Alissa Pavia is a nonresident senior fellow at the Rafik Hariri Center and Middle East Programs at the Atlantic Council.

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Foe or friend? US-Turkey bilateral relations seem set to improve as interests align

Rich Outzen — Wed, 11 Mar 2026 13:00:00 +0000

Few alliance relationships generate as much public drama as US-Turkish ties. In the roughly seventy-five years since Turkish accession to NATO there have been ups and downs between Washington and Ankara, with the past twenty years marked by particularly sharp differences over regional policy and frequent bouts of public criticism and recriminations. President Trump’s second term has brought a positive turn in tone and optics—but there are still widespread perceptions in both capitals that the “other” ally is at best unreliable and perhaps more foe than friend.

Mutually antagonistic narratives have served domestic political purposes in both countries and have become something of a staple in the age of populist democracy of the twenty-first century. Yet the two countries rely on each other extensively in matters of trade, diplomacy, and security. State-to-state relationships are sometimes smoothed over in public but fractious in practice; the US-Turkish dyad is the rarer obverse: disagreeable in public for domestic audiences while resting on a high degree of alignment and collaboration.

Where do bilateral relations go when trust is low, mutual perception negative, but operational collaboration frequent? The answer depends less on rhetoric or polemical discourse and more on alignment of practical interests: We therefore must clear away the smoke of domestically motivated rhetoric to instead focus on mutual benefit. If two states pursue compatible goals and interests, room remains to balance internal political benefits with geopolitical cooperation in a form of complex interdependence. Whether that is the case for the United States and Turkey is a matter of substantial interest, given the weight that both have in the international system and the substantial number of crises and international matters that affect them.

Rorschach test

Articulating interests is more of a political than an academic exercise. It also presents something of a Rorschach test: If you ascribe ideological frames as determinative of status for Ankara (e.g., neo-Ottomanism, Muslim Brotherhood Islamism, reckless aggression) it brings you to one implied set of Turkish interests. If you accept declarative policy as the whole story you get another implied set. It is similarly the case for the United States: If you assume hegemonic interests are the primary driver, it takes you down a certain path; however, that road shifts significantly between and sometimes within presidential administrations. American interests as viewed by Trump differ significantly from those of his predecessor. Yet pattern analysis over time—observed behaviors and statements toward particular goals—tell us how specific a US president and his Turkish counterpart actually perceive the degree to which their interests overlap.

As an imperfect but useful generality, we can ascribe the following traits to Turkish foreign policy: multiaxial engagement and balance-seeking, nationalistic, hard power/realpolitik, traditionally but conditionally attached to the status quo. For decades, Ankara has sought to maximize autonomy while pressing for positive coalitions, where possible. For most of the current century, the United States has focused on maintaining a privileged or primary position in the international system, leavened increasingly with a dose of parsimony and pragmatism, but resting on what might be called enduring counter-revisionism (still in the tradition of US naval strategist and historian Alfred Thayer Mahan).

Ankara and Washington have demonstrated a generally cooperative approach across numerous regional and global issues in recent decades because their top-line approaches are compatible: one a retrenching-but-potent leading power, the other a rising middle power, both disinclined to establish imperial arrangements or to allow others to do so. A brief review of these issues illustrates this general (if imperfect) alignment by assigning numeric values reflecting relative alignment of strategic and diplomatic approaches between the two. Any such numbers game comes with attendant risk of overgeneralizing and missing some context, but statecraft and policy analysis at the higher levels of abstraction unavoidably entail some risk in this regard. So the numbers below are presented as suggestive rather than determinative.

In the table below, full interest alignment equals 1, partial interest alignment 0.5, neither alignment nor friction 0, friction -0.5, counteralignment -1. Descriptions of the cases follow the table.

Table 1: Sizing up US-Turkish alignment and friction on sixteen issues

Regional matter	Turkish position	US position	Assessment	Score
Ukraine/Black Sea	Ukraine survives	Ukraine survives	Full alignment	+1
Caucasus	Peace/prosperity deals	Iran, Russia lose influence	Full alignment	+1
Central Asia	Middle Corridor/ Organization of Turkic States	Russia, China influence limited	Full alignment	+1
Africa	Greater engagement	Russia, China influence limited	Full alignment	+1
Syria	Stable, unified	Stable, unified	Full alignment	+1
Iraq	Stable, unified, not under Iranian control	Stable, unified, not under Iranian control	Full alignment	+1
Gaza	Peace/Israel out	Peace/Hamas out	Partial alignment	+0.5
Energy	Diversify supply	Diversify supply/ marginalize Iran and Russia	Partial alignment	+0.5
US global leadership	US leadership conditional	US leadership but with counterbalances	Partial alignment	+0.5
Trade/defense trade	Autonomous Turkey, sales both ways	Turkey buys more/ doesn’t compete with US firms	Partial alignment	+0.5
European Union	Key trade partner, accession woes	Key trade partner, perceived as exploitative	Alignment but not cooperation	0
Eastern Mediterranean	Greater role for Turkey	Protect Greece	Friction	-0.5
Iran	Deterred but engaged, stable	Regime replaced or weakened	Friction	-0.5
Sanctions	Only multilateral	Multilateral and Minilateral	Friction	-0.5
Israel	Constrain Israel	Fully support Israel	Friction	-1
Venezuela	Engaged	Deterred/punished	Unalignment	-1

Black Sea/Ukraine: Both sides wish to see the war end with Ukrainian independence intact; neither recognizes Russian claims over Crimea or Donbass, though Washington has signaled willingness to negotiate the status of territories Russia partially or fully occupies at present. Some differences exist regarding Black Sea access: The United States might like to have access for its own ships and more broadly for a NATO presence and routine access, while Turkey has preferred littoral NATO states do the lifting and a strict interpretation of the Montreux Convention; but neither wants a Russian conquest of Ukraine’s coastline. For a Trump administration interested in some compromise deal with Moscow, the Turkish position is complementary.

Caucasus/Russia: While the Trump Route for International Peace and Prosperity (TRIPP) offers wins for the region and the United States, the Armenian position is a wildcard with elections approaching. Should Armenian Prime Minister Nikol Pashinyan get the boot in parliamentary elections (to be held no later than mid-June 2026), the United States may tack back to a position that pressures Azerbaijan and marginalizes Ankara. Russian and Iranian pushback on a deal that opens the region to trade on US-friendly terms can be expected. Interest alignment here between Ankara and Washington is solid, though the prospects for realized gain uncertain.

Central Asia: The TRIPP shows US interest in opening up more trade to Central Asia and balancing against outright domination of the region by Russia or China. The Middle Corridor and the Organization of Turkic States both have value in this regard—and have generated more interest from the Trump administration than its predecessor. Central Asia has not traditionally been an area of high investment for the US government; however, energy companies are interested, so having an ally be more engaged is an advantage.

Africa: US investment and engagement in Africa has lagged, but Washington has concerns about Chinese or Russian influence on the continent. Meanwhile, Turkey has dramatically increased its diplomatic, military, and economic presence in Africa over the past two decades. In countries like Somalia and Libya, Turkish presence has lent heft to US diplomatic and counterterror initiatives. Africa demonstrates the complementarity of having compatible goals but varying levels of commitment.

Syria: Trump has made clear his policy that Syria will be stabilized and maintained as a unitary state and that Ahmed al-Sharaa is an acceptable figure to lead. This comports with Turkish policy, despite Israel’s objections. The assignment of Trump confidant Thomas J. Barrack Jr. as special envoy and positive statements from the US-Turkish working group on Syria have shown close convergence on Syria policy, a remarkable turnaround from the previous decade. The January 2026 agreement to reintegrate northeast Syria with the Syrian Transitional Government was a sign that this alignment was proving determinative on the ground.

Iraq: Washington wants a stable Iraq that is: not dominated by Iran; oriented to Western energy markets more than Iranian or Chinese; and working amicably with the Kurdistan Regional Government. Iraq may not fulfill all those interests, but Ankara shares them, and the Development Road project to foster Eastern trade with Europe provides a vehicle for all three countries to earn profits while tightening Baghdad’s ties to Western economies. The presence of PKK fighters in northern Iraq remains a point of friction, but ongoing negotiations to disarm the PKK – and US support for those talks – has taken helped reduce that friction.

Gaza: Washington and Ankara both pressed Israel and Hamas, respectively, to accept a ceasefire deal, return of hostages, and military withdrawal from Gaza in return for disarmament. While the truce remains shaky as of late 2025 and the end state Trump and Erdoğan have in mind may differ somewhat, the coordination on diplomatic efforts has been unambiguous.

Iran: There is divergence here between the hard line taken in Washington toward the Islamic Republic and the modus vivendi approach in Ankara. While Ankara may not want regime change in Tehran, and wants to protect trade with its neighbor, the Turkish government has no illusions about Tehran’s destabilizing regional behavior and shares an interest in deterring it. Ankara has tightened enforcement of multilateral sanctions on the Iranian nuclear program—partially redressing a long-standing US grievance with Ankara. The launch of Israel-U.S. Operation Epic Fury to destroy Iran’s power projection and nuclear capabilities has driven fears of instability and chaos along the Turkish border, turning this from an area of some overlap into an area of friction.

Energy: Ankara’s energy diplomacy has sought to position the country as a hub for multidirectional energy transit and major new gas, oil, and nuclear deals have been signed with Washington. US pressure to decrease oil purchases from Russia has created some strain, as Ankara cannot shift to alternate suppliers as quickly as it can with gas.

US global leadership: American leadership that cooperates with Ankara on key strategic objectives, praising in public and transacting in private, plays like music to the ears of Turks. This contrasts greatly with the constraining approach Turkish leaders called for regarding perceived American overreach in Iraq, Syria, and other regions over the past two decades, including demands to reform the United Nations to lessen the power of the five permanent members. Still, this middle power and the great power have imperfect but positive alignment at present.

Trade/defense trade: The relatively light 15 percent tariff levied on Turkish goods and the $100 billion shared goal for bilateral trade are clear indicators of positive intentions. But defense trade is thorny, with a congressional role and some competition between rising Turkish defense players and US prime defense contractors.

European Union: Ankara and Washington remain at odds with Brussels ideologically and stylistically, while maintaining strong strategic and trade ties with numerous members states. Yet the tensions stem from different sources: Turkish desire to enter the bloc and the American administration’s desire to end what it perceives as the EU’s exploitative trade and security practices.

Eastern Mediterranean: The continuing friction between Greece and Turkey redounds against US-Turkish bilateral relations—a problem that continues to play out in the region and in Congress.

Sanctions: The divergences are clear regarding imposition: Ankara supports multilateral but generally not unilateral sanctions and enforcement, whereas the Turkish track record looks spotty from Washington’s perspective.

Israel: Ankara and Jerusalem pursued a rapprochement in the months before October 7, 2023; since then, rancor, acrimony, and mutual suspicion have become the norm. While regional competition over Syria, the Palestinians, and other issues can be managed, related tensions spill over into US-Turkish bilateral relations in a major way—and that seems likely to persist.

Venezuela: Erdoğan’s quixotic friendship with President Maduro had its roots in terms of oil sales and multipolarity theory, but was a clear point of policy divergence as Trump upped the pressure level on Caracas. With the early 2026 arrest of Maduro and muted response from Ankara, this seems likely to be a decreasing source of tension in U.S.-Turkish relations.

A clear trend and policy takeaway

In conclusion, this assessment sketch of sixteen complicated cases of regional and global policy matters yields eleven that demonstrate substantial bilateral alignment, four with significant unalignment, and one somewhere in between. The aggregate score by the simple rubric of “words and deeds reflect alignment” was positive (+4.5 – with the caveat that these numbers are illustrative but rooted more in subjective alignment rather than formal quantitative criteria). An honest critic might quibble with individual ratings and the framing of the cases or argue for the salience of other matters. Yet sixteen is a reasonable sample size, the thought exercise is revealing, and the trend clear: more alignment than friction overall.

The policy takeaway is equally clear: maintaining a working relationship is vital for both countries. Those arguing for punitive approaches (by the United States) or hedging (by Turkey) disregard potential mutual benefits as well as both opportunity costs and implementation costs. Managing differences and satisfying domestic sentiment require an adaptive response from policy elites in both countries, but the record of cooperation in 2025 indicates that the pragmatism of both presidents fits the moment—and the alignment.

Rich Outzen is a geopolitical consultant and nonresident senior fellow at the Atlantic Council in Turkey with thirty-two years of government service both in uniform and as a civilian. Follow him on X @RichOutzen.

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How to understand the Iran war market swings: A geopolitical put option

Khalid Azim — Tue, 10 Mar 2026 14:51:28 +0000

In response to the joint US and Israeli attack on Iran, financial markets have so far reacted in a relatively orderly and measured way. Risk, as measured by volatility, has increased across asset classes. However, we have not seen dramatic dislocations in core financial markets, rates, credit, and foreign exchange.

Energy markets, however, have reacted more strongly. Natural gas prices have spiked, reflecting the physical disruption and impairment of certain Gulf-based processing facilities. Oil prices briefly crossed the psychological threshold of one hundred dollars per barrel, while shipping in and out of the Strait of Hormuz slowed dramatically. Monday’s comments by President Donald Trump suggesting that the conflict may be nearing an endpoint subsequently brought oil prices back near ninety dollars per barrel, underscoring how sensitive energy markets are to perceptions about the duration of the conflict.

Predicting market movements in moments like this is extraordinarily difficult, and it would be unwise to offer precise forecasts. Instead, two variables deserve particular attention.

The first variable is time. Energy demand tends to be relatively inelastic in the short run. Homes still need heating, vehicles still require fuel, and factories must continue operating. As a result, when disruptions occur in energy supply chains, markets tend to focus less on demand destruction and more on the persistence of supply constraints.

If supply disruptions persist, prices tend to rise. Higher energy prices often feed into inflation expectations, which can ultimately influence monetary policy. Central banks may respond by tightening financial conditions, which in turn can affect interest rates, currency valuations, and economic growth. In this way, what begins as a geopolitical disruption in energy markets can gradually propagate through the broader global economy.

The second variable is uncertainty. Financial markets can absorb significant shocks when the strategic path forward is reasonably clear. What markets struggle with is ambiguity. When investors lack clarity about the trajectory of a conflict or the potential for escalation, they demand a higher premium for bearing risk. This manifests through elevated volatility, wider credit spreads, and shifts toward perceived safe-haven assets.

These same two variables, time and uncertainty, play a central role in how financial markets price geopolitical risk.

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Option play

One way to understand this dynamic is through the lens of options pricing. An option is a financial instrument that gives its owner the right, but not the obligation, to buy or sell an underlying asset at a predetermined price. The two most important determinants of an option’s price are time to expiration and volatility.

Consider the global economy as the underlying asset. A geopolitical shock introduces the possibility of downside outcomes. Investors respond by seeking protection against those outcomes, which conceptually resembles buying a put option. A put option allows its owner to sell an asset at a predetermined price, even if the market value falls significantly below that level.

The analogy can be framed in the following way:

Within this framework, both time and uncertainty influence how markets price risk.

From a time perspective, prolonged disruptions in energy supply shift the aggregate supply curve of energy and place upward pressure on prices. Rising energy costs can alter inflation expectations, which in turn shape monetary policy responses and influence economic growth.

From an uncertainty perspective, several variables widen the distribution of possible outcomes: disruptions in the Strait of Hormuz, escalation of military conflict, supply-chain fragmentation, regional instability across the Middle East and North Africa, and the possibility of broader social or civic disruptions.

Importantly, a put option increases in value not just because the underlying asset has already moved, but because the range of possible outcomes has widened. In other words, the probability distribution around future outcomes becomes more dispersed.

This provides a useful way to interpret current market behavior. Long-dated geopolitical options are effectively being repriced. Markets are not simply reacting to realized economic losses; they are responding to the option value of uncertainty.

What policymakers can do

In practical terms, this means that policymakers themselves can influence how markets price geopolitical risk.

First, they can reduce the duration of the disruption. If Trump sticks with his assessment from Monday, the expected timeline of the conflict shortens. In options terminology, the maturity of the geopolitical risk contract declines, which reduces the premium investors demand.

Second, policymakers can reduce uncertainty by articulating a clear strategic framework. When governments provide credible clarity regarding objectives, escalation thresholds, and pathways toward de-escalation, the volatility parameter embedded in market pricing declines.

Both mechanisms would serve to lower the effective price of what might be called a geopolitical put option on the global economy.

Ultimately, financial markets are not just reacting to the immediate shock of conflict. They are pricing the duration and uncertainty surrounding it. Understanding how these two variables interact provides a useful framework for interpreting market behavior and for understanding how policy decisions themselves can shape the financial cost of a geopolitical risk event.

Khalid Azim is the director of the MENA Futures Lab at the Atlantic Council’s Rafik Hariri Center for the Middle East.

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‘Energy dominance’ reconsidered: From domestic abundance to global strategic leverage

Sara Vakhshouri — Tue, 10 Mar 2026 13:50:34 +0000

“Energy dominance” has become a defining phrase of President Donald Trump’s second-term energy policy. The administration frequently links the concept to energy abundance, affordability, and energy freedom. Yet despite its prominence in policy rhetoric, the term itself has rarely been clearly defined.

Last year, I proposed one interpretation. Based on the administration’s emphasis on abundance, affordability and freedom, I defined energy dominance as a vision to position US energy as a source of stability, competitiveness, and international leadership, and the ability of a country to utilize its energy and mineral resources in the most efficient and strategic way, making them a central enabler of national strategy.

Recent geopolitical developments—particularly those involving the US-China race on artificial intelligence (AI), the US intervention in Venezuela, and, most recently, the US-Israel war with Iran—suggest that the concept may now be evolving into something broader. On several occasions, Trump and senior US officials have referenced the strategic importance of access to the oil and energy resources in both Venezuela and Iran within the broader objectives of these actions. Thus, energy dominance may no longer refer simply to domestic production or export strength. Increasingly, it appears to involve control over energy assets, strategic chokepoints, and the global energy flow.

In this expanded interpretation, energy dominance becomes not just an energy policy—but a geopolitical strategy.

AI race with China and the United States’ strategic counterweight

While the war in Iran and its impact on energy prices are dominating headlines, the ongoing, broader context for the shift toward an energy-as-geopolitics framework is the intensifying technological competition between the United States and China. Leadership in artificial intelligence is increasingly viewed as a core pillar of US national security, shaping economic security, military capabilities, and technological influence in the decades ahead.

Artificial intelligence requires enormous energy inputs: electricity for AI and data centers, petrochemical materials for advanced manufacturing, and industrial energy for the supply chains and minerals processing that sustain technological growth. China currently holds significant structural advantages in critical minerals across nearly every level of the supply chain, including resource ownership, production, refining and processing capacity that underpin many advanced technologies. Closing that critical mineral gap quickly would be difficult.

One possible strategic response is to focus on energy leverage instead. If China’s advantage lies in mineral supply chains, the United States’ comparative advantage lies in energy production, maritime security, the control of energy flows, and the global financial systems that govern energy trade. By shaping the cost and security of energy flows, Washington could indirectly influence the cost structure of China’s AI expansion.

Energy, in this sense, may be emerging as the strategic counterpart to mineral dominance. While China has built significant domestic energy storage capacity, it is still not energy independent and relies heavily on imported energy, particularly from the Middle East via shipments passing through the Strait of Hormuz.

Venezuela and Iran: Assets and geography

In the midst of the competition between the United States and China in which energy has become a critical lever, the more acute developments in Venezuela and Iran illustrate two different elements of the broader energy-as-geopolitics strategy.

Venezuela represents resource control. The country holds some of the largest proven oil reserves in the world. Increased US influence over Venezuelan energy assets could expand Western control over major supply capacity in the Western Hemisphere, while minimizing China and Russia’s influence over the energy resources in this country.

Iran represents something different: geography.

Its strategic importance lies not only in its oil, natural gas, and significant share of strategic minerals reserves like lithium and copper, but in its proximity and control over the Strait of Hormuz, one of the most important energy chokepoints in the world.

Roughly 20 million barrels of oil per day—about one-fifth of global petroleum consumption—pass through the Strait of Hormuz, along with roughly 20 percent of global liquefied natural gas trade. Most exports from major producers in the region—Saudi Arabia, Iraq, Kuwait, Qatar, and the United Arab Emirates—must pass through this narrow corridor.

Much of that energy ultimately flows to Asia, particularly China.

For decades the strait has been treated primarily as a security risk. But in a world shaped by geopolitical competition, its significance may be expanding.

Iran war scenarios and the strategic implications for energy dominance

The trajectory of conflict involving Iran remains uncertain. Military confrontations rarely unfold according to predictable timelines, and the political consequences of war often prove more consequential than the duration of the conflict itself.

For global energy markets, the critical variable is not only how long this conflict lasts, but what form of governance ultimately emerges in Iran and how that outcome affects regional energy flows and security.

Three broad governance outcomes illustrate how different political trajectories could reshape the global energy system.

Scenario 1: Political transformation and market reintegration

One possible outcome is a political transformation in Iran that produces a government more willing to engage with international markets. Such a shift could eventually allow Iran’s substantial oil, natural gas, and mineral resources to reenter global supply chains more fully.

In this scenario, regional energy infrastructure could stabilize relatively quickly. Market confidence would likely improve as sanctions ease and new investment enters the country’s energy sector. Access to Iran’s significant resource base could expand global supply and potentially reduce long-term supply risks in the region.

However, such a transformation, while not unlikely, would be difficult to achieve. Iran has built a complex political system around multiple centers of power, making it resilient in the face of external pressure.

Scenario 2: System continuity with managed tensions

A second possibility is that the current political structure in Iran largely survives the conflict, even if it emerges weakened or under increased pressure. In this case, tensions between Iran and Western powers would likely continue, and periodic disruptions to regional security could persist.

Even without large-scale warfare, the risk of attacks on energy infrastructure or maritime shipping could remain elevated. In such an environment, producers across the region would likely rely heavily on continued US naval presence to secure shipping lanes and protect critical infrastructure.

This dynamic would increase Washington’s influence over the security of energy transportation through the Strait of Hormuz, giving the United States greater leverage over the conditions under which energy flows to global markets.

Scenario 3: Fragmentation and persistent instability

A third potential outcome is a period of prolonged instability in which Iran’s central authority weakens and internal fragmentation leads to recurring security risks in the region.

In this scenario, maritime security threats, attacks on infrastructure or disruptions to shipping could occur intermittently. Insurance premiums, transportation risks, and price volatility would remain elevated for extended periods.

While such instability would unsettle global markets, its economic impact would fall unevenly across the international system. Major energy-importing economies—particularly those heavily dependent on Middle Eastern supply routes—would face higher transportation costs and greater supply uncertainty. Countries like China, which rely heavily on imported oil and gas passing through the Strait of Hormuz, would be especially exposed to these disruptions.

None of these outcomes are guaranteed, and war inevitably introduces significant uncertainty. But across these scenarios, the strategic consequences of disruption in the region tend to fall differently on major energy producers and major energy importers, reshaping the balance of influence in global energy markets.

Viewed this way, the conflict does not simply shape regional security. It also reshapes the structure of global energy markets. Whether through expanded access to resources, influence over the movement of energy or market dynamics that raise costs for major importers, each trajectory carries implications for how energy power is distributed in the global economy.

A new mechanism of market management

The geopolitical consequences of this war could raise an important possibility. For decades, global oil markets have been shaped significantly by OPEC and OPEC+, which manage markets by adjusting production in response to supply-demand fundamentals. But if the United States maintains influence over the transportation routes used by many of those producers, the dynamics of market power could shift.

Most major exporters in the region—and many OPEC+ members—rely on the Strait of Hormuz for their exports. If the security of that passage depends on sustained US naval presence, Washington would gain influence over the condition under which energy reaches global markets.

This leverage would come not from production quotas, but from transportation security, insurance costs, and maritime access. Through these mechanisms, the United States could shape the conditions under which energy moves through global markets and how prices are formed.

In effect, this structure of influence would resemble the leverage China holds in critical mineral markets: not by controlling production itself, but by shaping the conditions under which supply reaches global buyers. Through such market influence, Washington could counter the price power China derives from its dominance in critical mineral supply chains.

Trump’s energy price strategy: Short-term pain, long-term leverage

The Trump administration has consistently emphasized energy affordability and low energy costs for American consumers. But global energy prices are not determined by domestic production alone. They are shaped by the structure of global supply routes, geopolitical risk, and the balance between producers and large importing economies.

Periods of geopolitical tension in the Middle East tend to increase transportation risks, insurance costs, and market uncertainty. These dynamics often affect energy-importing economies more heavily than energy producers. Countries like China that rely heavily on imported oil and gas from the Middle East are particularly exposed to disruptions or rising transit costs through chokepoints such as the Strait of Hormuz.

Over time, higher energy costs can slow industrial demand in large importing economies. If demand growth weakens while production capacity in the Western Hemisphere expands, global markets could eventually move back toward lower prices—bringing the system closer to the long-term objective of affordable energy.

Energy and the emerging strategic landscape

None of these outcomes is guaranteed. Wars rarely unfold according to strategic expectations, and the risks to regional stability and global markets are real. But when viewed through the structure of the global energy system, the implications of the conflict extend beyond the battlefield.

Energy remains a foundational input of industrial power and technological development. As global competition increasingly centers on emerging technologies such as artificial intelligence, the cost and security of energy will play a critical role in shaping economic competitiveness. Countries that rely heavily on imported energy are particularly sensitive to disruptions in major supply routes.

From the perspective of energy dominance, influence is no longer determined only by who produces energy. It increasingly depends on who can shape the security, cost, and movement of energy across the global system. As competition between the United States and China expands into technology, supply chains, and artificial intelligence, control over energy flows may become one of the defining sources of leverage in that rivalry.

Sara Vakhshouri is founder and president of SVB Energy International; founding chair of the IWP Center for Energy Security and Diplomacy; a faculty member at Georgetown University School of Foreign Service; and a senior fellow at the Oxford Institute for Energy Studies.

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What the US can do to mitigate an impending energy crisis

Ellen Wald — Thu, 05 Mar 2026 21:59:06 +0000

As Operation Epic Fury continues, a global energy crisis is unfolding in the Persian Gulf. With swift action, this crisis can be alleviated. If not, the world is likely to see economically devastating price spikes and shortages in crude oil, petroleum products, and natural gas across Asia and Europe, the primary importers of Gulf oil and liquefied natural gas (LNG). Though the United States remains relatively insulated from potential shortages due to a robust and dynamic domestic oil and gas industry, it is within the nation’s power to mitigate the emerging energy crisis.

Thus far, oil prices have not spiked to unreasonable levels—a testament to just how well supplied the global oil market was when the attack began and to the fact that attacks on oil infrastructure have been minimal. Iran has not—nor can it—close or physically block the Strait of Hormuz no matter what its politicians proclaim. However, several ships were reportedly hit by projectiles near the Strait and major marine insurers either cancelled their war-risk insurance policies or raised the rates from around $200,000 to as high as $1 million. As a result, marine traffic through the Strait of Hormuz has been at a standstill since March 1, and the world is standing at the precipice of a major energy crisis.

If tankers don’t start moving out of the Persian Gulf soon, crude oil prices will surge into the triple digits and many countries around the world will experience immediate shortages of gasoline, diesel, and natural gas. Some countries, like Iraq, lack extra storage facilities for crude oil and have already cut production by 1.5 million barrels per day (bpd) as a result. Barring a swift and decisive conclusion to the war, here are some steps the United States can and should take to avert a global energy crisis.

Access strategic petroleum reserves

Through the International Energy Agency, member countries can coordinate releases from their strategic petroleum reserves. Even countries that are not experiencing shortages should participate because the market can ensure that crude oil is efficiently rerouted to areas in need.

Mobilize additional oil production

President Trump can encourage US domestic oil producers to pump more oil, but producers will only invest in this if they believe doing so will be financially beneficial. If the price of WTI remains elevated and demand for US oil exports grows, frackers should be able to increase production rapidly. To provide additional—if limited—mitigation, Trump can also encourage OPEC+ to raise production quotas so that the producers with the ability to pump and move more oil can do so. Kazakhstan can produce and transport at least 500,000 bpd above its OPEC+ quota. Saudi Arabia and the United Arab Emirates also have spare capacity, but their export facilities outside of the Persian Gulf are limited. Even though Aramco can produce 12 million bpd of oil if needed, it can only export 7 million bpd from its Red Sea port of Yanbu. The UAE can increase oil production to 4 million bpd, but only 1.5 million bpd can flow through the Habshan-Fujairah pipeline to the port of Fujairah in the Gulf of Oman.

Mobilizing alternative sources of oil could provide some minor relief, but not nearly enough to make up for the 20 percent of the world’s crude oil and petroleum products that typically pass through the Strait of Hormuz. To prevent Asian and European economies from severe crisis, the Trump administration needs to get tankers moving through the Strait of Hormuz.

Military escorts for tankers

During the Iran-Iraq War, oil tankers from Kuwait were permitted to fly the US flag and received US military escorts to ensure their safety as they sailed through the Persian Gulf. If the US military has achieved naval superiority in the Gulf, it should offer physical protection to all non-sanctioned tankers leaving and entering the Gulf. On March 3, Trump indicated that he would direct the US Development Finance Corp. to offer reasonably priced political-risk insurance to all non-sanctioned tankers. He also said that the US Navy would escort tankers through the Strait of Hormuz, if necessary. It is likely that these military escorts will be a necessity for ships to accept the transit risk, even with lower insurance costs. As soon as naval escorts are available, Trump should arrange a demonstration of safe transit to encourage tankers to start crossing. The US, however, does not have the resources in the Persian Gulf to accompany every tanker through the strait. While resources can be pulled from other areas, the United States should coordinate with other naval powers, like the UK, to support tanker transit—albeit on a reduced schedule—through the strait.

Establish alternate shipping lanes in the Strait of Hormuz

Since 1979, ship traffic through the Strait of Hormuz has operated according to Traffic Separation Scheme (TSS) established by the United Nations International Maritime Organization. The TSS consists of two shipping lanes, one incoming and one outgoing. Each lane is two miles wide and are separated by a four-mile buffer zone. Both lanes take ships into Iranian territorial waters, less than ten miles from Iran’s shore. But the TSS is not the only navigable route through the Strait of Hormuz. There are other areas that are sufficiently deep to accommodate a fully laden, large-capacity crude oil carrier. In fact, before 1979, the main shipping channel ran through the Inshore Traffic Zone, which is south of the Omani island of Didimar. Oman usually restricts access to this zone to smaller vessels, but it could be used, with US military protection, for oil tankers to avoid entering Iranian waters

Remove Iranian military from islands in the Strait of Hormuz

There are three small islands in the Strait of Hormuz (Abu Musa Island and the Greater and Lesser Tunbs Islands) that frame the maritime shipping lanes and are strategically significant for controlling maritime traffic in the waterway. Iranian military forces occupied these islands in 1971 even though, in the case of Abu Musa Island, Iran and the UAE agreed to share sovereignty. The United States could, in agreement with the UAE, remove the Iranian military from the islands with the immediate goal of ensuring the safety of international shipping and the long-term goal of facilitating a resolution to the longstanding territorial dispute between Iran and the UAE. This option would require ground troops and coordination with Emirati forces, who would remain to secure Emirati presence on the islands until a negotiated agreement with the future Iranian government can be reached.

Conclusion

Unless a cease-fire or negotiated settlement is on the horizon, President Trump needs to take swift action to prevent oil prices from rising to economically detrimental levels. It is implausible to expect maritime traffic through the Strait of Hormuz to operate at normal rates when it is in the middle of an active warzone. However, there are actions the US can take to promote the safety and security of ships transiting the strait, so that shipping can restart at reduced levels. There is still time to prevent an oil energy crisis, but the clock is ticking.

Ellen Wald is a nonresident senior fellow with the Atlantic Council Global Energy Center

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What a Middle East oil and LNG crisis means for China and East Asia

Joseph Webster, Reid I’Anson, and Kevin Li — Thu, 05 Mar 2026 21:48:49 +0000

WASHINGTON—The Trump administration’s decision to launch air strikes against the Iranian regime could prove enormously consequential for global oil and gas markets. Even as the strikes and Iranian retaliation continue, it’s worth examining the potential impact of the war on China and East Asia more broadly. A crisis that hits oil supplies clearly harms Beijing’s strategic interests, but one that affects liquefied natural gas (LNG) could end up advancing them.

China, the world’s largest oil importer, would suffer significant economic costs from a long-term, large-scale oil outage in the Middle East. Still, it would fare better than other regional economies, such as Japan, South Korea, and Taiwan. Not only does the People’s Republic of China (PRC) enjoy greater domestic oil production than any of those Asian democracies, but its economy is about as oil-intensive as Japan’s or Taiwan’s, and much less so than South Korea’s. Accordingly, while an oil crisis would bring real pain to the PRC, it might empower Beijing relative to its regional rivals.

While China would suffer from oil outages, a Middle East crisis with disproportionate LNG outages might benefit the PRC. Natural gas accounts for a relatively small share of China’s primary energy consumption, the country enjoys substantial domestic production, and it can tap pipeline imports from Russia, Central Asia, and Myanmar. Significantly, many of the PRC’s competitors or rivals—the European Union, Japan, South Korea, and Taiwan—are substantially or even wholly reliant on LNG imports for their natural gas consumption. Dutch TTF natural gas prices are up more than 50 percent against last Friday’s close, fueling concerns of an energy-induced inflationary spike. In addition, LNG outages in Qatar, the world’s second-largest producer, would benefit the US LNG complex—and fuel accusations that Washington was reaping windfall benefits from a war it started. Beijing may therefore judge that another LNG-tinged crisis would impose little economic cost on it while potentially further antagonizing Washington’s already-fraught ties with its allies.

Ominously, Russian President Vladimir Putin said this week that he would deprioritize natural gas exports to Europe as “other markets are opening up.” But the Russian leader is once again lying—he has no major pipeline export alternative to Europe, not even China. Instead, he appears to be establishing Russia’s baseline negotiating position ahead of a likely crisis in LNG markets.

While Tehran has so far not targeted significant regional oil infrastructure in its retaliatory strikes, it still might. With the United States and Israel showing no signs that they will stop targeting Iran’s political leadership, the remnants of the Khamenei regime are becoming increasingly desperate and are taking more risks. Even a trigger-happy regional commander could act independently from the regime. If Iranian forces do start targeting regional oil exports en masse, it could quickly raise Beijing’s ire. On the other hand, large-scale LNG outages might be more palatable for Beijing while harming Tehran’s adversaries—and Iran has not refrained from targeting LNG infrastructure so far. US and allied policymakers should closely follow Beijing’s actions and rhetoric, especially if a Middle East energy crisis disproportionately affects LNG. And from the present crisis, Indo-Pacific capitals should draw important lessons, not the least of which is the importance of strengthening energy security ahead of a potential Taiwan crisis.

The Strait of Hormuz’s vulnerabilities

Iran’s ability to threaten the world economy centers around the Strait of Hormuz. Traffic along this maritime bottleneck has already ground to a halt amid the threat of attacks, which could send the prices of oil and other commodities higher and potentially trigger a global economic crisis. East Asian economies would be particularly impacted by a closed strait. In 2025, around 78 percent of all Middle Eastern crude oil exports to China, Japan, South Korea, and Taiwan flowed through this important chokepoint. While Saudi Arabia and the United Arab Emirates have pipeline capacity of about 2.6 million barrels per day to reach Red Sea ports, this is only a fraction of even their own domestic production, and most Gulf states would not be able to find alternative shipping routes.

East Asian economies are particularly vulnerable to a Middle Eastern oil crisis, and Japan, South Korea, and Taiwan are among the most exposed.

Conversely, the PRC imports less via the Strait of Hormuz and has insulated itself, to a degree, from a potential long-term oil outage through rapid vehicle electrification and robust domestic oil production. It has also diversified energy sources—mostly coal, but also renewables. Indeed, China is far less exposed to energy imports than its regional rivals.

Japan, South Korea, and Taiwan have virtually no domestic crude production and rely almost exclusively on imports. The PRC, meanwhile, meets over a quarter of its oil demand through domestic production. Moreover, the economies of Taiwan and South Korea are much more oil-intensive than that of the PRC, meaning that mainland China generally requires fewer barrels of oil than its rivals to produce one thousand dollars of gross domestic product.

The PRC is therefore better positioned to withstand a major Middle East oil supply disruption relative to regional rivals. Of course, oil is but one of many macroeconomic variables, so the PRC’s economy could still underperform relative to other regional players—especially Taiwan and South Korea—if, for example, the artificial intelligence boom continues along its current trend. However, in addition to its oil production, the PRC’s current stockpiles of crude oil leave it relatively well-prepared for a crisis.

PRC and East Asia crude oil inventories

Japan has robust import coverage. At present, Japanese onshore crude inventory is holding at 350 million barrels, according to Kpler data. Assuming 2025’s average refinery runs of 2.4 million barrels per day persist in 2026, Japan has nearly 150 days of oil supply in its reserves. This figure is even higher, at 182 days, when accounting only for domestic transportation fuel demand (gas oil/diesel, gasoline, jet). In other words, Japan’s refineries could supply its domestic fuel needs, at current activity levels, for 182 days if it seeks to only satisfy domestic needs and eschews exports.

While Taiwan and South Korea appear more exposed to a prolonged oil supply disruption at first glance, they are more secure if one distinguishes between only domestic consumption and total demand, which includes crude oil ultimately destined for export as a petroleum product. Based on our measures of Taiwanese and South Korean inventory levels and refinery runs, Taiwan can cover thirty-nine days, while South Korea has just thirty-three days of cover. But both could sustain domestic consumption for much longer. Taiwan, for example, is mandated to hold at least ninety days of cover for current core transportation fuel demand; South Korea has 107 days, with the potential to increase this further with additional policy adjustments to lower domestic retail consumption.

For instance, in April 2024, Taiwan held that its domestic inventories equated to about 167 days of supply for all petroleum products. Taiwan no longer appears to report inventories data, although its Energy Administration at the Ministry of Economic Affairs reports that domestic inventories are compliant with statutory mandates requiring commercial and governmental inventories to hold at least ninety days of consumption.

The governments of Japan and South Korea report that they have at least 254 days and 210 days, respectively, of supply, while Taiwan has enough for about 120 days, according to The New York Times.

The PRC has the largest onshore crude stockpiles in the world, with inventory levels estimated at 1.2 billion barrels as of January 2026 with builds amounting to 100 million barrels over the previous year, per Kpler data. With average refinery runs of 15.5 million barrels per day in 2026, less domestic crude production of 4.3 million barrels per day, this implies around 108 days of import cover. On the other hand, if the PRC decided to also maximize domestic consumption and eschew exports of petroleum products, its supply would extend to 130 days.

China may also be able to obtain another 38 million barrels of floating Iranian crude on tankers, many of which are located offshore of Malaysia or China. While the status of these Iranian barrels is currently unclear, the PRC’s existing inventories leave it relatively well positioned to weather an oil crisis, at least compared to its regional rivals.

LNG’s role in energy, by economy

But a crisis may not only exist solely or even largely in the oil domain: LNG outages could also damage East Asian economies. If Tehran disproportionately targets LNG infrastructure in the Gulf, then its relationship with Beijing may be a significant or even primary factor, as the PRC is much less reliant on LNG imports than other energy importers. Unlike many of its democratic rivals across Europe and the Indo-Pacific, natural gas is a small share of China’s primary energy consumption, and the PRC produces much of its needs domestically. East Asian economies should be alert to the possibility that Tehran will disproportionately target regional LNG infrastructure—not necessarily because it was directed by Beijing, but because the Iranian leadership will likely seek to maximize Western pain while minimizing Chinese anger.

If Iran does target regional LNG infrastructure, Qatar, the world’s second-largest LNG exporter, could be hit hard. Significantly, Iran drone strikes have already hit Qatar’s Ras Laffan facility, and the complex accounts for about 20 percent of global LNG exports. LNG outages in Qatar would hold significant geopolitical ramifications, as the fuel is only semi-fungible, meaning transportation of the fuel faces infrastructure constraints and bottlenecks. As seen below, the PRC is less exposed to Qatari LNG than Taiwan, South Korea, or Japan. Moreover, as much of its LNG imports satisfy southern Chinese power demand, China can also replace its LNG imports, to a degree, by shifting to other forms of electricity, such as coal or renewables.

Furthermore, if Middle Eastern LNG outages persist, prices may spike even further. There is virtually no global spare capacity right now. Any unplanned incremental expansions would take well over a year, and European natural gas storage levels are low.

If prices continue to spike, this would boost LNG exports for the United States—already the world’s largest LNG exporter—at the expense of consumers across Europe and the Indo-Pacific. While this development would produce short-term commercial benefits for the United States, it would also potentially widen diplomatic fissures between Washington and its allies across Europe and the Indo-Pacific. Washington would be in the awkward position of receiving commercial benefits, at the expense of its allies, from a war it initiated. This dynamic could be a diplomatic boon for Beijing, especially since its media outlets falsely blamed the United States for the 2022 LNG price spike arising from Russia’s full-scale invasion of Ukraine.

Energy security risks and lessons

As the world’s largest energy importer, China has a lot to lose from a conflict in the Middle East. Nevertheless, in certain scenarios, Beijing could reap geopolitical benefits that offset some or perhaps even all of the economic costs. Accordingly, policymakers should watch for signs that Tehran is disproportionately targeting LNG infrastructure, pursue short-term mitigation steps, and consider the long-term consequences of the conflict.

Short-term risk mitigation steps are straightforward. To guard against any short-term price spikes, the United States may need to tap its Strategic Petroleum Reserve (SPR) in coordination with its allies and partners. In addition, Washington may need to incentivize domestic crude oil and natural gas production. In some cases, export projects could be accelerated, perhaps via financing from the Office of Energy Dominance Financing or the Export-Import Bank. Furthermore, agreeing to fill the SPR at a price floor could provide certainty for long-term production, likely sending domestic crude oil production higher. If the crisis metastasizes, however, other measures may be warranted.

The long-term consequences of this crisis are potentially alarming. It could provide a template for Beijing if it attempts to conquer Taiwan via coercion. The PRC’s energy security is transforming in important ways as it becomes increasingly self-reliant. While Beijing is, for now, highly exposed in an oil crisis, its vulnerability will be substantially reduced in a few short years. Vehicle electrification and improving fuel economy have ended Chinese total transport fuel demand growth. Domestic gasoline consumption has already peaked. If—when—China commercializes more advanced batteries, such as semi-solid state or solid-state batteries, its overall demand for oil will likely decrease further. In 2025, China marginally increased domestic crude oil production, and it could likely expand further if energy security becomes an overriding priority; Beijing could also quickly increase overland crude oil pipeline connectivity with Russia by expanding the mainland Chinese leg of the East Siberia-Pacific Ocean pipeline. In sum, while Beijing remains vulnerable to an oil crisis, it is narrowing its oil exposure to seaborne volumes. If vehicle electrification and battery advances accelerate, Beijing’s interests could shift, including in the Middle East.

The East Asian democracies and the United States should quickly learn and apply these lessons. The present crisis poses serious dangers but may also foreshadow even graver dangers ahead related to a potential Taiwan crisis. A future confrontation over Taiwan may be determined not only by military might but by logistics and energy security. Accordingly, while East Asian democracies should expand their military capabilities, they would also be wise to bolster energy security by reducing domestic demand, bolstering domestic supply, and stockpiling and hardening dispersed storage.

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Enforce sanctions to prevent Russia from benefitting in a prolonged Iran crisis

Kimberly Donovan — Thu, 05 Mar 2026 18:03:00 +0000

WASHINGTON—As all eyes turn to the war in Iran, the United States and its Western allies cannot afford to take their sights off Russia. Ongoing US and Israeli strikes on Iran, combined with Iran’s threats to close the Strait of Hormuz and its attacks on energy and military infrastructure across the Middle East, are leading to spikes in oil prices. Some analysts warn that oil prices could rise to one hundred dollars per barrel if there is a prolonged disruption of oil exports from the Gulf. Watching all this is Russia, eager to sell the hundreds of millions of barrels of sanctioned oil it currently has sitting in storage tankers at sea.

Oil’s rise

Oil futures have fluctuated since the war began. On Tuesday, Brent crude traded at nearly $84 per barrel, its highest price since July 2024. While the surge appears to be leveling off, oil prices are up 15 percent this week. Many analysts anticipate that the longer the conflict goes on and risks to the Strait of Hormuz and Gulf energy infrastructure persist, the greater the likelihood of further price increases.

There are global economic implications associated with high oil prices, including higher inflation, negative impacts on markets, and increased prices at the gas pump and for common goods. But there are also more specific implications for the Russian economy: Higher oil prices could help Moscow continue funding its war against Ukraine despite being under heavy sanctions. As policymakers consider next steps with Iran, they should double down on enforcing sanctions against Russia to prevent Moscow from benefiting from the conflict in Iran.

Russia’s opportunity

Russia has been under increasing economic pressure from Western sanctions since its full-scale invasion of Ukraine in 2022. The United States and its allies imposed sanctions, export controls, asset blockings, an oil price cap, and other restrictive economic measures aimed at reducing Moscow’s ability to fund and equip its war. This pressure, for example, includes US and UK sanctions targeting Russia’s four largest oil companies—Rosneft, Lukoil, Gazprom Neft, and Surgutneftgas—and their subsidiaries, as well as US, UK, and European Union (EU) sanctions targeting the “shadow fleet” of Russian oil tankers and facilitators enabling Russian sanctions evasion. These sanctions took the Group of Seven (G7) advanced economies’ sixty-dollar price cap on Russian oil, enacted in December 2022, a significant step forward by further restricting Moscow’s ability to sell its oil and reducing Russia’s oil revenue.

As these sanctions have taken hold, Russia’s economy has been hit hard. While the Kremlin has sought to reshape Russia’s economy into supporting its war, its revenue from oil exports has fallen. Prior to 2022, fossil fuel exports funded nearly 40 percent of Russia’s federal budget. In 2025, this dropped to 25 percent. This fall in revenue was due to a combination of a global oil surplus, low oil prices, and Western economic pressure.

After European countries started to phase out purchases of Russian Urals due to the price cap and sanctions, China and India became the primary importers of Russia’s oil. In the past year, however, Beijing and New Delhi reduced their imports of Russian oil due to concerns over US secondary sanctions exposure, tariffs, and, in India’s case, difficult trade negotiations with the United States. China continued to buy oil from Iran and Venezuela, evading US sanctions, and it began importing more oil from Saudi Arabia. Meanwhile, India started sourcing more oil from the United States and Gulf states to meet its domestic demand.

But now, as oil prices surge and it becomes more difficult to move oil out of the Persian Gulf, big oil consumers such as China and India will need to shore up their supplies. Russia is ready and waiting for fresh demand for its oil: On Wednesday, Russian Deputy Prime Minister Alexander Novak said that Russia is getting “signals of renewed interest from India.”

In January, the EU and the United Kingdom reduced the Russian oil price cap to $44.10 per barrel, a move that was intended to further curb Russian oil revenue. But with oil prices over $80 per barrel this week and many analysts expecting those prices to rise, $44.10 per barrel becomes an attractive discount for readily available oil, giving Russia an opportunity to increase oil sales.

The Western response

While the US-Israeli war against Iran is expanding across the Middle East, Russia’s war in Ukraine continues. If Russia is left unchecked and sanctions are not enforced, Russia may have the opportunity to replenish its coffers with oil revenue. This would shore up Russia’s declining economy, provide it with the funds it needs to continue the bloodshed in Ukraine, and weaken US and Western leverage in peace negotiations. The West cannot afford to let this happen.

The United States, the EU, the United Kingdom, and the broader G7 sanctions coalition should step up the enforcement of their existing sanctions against Russia now. This should include levying additional sanctions on Russia’s energy sector, including currently unsanctioned oil companies, refineries, ports, and financial institutions that facilitate oil and gas transactions.

In addition, the United States should align its shadow fleet sanctions with those of the EU and the United Kingdom. Aligning or matching sanctions with allies extends the tool’s reach across jurisdictions and reduces sanctions evasion. In addition to designating the shadow fleet vessels, allies should expand operations to seize them. These seizures reduce Russia’s profits from sanctioned oil and send a clear message that sanctions evasion will not be tolerated. Further, these operations remove dangerous unseaworthy vessels from the water, preventing potential environmental and maritime accidents, as well as potential national security risks, such as undersea cable cutting.

Beyond oil, Western partners should also pursue sanctions on Russia’s liquefied natural gas (LNG) sector, especially now that Qatar’s LNG capacity is shut down as a result of the war in Iran. Qatar’s LNG exports represent 20 percent of the global supply. Meanwhile, Russia remains the fourth-largest LNG supplier, behind Australia, Qatar, and the United States. With Qatari LNG offline, Russia, if left unchecked, could fill the gap in supply. Further, the United States, the United Kingdom, and the EU should make clear to China and India that sanctions on Russian energy remain in place and it would be in their best interest to comply with them.

The weaker the Russian economy performs, the greater the West’s leverage in negotiations to end Moscow’s war in Ukraine. To maintain and bolster this leverage over Russia, the United States and its allies should enforce and increase their sanctions efforts to ensure that the Kremlin cannot economically benefit from a boost in energy sales as a result of the Iran war.

Energy Sanctions Dashboard

This dashboard focuses on US sanctions and restrictive measures placed on crude oil from Russia, Iran, and Venezuela—including the unintended consequences and the lessons learned.

The post Enforce sanctions to prevent Russia from benefitting in a prolonged Iran crisis appeared first on Atlantic Council.

How the US and its allies can prevent an energy supply crisis in the Strait of Hormuz

David L. Goldwyn, Andrea Clabough — Tue, 03 Mar 2026 18:49:14 +0000

WASHINGTON—After weeks of uncertainty, a seemingly perfect storm has formed in the Persian Gulf—one that energy security analysts and risk assessors have long feared. Amid ongoing joint US-Israeli strikes targeting Iranian senior leadership and critical infrastructure, Iranian regime threats are resulting in an effective closure of the Strait of Hormuz.

With vessel traffic down 70 percent in the past week, voluntary delays for seaborne vessels, and insurers rapidly recalculating their premiums, matters are tense in the passageway through which more than 30 percent of the world’s seaborne crude oil is shipped. Warnings of unsafe conditions in the strait, in combination with missile barrages throughout the Gulf region, suggest that the situation could intensify and persist for days or even weeks—even if Iranian naval forces cannot shut down the waterway by conventional force alone.

Since the strikes began, prices for crude oil have spiked by more than 8 percent, surpassing seventy-five dollars per barrel, following steady price increases in the lead-up to the US-Israeli strikes on February 28. There are several profound uncertainties at play: the risks to future marine transit, the duration of the disruption, the potential for commercial inventories to replace disrupted supply, the demand response to higher prices, and the behavior of governments. All are top of mind for traders and policymakers alike across the world’s major economies.

Despite the relatively moderate oil price impacts so far, there is a real prospect of further escalation in and around these key oil trading zones. Fresh market volatility on Tuesday underscored traders’ concerns. US leadership cannot afford to wait for the worst-case scenario—major supply displacement that could cause prices to soar into the triple digits per barrel. Working with like-minded allies, Washington should leverage the available tools to address the disruption risks immediately, well before uncertainty devolves into catastrophe.

A history of coordinated responses

Fortunately, a review of relevant history offers a helpful guide. The Arab Oil Embargo of the early 1970s spurred the creation of the International Energy Agency (IEA) in 1974, quickly followed by the passage of the Energy Policy and Conservation Act in the US Congress, which created the Strategic Petroleum Reserve (SPR). Together, these mechanisms enabled the United States to assert global leadership on crisis supply management and created forums for collaboration and measured responses.

The IEA, for example, required its members to hold strategic reserves of at least ninety days of crude oil supply, to be drawn on under specific circumstances and by consensus, and it facilitated voluntary demand-side response measures. The IEA thus became a cornerstone of a US-led coordinated emergency response mechanism. The defensive system that emerged from this collaborative mindset meant that time could be bought in an emergency: The market could be assured that there would be a bridge until a given crisis resolves, with the ability to substitute displaced oil supplies or release additional stockpiles as needed. This reassurance has helped to prevent sudden, dramatic price spikes that the markets, as well as the the oil and gas industry, cannot possibly respond to before they induce severe economic and inflationary consequences.

The need for speed

But speed matters as much as collaboration. In the past, the United States has sometimes delayed its decision to utilize its SPR, such as during the first Gulf war, when prices spiked 140 percent between July and October 1990. The failure to immediately signal to global markets that additional supplies would be released had real consequences for how oil markets responded.

It is easy to see why: Traders need to know whether a release is coming so they can accurately calculate the amount of anticipated disrupted supply. Traders don’t just consider the given day or week; they look significantly further ahead. Likewise, holders of commercial inventories may not release them if they are uncertain about when a drawdown will occur. The vicious cycle thus feeds itself: Uncertainty creates fear, fear incentivizes protection of available resources, and the potential for a supply crunch elevates prices even if real barrels are not yet displaced.

Today, the prevalence of electronic trading and robust futures markets also means that a quick and significant announcement of available strategic stocks (if needed) can have a multiplier effect in mitigating price spikes or preventing them in the first place. For now, the Trump administration has downplayed any role for the SPR in the current conflict, and it has suggested that markets remain well supplied for now. That may well be true—but it may not remain so should the conflict persist for weeks.

What the US can do

The Trump administration has opted for a preemptive strike on Iran, presumably to preclude a national security crisis. It must now act quickly to prevent an oil security crisis.

First, the administration should immediately reengage the IEA and leverage its influence and coordination authorities to reassure markets. Specifically, the IEA can help galvanize members around a consensus agreement: that if the obstruction of the Strait of Hormuz (either from the lack of insurance coverage or an actual physical risk) is not resolved quickly, then they will implement a maximum drawdown of available crude resources for sixty days to ensure that global markets are well supplied.

After all, oil market traders “buy the rumor and sell the fact.” This proactive approach would ensure immediate price moderation, even if the drawdown never takes place or is not fully subscribed. However, a failure to coordinate quickly risks paralyzing market participants who are trying to ascertain the administration’s posture and the likely consequences—elevating the risk of painful price inflation.

This effort will demand serious and thoughtful diplomacy given the uncertain relationship at present between the IEA and the White House, as well as the lack of notice to allies in advance of the US attack on Iran. But the United States’ fellow members of the IEA will have their own economic self-interest implicated in whatever happens next with oil markets. Importantly, the leadership of the IEA on this effort could offer critical neutral ground for multilateral engagement. Moreover, agreeing to address the economic ramifications of the Trump administration’s attack does not itself constitute an endorsement of that act—a point worth underscoring, as it might help bring any wary European partners on board.

Even those major economies outside the IEA would have incentive to be aligned in spirit with this endeavor. Notably, China has built significant strategic reserves over the years and, as the primary buyer of Iranian crude, has a great deal at stake if Iranian production is wholly shut in or other Middle Eastern cargoes are unable to transit to Asia safely. By engaging in quiet diplomacy and leveraging the IEA’s neutrality and convening power, China might be inclined to tacitly participate in a collective drawdown if a formal decision were made to release strategic stocks.

Hope for the best, expect the worst

The history of international coordination on global energy security offers multiple important lessons for the present moment: One need not wait for a crisis to prepare for a crisis and—ideally—to avoid one. An expeditious and coordinated response may not be sufficient to avoid the full consequences of a spiraling regional war for oil markets. However, it can certainly ease sudden inflationary pressure on available supplies and buy time for markets to respond and adjust, as well as for producers to locate alternative supplies.

Above all, this moment offers a golden opportunity for the White House to demonstrate agility, responsiveness, and a collaborative mindset. None of this is altruism; rather, a skillful management of this moment would reflect a comprehensive understanding of the energy security challenge at hand. It would also help the United States reassure allies that the tools they have leveraged for so long continue to work in the here and now.

The post How the US and its allies can prevent an energy supply crisis in the Strait of Hormuz appeared first on Atlantic Council.

#AtlanticDebrief – What’s in store for the Three Seas Summit? | A Debrief from Amb. Romana Vlahutin

Francis — Tue, 03 Mar 2026 17:49:58 +0000

What’s on the agenda for the 2026 Three Sees Summit (3SI) in Dubrovnik?

Senior Fellow Ian Brzezinski sits down with Special Envoy for Strategic Connectivity and Three Seas Initiative of Croatia Ambassador Romana Vlahutin to discuss the upcoming 3SI Summit in Croatia and opportunities for international engagement on energy, economy, and more.

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How a crisis over a stockpile of uranium created an opening for US reengagement in Niger

Adal Rhoubeid and Maureen Farrell — Tue, 03 Mar 2026 17:33:21 +0000

The failed coup attempt in Benin on December 7, 2025, represents a pivotal moment for US policy in the Sahel. In the immediate aftermath, regional attention focused on Nigeria’s swift military intervention and the Economic Community of West African States’ (ECOWAS) rare success in defeating putschists. But the coup’s failure has also created an unexpected and important diplomatic opening for the United States to engage with Niger’s military government.

Niamey is diplomatically isolated, and the failed coup in Benin has reinforced its isolation. Meanwhile, Niger’s government has been unable to find a way out of an impasse over the stockpile of uranium it seized from the French company Orano. Quiet US mediation on this issue could help resolve it, and in so doing, Washington could advance US interests in the region as well.

For the United States, this is potentially an opportunity to regain Niger as a counterterrorism partner. Terrorist groups in the Sahel, such as Boko Haram and al-Qaeda in the Islamic Maghreb, continue to destabilize the region and pose a threat well beyond West Africa. Before the 2023 coup, the United States had roughly 1,100 military personnel in Niger operating from the $110 million Air Base 201 in Agadez and an air base in Niamey, monitoring terrorist threats across the region. But for Washington to revive this relationship with Niamey—and to offset Russian influence—it must act quickly.

Why the Benin coup failed—and what it reveals

The rapid defeat in Benin of Lt. Col. Pascal Tigri’s Military Committee for Refoundation coup attempt was unprecedented in recent Sahelian history. Within hours, Nigerian fighter jets struck coup positions and ECOWAS troops arrived in the country. Within twenty-four hours, the coup had collapsed, with Tigri reportedly fleeing to Togo.

The coup’s failure is especially significant considering the deteriorated state of Niger-Benin relations. Since Niger’s July 2023 coup, the country’s military leader, General Abdourahamane Tchiani, has repeatedly accused Benin of hiding French military bases and preparing to invade Niger. These accusations poisoned bilateral relations, causing Benin to block Niger from accessing its ports. A successful coup in Benin would have improved Niger’s strategic position. A Military Committee for Refoundation government in Cotonou would likely have aligned with the Alliance of Sahelian States—known by its French acronym AES and comprising Burkina Faso, Mali, and Niger—which could have led to a reopening of the border between Benin and Niger and restored Niamey’s southern trade corridor.

The coup’s failure, then, represents a significant setback for any such regional realignment, exposing Niger’s growing isolation and vulnerability.

The uranium crisis: Niger’s radioactive political trap

At the heart of Niger’s current dilemma sits approximately one thousand tons of uranium yellowcake immobilized at Niamey’s international airport. The junta nationalized the Somair mine—Orano’s principal uranium subsidiary, in which the French company held a 63.4 percent stake—in June 2025, at which point the yellowcake already transported to Niamey came under the junta’s direct control. Tchiani announced plans to sell and transport this material via Lomé port in Togo to unknown buyers. However, following a discreet visit by Togolese President Faure Gnassingbé to Niamey on December 9-10—just days after the Benin coup failed—the shipment was frozen and remains at the Niamey airport.

Then, on January 29, the terrorist group Islamic State Sahel Province opened fire near the airport—further evidence of the intensifying risk that possession of the uranium poses for the junta. This yellowcake has become a hot potato that is causing significant problems for the Nigerien government, prompting Tchiani to consider returning the uranium to Orano.

First, the uranium cannot practically be returned to the mines in Arlit, one thousand kilometers north of Niamey. The logistics of reversing such a massive shipment would be prohibitively expensive and politically embarrassing, essentially advertising the junta’s failure to execute its economic strategy.

Second, the material cannot be transported through Benin or Nigeria. The failed coup ensures that Niger’s border with Benin will stay closed and relations between the two countries will remain hostile. Transit through Nigeria faces similar obstacles given Nigeria’s strong opposition to the Niger junta and Abuja’s decisive intervention in Benin.

Third, there are international legal barriers complicating Niger’s intention to export the uranium. In August 2025, French uranium processing company Orano filed a complaint, prompting French authorities to open an investigation into Niger’s government for “organized theft for the purpose of serving the interests of a foreign power.” An international arbitration tribunal ruled in September 2025 that Niger cannot sell, transfer, or facilitate transfer of the uranium. This legal action makes any third country or company facilitating the uranium’s transport potentially liable.

Fourth, Niamey cannot openly negotiate with Orano without suffering significant loss of face. The junta’s legitimacy rests on its anti-French rhetoric and claims of economic sovereignty over Niger’s resources. A public capitulation to French terms would undermine the very foundation of the military government’s rule.

And the longer this uranium sits immobilized, the more acute Niger’s geopolitical pressures become. This stalemate is unsustainable, forcing the junta to seek alternative ways to exit the crisis—but its options are narrowing by the day.

The broader Sahelian pattern

Niger’s uranium dilemma reflects a broader dynamic affecting military governments across the Sahel. The longer that juntas remain in power, the more political pressure they face to deliver tangible improvements in security, governance, and economic conditions. Initial revolutionary rhetoric inevitably meets the hard reality that military takeovers do not solve complex governance challenges.

In Burkina Faso, junta leader Captain Ibrahim Traoré has proven effective at articulating governance challenges and projecting responsiveness to popular demands. However, concrete benefits to citizens—improved security, economic opportunity, and public services—remain elusive under his government’s rule. The gap between rhetoric and results continues to widen.

Mali faces similar contradictions, with Russian security partnerships failing to reverse jihadist gains while economic conditions deteriorate.

These governance failures risk spurring leaders to make destabilizing decisions as the juntas become increasingly cornered by international isolation and pressure from jihadist groups. Such actions threaten not only regional stability but also US counterterrorism objectives as ungoverned spaces expand and extremist groups exploit the chaos.

The AES has proven equally ineffective in addressing Niger’s uranium crisis, revealing clear asymmetries in how member states navigate their anti-ECOWAS posture. The original plan to route yellowcake through Burkina Faso to Togo collapsed not only due to Lomé’s reluctance to risk international legal complications, but also from fundamental safety and security concerns: Any overland convoy would traverse vast territories controlled by jihadist groups, making the route commercially and politically untenable.

More significantly, while Niger rigidly adheres to AES’s confrontational rhetoric toward ECOWAS, its partners maintain pragmatic flexibility. For instance, Mali has preserved relatively good relations with its coastal neighbors—such as Senegal and Guinea—ensuring access to maritime trade routes. Burkina Faso similarly sustains working relationships with Togo (which recently extradited Lieutenant Colonel Paul-Henri Sandaogo Damiba, the former Burkinabè head of state) and Ghana.

Niger, meanwhile, finds its primary sea access through Benin severely constrained, trapped by an ideological rigidity that its AES partners pragmatically avoid. The burden of the AES’s confrontational stance thus falls disproportionately on Niamey, where anti-ECOWAS solidarity costs more than it delivers in tangible economic cooperation.

The US policy window: Seizing the mediation opportunity

The uranium crisis creates unprecedented leverage for constructive US engagement because the junta knows that it cannot resolve it alone. The United States should therefore quietly engage in mediation on the uranium impasse. A potential approach might include:

Facilitating face-saving negotiations between Niger’s junta and Orano that allow both sides to claim success. This could involve US backing for financial arrangements that meet Niger’s revenue needs while satisfying Orano’s contractual concerns.
Mediating a transit solution, potentially involving coordinated arrangements with Benin or alternative routes that don’t require Niger to publicly capitulate to French demands.
Providing diplomatic cover that allows Niamey to frame any resolution as negotiated with US support rather than French pressure, preserving the junta’s domestic legitimacy.

If successful, resolving the uranium crisis could unlock multiple strategic benefits for the United States:

Renewed bilateral counterterrorism cooperation, including intelligence-sharing and coordinated operations against extremist groups threatening both Niger and its neighbors.
A reinforced multinational commitment to the security and safeguards of nuclear material.
Initial steps toward improved governance frameworks, as reduced economic pressure gives the junta space to consider longer-term political transitions.
A constructive model for engaging other Sahelian juntas, demonstrating to both the junta leadership and Nigerien people that Washington can be a problem-solving partner rather than merely a critic.
A counter to the Russian government’s narrative that the United States abandoned the Sahel and a demonstration of Washington’s continued relevance and constructive role in the region.

The failed Benin coup had the unintended consequence of creating a path forward for US engagement in the Sahel. Niger’s immobilized uranium represents an immediate pressure point where US diplomatic involvement can add genuine value. However, this window is closing rapidly as desperation intensifies and the junta’s decision-making becomes increasingly irrational. The question is whether Washington will recognize and act on this opening before it disappears—and whether US policymakers can help create space for both immediate stability and gradual governance improvements.

The post How a crisis over a stockpile of uranium created an opening for US reengagement in Niger appeared first on Atlantic Council.

How the broadening Middle East conflict could strengthen Russia’s hand

Andrei Covatariu — Tue, 03 Mar 2026 15:05:52 +0000

Bottom lines up front

European gas prices do not jump 45 percent in a vacuum. They do so when geopolitics collides with structural vulnerability. The latest spike is not just a market reaction to Middle East tensions; it is a stress test for Europe’s energy strategy and political cohesion—and a reminder that Russia still benefits when the system shakes.

The immediate triggers are clear. Broader regional escalation has raised the risk premium across oil and gas markets. QatarEnergy paused liquefied natural gas (LNG) production following attacks on key facilities in Ras Laffan Industrial City, a complex that underpins a significant share of global LNG trade. At the same time, disruption in the Strait of Hormuz—through which roughly a fifth of global LNG and oil flows transit—have forced traders and shipowners to reassess exposure.

Add to this the uncertainty around pipeline gas flows between Iran and Turkey. If those volumes are curtailed or interrupted, Ankara may need to source additional cargoes on the spot LNG market. That would introduce yet another price-sensitive buyer competing directly with Europe for flexible supply.

Individually, each of these developments is manageable. Together, they create something more destabilizing: a synchronized tightening of global gas optionality.

Europe’s structural weakness this year

What makes this moment particularly uncomfortable for the European Union is timing.

First, storage levels are low after a relatively harsh winter, now below 30 percent. That does not mean an immediate shortage—but it does mean a steeper refill requirement.

Second, snow coverage in parts of Southern and Central Europe has been below average. Lower snow coverage translates into lower hydro generation in spring and summer. In practical terms, that means more gas-fired power generation precisely when Europe needs to inject gas back into storage.

Third, the storage refill clock is unforgiving. EU rules require storage facilities to approach 90 percent fullness ahead of winter. Even with recent flexibility in deadlines, the market knows injections must accelerate over the summer.

This is why conflict duration matters more than the initial price spike. Even if the Trump administration’s original estimate of four to five weeks proves accurate, that window overlaps with the early injection season. Four weeks of shipping disruptions, elevated insurance costs, and LNG rerouting is more than enough to reshape summer price curves—and political narratives.

The political spillover: A test for the Russian phaseout

Here is where the story shifts from markets to geopolitics.

The EU has committed—politically and legally—to phasing out Russian gas imports. The logic is strategic: reduce structural dependence on Moscow, limit Kremlin’s leverage, and harden Europe’s energy security architecture.

However, price spikes revive old arguments. In this context, governments such as Hungary and Slovakia could raise concerns about the feasibility of maintaining the current phaseout timeline amid elevated market stress. The argument would likely emphasize the perceived affordability, reliability, and geographic proximity of Russian pipeline gas, raising the question of whether additional constraints are prudent during a period of global instability.

In practical terms, an easing of the phaseout could take the form of delayed implementation deadlines, temporary exemptions for certain member states, extended transitional contracts, or a slower reduction of remaining pipeline and LNG imports under the justification of market stability.

This framing ignores the strategic cost of dependency. Yet in times of economic strain, short-term affordability arguments gain traction. High prices do not just test consumers—they test cohesion.

In this sense, Russia benefits without firing a shot in the Gulf. A tighter LNG market strengthens the perceived value of residual Russian flows. Moscow does not need to regain market dominance to gain leverage; it only needs to remain a marginal supplier in a tight system.

The oil dimension: Moscow’s quiet advantage in Asia

The advantage is not limited to gas.

If conventional oil flows from Gulf Cooperation Council exporters to Asia continue to be disrupted, China’s refiners will look for reliability. At the same time, Venezuelan exports to China have already been constrained by US enforcement actions. This context leaves Russia in a stronger negotiating position.

China, in particular, has been importing record volumes of Russian crude at steep discounts. In a context where Gulf supply faces logistical risk, Moscow’s barrels become relatively more valuable. The Kremlin may not eliminate discounts overnight, but it can narrow them—protecting revenue at a moment when higher oil prices already improve its fiscal outlook.

The real question for Europe

Against this backdrop, Russia appears to be the primary short-term beneficiary. Not because it controls the crisis, but because it benefits from fragmentation. Higher gas prices complicate Europe’s phaseout strategy. Political fault lines inside the EU widen as affordability concerns grow. But this advantage is contingent.

If Europe responds by doubling down on diversification, strengthening demand-side flexibility, and maintaining political unity on the Russian phaseout, the shock could ultimately reinforce strategic resilience.

If, instead, the crisis triggers policy backtracking, delayed phaseouts, or reconsidered bilateral gas deals with Moscow, then the Kremlin will have achieved something more durable than short-term revenue gains: restored leverage.

Andrei Covatariu is a nonresident senior fellow at the Atlantic Council Global Energy Center.

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Turkey’s gas diversification strategy and rising share of LNG

Eser Özdil — Tue, 03 Mar 2026 14:00:00 +0000

Executive summary

Since the adoption of the National Energy and Mining Policy in 2017, Turkey has executed a paradigm shift in its natural gas supply architecture, transitioning from a rigid, pipeline-dependent importer to a flexible, diversified regional energy actor. This transformation has been underpinned by a strategic diversification of import infrastructure from exclusive reliance on pipelines to an aggressive expansion of liquefied natural gas (LNG) regasification capacity.

A central pillar of this strategy has been the deployment of floating storage and regasification units (FSRUs), which have allowed Turkey to rapidly scale its daily entry capacity beyond peak winter demand levels. By 2025, the country’s regasification capacity had increased approximately fivefold to 150 million cubic meters (mcm), compared to pre-2016 levels of 37 mcm. This infrastructure redundancy is not merely a security buffer; it is a calculated commercial instrument designed to foster competition between incumbent pipeline suppliers—primarily Russia and Iran—and the global LNG market.

This enhanced flexibility has fundamentally altered Turkey’s negotiating position. State-owned operator BOTAŞ has successfully created a position to substitute Russian or Iranian molecules with flexible LNG sources based on more market-based pricing mechanisms instead of long-term oil-indexed prices. The historical reliance on oil-indexed pricing is being systematically dismantled in favor of hybrid formulas (blending Dutch TTF, oil indexation, and, more recently, Henry Hub-indexed contracts with US majors).

Furthermore, this diversification strategy and the rationale for it have transcended domestic security of supply, evolving into a commercial offensive aimed at Southeastern Europe. Through the commissioning of the Saros FSRU and the expansion of the Silivri underground storage facility, Turkey has physically integrated its national gas grid with the Balkan markets, enabling gas exports to Bulgaria, Hungary, Romania, and Moldova. Combined with the phased development of the Sakarya gas field in the Black Sea, which creates a domestic production field projected to meet significant domestic demand by 2028, Turkey is effectively repositioning itself from a transit corridor to a pivotal gas trading hub at the intersection of European and Asian markets.

This report provides an exhaustive analysis of the execution of this strategy from 2016 to 2025. It examines the granular details of infrastructure investments, the commercial restructuring of the contract portfolio, the technical and economic development of the Sakarya gas field, and the geopolitical implications of Turkey’s emergence as a gas exporter to Europe.

1. Introduction: The strategic imperative for diversification

The structural transformation of the Turkish natural gas market over the last decade is rooted in a response to the geopolitical and commercial vulnerabilities that characterized the country’s energy landscape in the early twenty-first century. Historically, Turkey imported nearly 99 percent of its natural gas, with the vast majority being delivered via long-distance pipelines from Russia (Blue Stream, Trans-Balkan, and, later, TurkStream), Iran (Tabriz-Ankara), and Azerbaijan (Baku-Tbilisi-Erzurum).

These supplies were governed by rigid long-term “take-or-pay” contracts, typically spanning twenty to twenty-five years. Pricing was predominantly indexed to high-sulfur fuel oil and gas oil prices, with a lag of six to nine months. This structure exposed the Turkish economy to two distinct risks.

Commercial exposure: During periods of elevated oil prices, gas import costs surged irrespective of underlying gas market fundamentals, placing pressure on the current account balance and BOTAŞ’s balance sheet.
Supply security: Reliance on technically volatile flows from Iran, which frequently suffered pressure drops during peak winter demand, and politically sensitive flows from Russia left the Turkish grid susceptible to supply shocks. Disputes between Russia and Ukraine (in 2006 and 2009) and recurring technical failures in the Iranian system almost every winter underscored the fragility of a pipeline-centric model.

Turkey’s strategic inflection point emerged in the 2016–2017 period. Facing expiring legacy contracts and a volatile geopolitical environment, the Ministry of Energy and Natural Resources initiated a doctrine of “localization and diversification.” The objective was threefold: to maximize the use of domestic resources (renewables and, later, Black Sea gas), diversify import sources to reduce dependence on any single supplier to below 50 percent, and invest in infrastructure that provides optionality (i.e. the physical ability to switch suppliers based on price and availability).

2. Infrastructure Investment: The expansion of regasification capacity (2016–2025)

The cornerstone of Turkey’s diversification strategy has been the rapid development of LNG entry capacity. Unlike pipelines, which take year to construct, are capital intensive and geopolitically complex, LNG terminals—particularly FSRUs—offer speed and flexibility. Between 2016 and 2025, Turkey transformed its coastal infrastructure to ensure that daily gasification capacity exceeds peak winter consumption, theoretically allowing the country to meet its entire annual gas demand via LNG if necessary. However, practically speaking, because peak demand is exceeding 300 mcm/day in the coldest days of the winter, LNG terminals can roughly cover half of the country’s total demand or act as last resort supplier for entire household demand in case of serious flows via pipelines.

2.1 Onshore terminal modernization

Marmara Ereğlisi LNG terminal (BOTAŞ)

Commissioned in 1994, the Marmara Ereğlisi terminal is the backbone of LNG supply for the high-consumption industrial zones of Thrace and Istanbul. Operational for decades, the terminal has seen continuous investment since 2016 to upgrade its send-out capacity and storage.

Operational capacity: in 2024, the terminal’s daily send-out capacity reached approximately 37 mcm.
Storage capacity: 255,000 cubic meters across three tanks.
Strategic role: located on the northern coast of the Sea of Marmara, it provides baseload stability to the region that accounts for the country’s highest industrial electricity and gas consumption.

Aliağa LNG terminal (private)

Located in Izmir, and operated by a private company.

Operational capacity: recent investments have pushed its daily send-out capacity to 40 mcm.
Storage capacity: high-capacity storage tanks totaling 280,000 cubic meters.
Strategic role: supplying the Aegean region’s gas-fired power plants and industrial zones.

2.2 The strategic pivot to FSRUs

The most distinct shift in post-2016 policy was the adoption of FSRUs. These vessels provided a solution to land constraints and permitting delays, allowing Turkey to bring new capacity online in record time.

Etki Liman FSRU (private)

Commissioned in December 2016 in Aliağa, Izmir, Etki Liman was Turkey’s first FSRU project, and which demonstrated the viability of the technology.

Capacity: daily send-out capacity of 28 mcm.
Significance: its rapid deployment immediately following the 2015–2016 geopolitical tensions with Russia was a signal of Turkey’s intent to diversify rapidly.

Ertuğrul Gazi FSRU (BOTAŞ)

In a move toward asset ownership rather than leasing, BOTAŞ commissioned the Ertuğrul Gazi in 2021. Stationed at the Dörtyol terminal in Hatay, near the Syrian border, this vessel is critical for the energy security of southern and southeastern Anatolia.

Investment: constructed by Hyundai Heavy Industries in South Korea for an estimated cost of $225 million.
Storage capacity: 170,000 cubic meters and a daily regasification capacity of 28 mcm.
Strategic role: by injecting gas into the southern transmission lines, the Ertuğrul Gazi mitigates the risks associated with the erratic flow of the Iran-Turkey pipeline, which historically suffers from pressure drops during winter. It also supplies heavy industry in the Iskenderun Bay area.

Saros FSRU (BOTAŞ)

Operational since early 2023, the Saros FSRU located in the Gulf of Saros (in the northwest Aegean Sea) is the most geostrategically significant addition to the fleet.

Location: its position allows gas to be injected into the Thrace region without the navigational constraints of the Dardanelles and Bosphorus Straits or the need to traverse the entire Turkish grid from east to west.
Capacity: daily send-out capacity of 28 mcm.
Export enabler: Crucially, the Saros terminal is located near the interconnection points with the Greek and Bulgarian grids. This proximity makes it the physical cornerstone of Turkey’s gas export deals to the Balkans. It allows LNG cargoes arriving from the United States or other exporters to be regasified and piped directly into the Trans-Balkan Pipeline (in reverse flow) or the interconnector with Bulgaria.

Future fleet expansion

Looking toward 2035, the Ministry of Energy has articulated plans to expand the FSRU fleet to five active units. This expansion strategy includes a novel operational concept: deploying FSRUs abroad. Negotiations have been reported regarding the deployment of a Turkish FSRU to Egypt or Morocco to manage seasonal demand imbalances, effectively positioning BOTAŞ as a regional infrastructure service provider.

2.3 Underground storage as a balancing mechanism

Complementing the LNG intake is the expansion of underground storage (UGS), which is essential for managing the seasonality of supply and demand balances and storing gas during periods of low spot prices (summer) for use during peak demand (winter).

Silivri UGS: expanded to a capacity of 4.6 billion cubic meters (bcm) with a daily withdrawal capacity of 75 mcm.
Tuz Gölü (Salt Lake) UGS: currently undergoing expansion to reach 5.4 bcm by 2028, with a withdrawal capacity of 40 mcm per day.

Combined impact: by 2028, Turkey aims to have storage capacity equivalent to 20 percent of its annual consumption, aligning with European Union benchmarks for supply security.

3. Domestic production: The Sakarya gas field investment

While LNG provided import flexibility, the discovery of the Sakarya gas field in the western Black Sea in 2020 fundamentally altered Turkey’s long-term energy balance. With reserves initially estimated at 540 bcm and revised upward to 710 bcm following further appraisals (including the Çaycuma-1 discovery), this field represents the largest industrial project in the country’s history.

3.1 Technical development and phases

The development of the Sakarya field is an ultra-deepwater project (at a depth of more than 2,000 meters), requiring cutting-edge engineering and massive capital investment.

Phase 1 (operational)
- Status: the first gas was delivered to the Filyos Natural Gas Processing Facility in April 2023.Investment: phase 1 involved the drilling of ten wells and the construction of subsea production systems and a 170-kilometer (km) pipeline to shore. The initial production plateau was set at 10 mcm per day (approximately 3.5 bcm per year (bcm/y)).
- Current output: as of 2024–2025, daily production has ramped up to approximately 7–9.5 mcm per day.
Phase 2 (under construction)
- Scope: this phase targets the drilling of approximately 26–30 additional wells.Contracting: A consortium including Saipem, SLB (Schlumberger), and Subsea7 was awarded the Engineering, Procurement, Construction and Installment (EPCI) contract for the second phase. Saipem’s share of the contract alone is valued at approximately $1.5 billion, covering the installation of 170 km of pipelines and subsurface systems.
- Target: the objective is to raise production to 40 mcm per day (approximately 15 bcm/y) by 2028.
Floating production unit (FPU)
- To process the increased volumes from the wider basin, Turkey has purchased an FPU from China. This vessel, expected to be operational by 2027–2028, will process raw gas offshore before transmission, functioning similarly to the Osman Gazi platform but on a larger scale.

3.2 Economic and strategic impact

Import substitution: At its plateau production of 15 bcm/y, the Sakarya field will cover approximately 25–30 percent of Turkey’s current domestic consumption. This will directly reduce the annual gas import bill by billions of dollars, improving the chronic current account deficit.
Contractual leverage: The certainty of 15 bcm of domestic gas, which is expected to reach plateau levels in 2028 from the Sakarya field, and with high probability, increase as exploration continues in other parts of the Black Sea, provides BOTAŞ with a “walk-away” option in negotiations. It forces suppliers such as Gazprom and NIOC to offer competitive pricing or risk losing market share permanently.

The development of the Sakarya field is an ultra-deepwater project (at a depth of more than 2,000 meters), requiring cutting-edge engineering and massive capital investment.

Phase 1 (operational)
- Status: the first gas was delivered to the Filyos Natural Gas Processing Facility in April 2023.Investment: phase 1 involved the drilling of ten wells and the construction of subsea production systems and a 170-kilometer (km) pipeline to shore. The initial production plateau was set at 10 mcm per day (approximately 3.5 bcm per year (bcm/y)).
- Current output: as of 2024–2025, daily production has ramped up to approximately 7–9.5 mcm per day.

Phase 2 (under construction)
- Scope: this phase targets the drilling of approximately 26–30 additional wells. Contracting: A consortium including Saipem, SLB (Schlumberger), and Subsea7 was awarded the Engineering, Procurement, Construction and Installation (EPCI) contract for the second phase. Saipem’s share of the contract alone is valued at approximately $1.5 billion, covering the installation of 170 km of pipelines and subsurface systems.
- Target: the objective is to raise production to 40 mcm per day (approximately 15 bcm/y) by 2028.
Floating production unit (FPU)
- To process the increased volumes from the wider basin, Turkey has purchased an FPU from China. This vessel, expected to be operational by 2027–2028, will process raw gas offshore before transmission, functioning similarly to the Osman Gazi platform but on a larger scale.

4. Import dynamics: LNG vs. pipeline gas competition

The interplay between pipeline gas and LNG in the Turkish market is driven by contract expirations, relative price dynamics, and the strategic objective to minimize geopolitical risk.

4.1 Evolution of the import mix

Historically, pipeline gas accounted for 85–90 percent of Turkish imports. Since 2016, however, investments in LNG infrastructure have allowed LNG to capture significant market share. In 2024 and 2025, LNG imports periodically accounted for 25 percent of total demand, with spot LNG playing a crucial balancing role. The share of Russian gas in Turkey’s total supply has declined structurally, dropping from more than 50 percent in 2018 to less than 40 percent in 2025. This reduction is not accidental; it is the result of BOTAŞ declining to renew expiring pipeline contracts at full volumes, choosing instead to fill the gap with spot LNG and medium-term contracts.

4.2 The expiry wall and contract strategy

The period between 2021 and 2026 constitutes a “contract expiry wall” during which the majority of Turkey’s legacy long-term contracts (totaling more than 40 bcm) come up for renewal.

Russia (Gazprom): Contracts for the Blue Stream and the western route (transferred to TurkStream) faced expiration. In late 2024 and early 2025, BOTAŞ extended these contracts—but, crucially, only for one year. This broke the tradition of twenty-year lock-in contract structures, allowing Turkey to reassess market conditions annually.
Iran (NIOC): The long-term contract for 9.6 bcm/y expires in 2026. Negotiations are ongoing, but Turkey’s increased LNG capacity significantly weakens Iran’s bargaining power, which was previously bolstered by the lack of alternative supply routes to eastern Anatolia.

Thanks to LNG infrastructure, BOTAŞ has an upper hand in negotiations vis-à-vis Russia and Iran.

4.3 US LNG and the hedging strategy

The United States has emerged as a critical partner in Turkey’s diversification of gas supplies. In 2025, the United States became Turkey’s fourth-largest gas supplier, providing 5.5 bcm. Upstream investment: To manage the price volatility of US LNG (indexed to the Henry Hub benchmark), Turkey has announced plans to invest directly in US upstream assets. Turkish Petroleum (TPAO) is in talks with ExxonMobil and Chevron to acquire stakes in production fields. This acts as a physical hedge. If Henry Hub prices rise, the cost of LNG imports for BOTAŞ increases, but the revenue from TPAO’s US production assets also rises, neutralizing the fiscal impact on the Turkish state. This vertical integration strategy mimics the portfolio approach of global supermajors.

5. Commercial strategy: The new LNG portfolio and pricing

In 2024 and 2025, BOTAŞ executed an unprecedented wave of contracting, signing agreements totaling nearly 20 bcm/y of LNG supply. This portfolio is designed to be geographically diverse and commercially flexible.

5.1 Key LNG agreements (2024–2025)

The table below summarizes the major agreements signed or operationalized in this period, based on data from industry sources.

Supplier company	Origin/portfolio	Annual quantity (bcm/y)	Duration	Start date	Strategic note
Oman LNG	Oman	1.4	Ten years	2025	Diversification away from the Atlantic basin
Sonatrach	Algeria	4.4	Three years (renewed)	2024	Extension of a decades-long partnership
ExxonMobil	United States/ portfolio	3.8	Ten years	2027	Henry Hub indexed and a foundational US deal
Shell	United States/ portfolio	4.0	Ten years	2027	High volume and destination flexibility
TotalEnergies	Portfolio	1.6	Ten years	2027	Strengthens European commercial ties
SEFE–I	Germany/portfolio	0.6	Three years	2026	Winter-weighted supply profile
SEFE–II	Portfolio	0.6	Ten years	2028	Winter-weighted supply profile
ENI–I	Portfolio	0.5	Ten years	2026	Winter-weighted supply profile
ENI–II	Portfolio	0.5	Ten years	2028	Winter-weighted supply profile
Woodside	Portfolio	0.65	Nine years	2030	US deal, Winter-weighted supply profile
Cheniere	Portfolio	1.2	One year	2026	Winter-weighted supply profile
Petrochina	Portfolio	Cooperation agreement	N/A	N/A	N/A
Hartree	Portfolio	0.3	Two years	2026	Winter-weighted supply profile
BP	Portfolio	1.6	Three years	2026	Winter-weighted supply profile
JERA	Portfolio	0.6	One year	2026	Winter-weighted supply profile
Equinor	Portfolio	0.50	Three years	2026	Winter-weighted supply profile
Mercuria	Portfolio	4 (up to 70 bcm)	Twenty years	2026	US deal, Winter-weighted supply profile

5.2 Evolution of pricing formulas

A critical element of these new contracts is a shift in pricing mechanisms.

Legacy model (oil Indexation): Historically, contracts with Gazprom and Iran were 100-percent indexed to Brent crude and oil products (often with the price movements averaged over the past 3-6-9 months. This meant gas prices remained high even when global gas hub prices crashed, penalizing the Turkish economy.
The hybrid transition: In contract renewals post-2021, particularly with Russia, Turkey successfully negotiated a shift to hybrid formulas. Current pipeline contracts often feature a split, such as 70 percent TTF (Dutch Title Transfer Facility) and 30-percent oil and linked. This links import costs more closely to the European spot market reality.
The Henry Hub advantage: The deal with ExxonMobil and other US suppliers introduces Henry Hub indexation. Historically, Henry Hub prices (US domestic gas) have been significantly lower and less volatile than European (TTF) or Asian (JKM) benchmarks. By securing volumes linked to Henry Hub, BOTAŞ gained exposure to the structurally lower cost of US gas production, creating a potential for price arbitrage relative to European market prices.

6. From importer to regional hub: The export strategy

Turkey’s infrastructure buildout has created a capacity surplus. With more than 50 bcm of LNG entry capacity, 15 bcm of domestic production, and existing pipeline capacity, the total supply potential exceeds domestic demand (approximately 50–55 bcm). BOTAŞ is capitalizing on this surplus by positioning Turkey as a gas trading hub for Eastern Europe.

6.1 The “Turkish blend” concept

Actively seeking to decouple from Russian energy—Turkey has advanced a concept it describes as a “Turkish blend.” Gas entering the national grid from Azerbaijan and the United States, along with other LNG suppliers such as Oman, Qatar, Nigeria, Algeria, Australia, and Egypt etc., is comingled with gas from the Sakarya field. When BOTAŞ exports gas to Bulgaria or Hungary, the molecules are legally and chemically indistinguishable. This allows BOTAŞ to supply certain European markets that do not want to buy Russian molecules either direct or indirectly. This role as an aggregator and blender is central to the hub strategy.

6.2 Key export agreements

Since 2023, BOTAŞ has signed a series of historic export deals, leveraging the Saros FSRU by regasifying LNG volumes coming from multiple sources and the Trans-Balkan Pipeline (now operating in reverse flow, from Turkey to Europe).

Bulgaria (Bulgargaz): A landmark thirteen-year agreement, signed in early 2023, grants Bulgargaz access to Turkish LNG terminals and the transmission grid, with a transfer volume of up to 1.5 bcm/y. This effectively breaks Gazprom’s monopoly on Bulgarian supply.
Hungary (MVM): A groundbreaking deal made Hungary the first non-bordering country for Turkish exports. The initial volume was 275 mcm, with plans for significant expansion.
Romania (OMV Petrom): An agreement to supply up to 4 mcm (approximately 1.5 bcm/y) via the Trans-Balkan Pipeline.
Moldova: A contract to supply 2 mcm per day to help the country reduce its critical dependence on Russian gas supplied via Ukraine.

6.3 Political and commercial motivations

Commercial: BOTAŞ is increasingly transforming from a national utility into a regional trader, capturing margins between its diversified import portfolio and European hub prices.
Political: By becoming one of the energy security enablers for southeastern NATO allies (Bulgaria, Romania, and Hungary), Ankara significantly enhances its diplomatic leverage within the Alliance. It creates a mutual dependency that acts as a buffer against political friction in other areas. The United States actively supports this role, viewing Turkish FSRUs as a vector to displace Russian dominance in the Balkans.

7. Conclusion: Commercial and political implications

The period from 2016 to 2025 marks a phase of consolidation and maturation in Turkey’s gas market. The country has successfully mitigated its primary strategic weakness—energy dependence—through a capital-intensive but high-yield strategy of infrastructure expansion and resource diversification.

Commercial benefits

Price arbitrage: access to gas indexed to multiple benchmarks including Henry Hub, TTF, and oil-indexed formulas allows BOTAŞ to manage its weighted average cost of gas (WACOG) more flexibly, shielding the domestic economy from single-market shocks.
Trading revenue: the utilization of surplus capacity for exports creates a new revenue stream in hard currency, which is essential for BOTAŞ’s financial sustainability.

Political benefits

Strategic autonomy: the ability to meet domestic demand without Russian pipelines (in a crisis scenario) removes the “energy weapon” from Russia’s diplomatic arsenal. Therefore LNG infrastructure and domestic gas production create important leverage.
Regional influence: Turkey has embedded itself as an indispensable node in the European energy security architecture. The Turkish hub is no longer an aspiration but a physical reality defined by steel pipes, floating terminals, and binding contracts.

By 2028, with the Sakarya field likely at full production and five FSRUs in operation, Turkey could cease to be merely a bridge for energy and become a center of price formation—a true hub where the dynamics of Asian, European, and Middle Eastern gas markets intersect.

About the author

Eser Özdil is an energy fellow at the Atlantic Council Turkey Program & founder of Glocal Group Consulting, Investment & Trade. You can follow him on X at @eserozdil.

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Expanding transmission infrastructure to achieve low-cost, reliable, and abundant energy

Ken Berlin, Frank Willey — Tue, 03 Mar 2026 14:00:00 +0000

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Electricity demand in the United States is growing rapidly, driven primarily by data centers and electrification. But the buildout of new transmission wires to deliver power from generator to end user has stalled. Expanding and modernizing the US grid is essential to meet surging electricity demand while keeping energy affordable and reliable.

To achieve these goals, however, utilities, policymakers, regulators, and other stakeholders will have to overcome four major barriers to transmission development: slow and fragmented permitting processes involving dozens of federal and state agencies; the high cost of rebuilding decades-old infrastructure; siloed utility planning that prevents regional coordination and cost-sharing; and supply chain constraints on key energy materials.

Recent Department of Energy initiatives, Federal Energy Regulatory Commission rulemakings, executive actions, and legislative efforts have made some progress to enable transmission expansion, but much more work is needed. This report outlines what actions utilities, policymakers, and regulators can take to achieve the following: proactive, long-term, coordinated system planning across regions; streamlined permitting with clear deadlines and more effective community engagement; the deployment of advanced transmission technologies like advanced conductors and dynamic line ratings; the implementation of energy efficiency and demand response programs; the development of innovative financing tools; and the diversification of supply chains for critical materials.

These actions comprise a comprehensive strategy to expand and modernize US transmission infrastructure that can yield multiples in savings over time, making grid expansion central to achieving an affordable, reliable, and sustainable energy system.

By the numbers

1,700 miles: the number of miles of new high-voltage transmission lines built per year between 2010-2014.

350 miles: the number of high-voltage transmission lines built per year between 2020-2023.

6.5 years: average time it takes for a project to complete the permitting process.

2,600 gigawatts: the amount of new generation capacity awaiting interconnection to the grid.

$20.8 billion: cost to consumers of grid congestion in 2022.

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Ken Berlin

Chinese Climate Change & Climate Action

Staff

Frank Willey

Assistant Director

Energy & Environment French

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The risk of unknown unknowns for global markets amid war in Iran

Khalid Azim — Sun, 01 Mar 2026 22:10:42 +0000

During periods of heightened uncertainty, the most important function of regulators and policymakers is to ensure that investors have access to liquidity and that markets remain orderly. Fortunately, financial markets are generally adept at pricing risk, including complex forms such as event risk, natural disasters, geopolitical tensions, and sovereign instability. Across traditional asset classes, rates, credit, foreign exchange, commodities, and equities, investors have a wide range of tools to hedge exposure, including credit default swaps, rate locks, options, short selling, insurance wraps, and other instruments. These mechanisms allow markets to incorporate adverse outcomes into pricing, typically through higher discount rates and wider risk premiums.

The greater challenge, however, lies not in managing what then US Secretary of Defense Donald Rumsfeld described as “known unknowns,” but in confronting “unknown unknowns,” risks that defy anticipation, resist modeling, and exist outside established frameworks of probability and policy planning. In conceptual terms, they resemble the null set in mathematics: not simply unknown values, but the absence of definable parameters altogether.

For policymakers in the Gulf Cooperation Council (GCC), transparency, policy clarity, and credible communication will therefore be critical litmus tests for markets as they reopen following the recent escalation involving US and Israeli military action against Iran and Iran’s subsequent response affecting GCC nations. To keep the unknowns in the realm of the known, markets, for example, would welcome detailed updates on hydrocarbon production, capacity, constraints, and operational continuity. Equally important is the normal functioning of domestic capital markets and visible stability across the financial sector.

Market reaction will likely begin with Asia’s opening sessions on Monday morning. One early indicator will be the behavior of the US dollar. Despite the dollar’s traditional safe-haven status, recent months have seen episodes of capital rotation away from it. Given current uncertainty surrounding Iran’s internal stability, global demand for dollars may not spike as sharply as in past crises. Gold and, in some cases, currencies such as the Swiss franc or Australian dollar may instead benefit as investors seek perceived stores of value amid geopolitical instability.

It is also worth noting Iran’s role in global energy supply. Iran is the Organization of the Petroleum Exporting Countries’ (OPEC’s) fourth-largest producer, at 12 percent of the cartel’s total, according to Bloomberg data based on monthly production figures for December 2025.

Energy markets, therefore, will be closely watched. Prices will likely rise, though perhaps without the same degree of panic seen in earlier conflicts, as global supply conditions were relatively strong entering this episode. Neal Shear, founder of Morgan Stanley’s commodities platform and former head of sales and trading, told me: “China, for example, may be able to offset disruptions to Iranian crude exports by drawing on its strategic reserves, thereby mitigating immediate supply shocks. Natural gas markets could prove more sensitive, particularly given Iran’s shared fields with Qatar, where any operational disruption could have regional implications.”

Ultimately, the central question is not whether Iran can match US military capabilities—it cannot compete on air or maritime dominance—but whether it can exert asymmetric pressure on global energy flows, particularly through shipping routes such as the Strait of Hormuz. It is this uncertainty, rather than conventional military balance, that markets will be watching most closely.

Khalid Azim is the director of the MENA Futures Lab at the Atlantic Council’s Rafik Hariri Center for the Middle East.

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Don’t worry about the Iran conflict’s impact on oil prices—yet

Landon Derentz — Sun, 01 Mar 2026 21:50:11 +0000

WASHINGTON—Now is not the time to hyperventilate over oil—at least not yet.

The United States should first focus on what matters most: ensuring Iran does not emerge from the conflict unfolding in the Middle East with a viable nuclear weapons program, much less nuclear weapons capability. Energy prices are an important but manageable secondary variable.

Over the period of US operations in Iraq between 2003 and 2011, crude oil averaged roughly $72 per barrel. Adjusted to today’s dollars, that is north of $100 per barrel. The global economy operated and grew under far higher sustained price levels than what is anticipated in the wake of joint airstrikes by the United States and Israel on Iran as part of Operation Epic Fury.

Energy analysts are now forecasting the potential for a 5–15 percent increase in the prices of crude oil when markets open on Sunday evening, placing international benchmark Brent crude oil in a range of $76-$84 per barrel. This would mean that even with a material disruption to global oil flows, prices are projected to remain $20 per barrel below the inflation-adjusted average during the Iraq War.

The immediate price shock, therefore, is not the primary threat to achieving a nuclear-free Iran. Instead, it’s duration and scale.

Insurers—not Tehran—have temporarily halted coverage for vessels transiting the chokepoint through which roughly 20 percent of global petroleum and liquefied natural gas is shipped. What will determine the economic pressure on the military campaign against Iran is whether maritime traffic through the Strait of Hormuz resumes within days or remains suspended for months.

A sustained disruption would not only test energy markets. It would also test political tolerance in Washington and among allied governments that are already sensitive to increasing pressures around energy affordability over the past year. As the price shocks of the 1970s demonstrated, higher prices can quickly translate into domestic political constraints.

Importantly, regional infrastructure remains intact. Supply has not been structurally impaired and oil-market fundamentals, which prior to Operation Epic Fury supported supply outpacing demand in 2026, remain strong. Major producers, particularly Saudi Arabia, routinely preposition weeks of inventory around the globe to cushion disruptions. This was clear after the drone attacks on Saudi Arabia’s Abqaiq oil field in 2019, and markets should expect similar shock absorption now. Strategic petroleum reserves exist precisely for moments of acute tension like this.

Markets can tolerate a spike. What they cannot tolerate is prolonged uncertainty over trade flows through the Strait of Hormuz. That is the strategic dilemma confronting Washington.

To secure the time necessary to neutralize Iran’s nuclear program, maritime flows must resume. Otherwise, rising price pressure could force a premature end to the conflict before its central objective is achieved.

Military success requires time. Time requires economic stability. Economic stability requires energy to flow. Energy security and the dismantling of Iran’s nuclear program are, therefore, not competing objectives, but interdependent ones.

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The state of great power competition in the Gulf

Jonathan Fulton — Thu, 26 Feb 2026 21:30:20 +0000

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The Gulf region is at a pivotal moment as global power dynamics shift from unipolarity to a decentered system of regional powers. While the United States remains the only true global superpower, China and Russia are regional powers with limited global influence. This creates a unique opportunity for Gulf leaders to shape their own political, economic, and security agendas, prioritizing stability and development.

The states of the Gulf Cooperation Council (GCC) are leveraging interest-based partnerships, maintaining strategic ties with China and Russia while deepening defense and economic relationships with the United States. Recent agreements, such as the 2023 US-Bahrain Comprehensive Security Integration and Prosperity Agreement, highlight the Gulf’s preference for the predictability of a rules-based international order. Despite their illiberal domestic systems, GCC leaders value the stability and market access provided by Western-led governance.

De-escalation remains a key priority for the Gulf, as demonstrated by initiatives like Saudi Vision 2030, the Abraham Accords, and the India-Middle East-Europe Economic Corridor (IMEC). However, regional tensions since October 2023 have disrupted progress, emphasizing the need for external powers to support Gulf stability and development agendas. While the United States is seen as an essential partner, there is growing potential for deeper Gulf-European collaboration.

This moment of transition in the global order presents both challenges and opportunities for Gulf leaders, who are shaping their region’s future amidst great-power competition.

This issue brief is the result of a collaboration between the Atlantic Council’s Scowcroft Middle East Security Initiative and the Konrad-Adenauer-Stiftung Regional Programme Gulf States, which set the stage for a series of Track II discussions in Qatar, the United Arab Emirates, and Saudi Arabia on the state of play of great power competition in the Gulf with regional, US, and European experts and policymakers.

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Jonathan Fulton

Rafik Hariri Center & Middle East programs Scowcroft Middle East Security Initiative

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The Scowcroft Middle East Security Initiative (SMESI) provides policymakers fresh insights into core US national security interests by leveraging its expertise, networks, and on-the-ground programs to develop unique and holistic assessments on the future of the most pressing strategic, political, and security challenges and opportunities in the Middle East.

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Standardizing carbon accounting worldwide with a single, robust, cost-effective system

Vincent Aussilloux, Yann Coatanlem, and Karthik Ramanna — Thu, 26 Feb 2026 18:25:51 +0000

Bottom lines up front

Developed economies aren’t just underinvesting in the climate transition—they are missing the mark by an order of magnitude. Because green financing is often characterized as underperforming, the capital they do deploy rarely reaches the projects or regions where it’s needed most.
But decarbonization doesn’t have to be a synonym for “high risk.” The key to unlocking high-impact, high-return investment lies in better risk management. Measuring a project’s carbon footprint with greater accuracy will mitigate the guesswork that keeps capital on the sidelines.
The authors advocate for the Climate Club, an intergovernmental decarbonization forum, to select a single, robust, and cost-effective method for computing products’ carbon footprint. The framework would provide the rigor required to significantly scale climate finance and drive energy security.

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Carbon accounting has gained traction in recent years as the mechanism through which companies and countries can unlock competitive forces to drive innovation in decarbonization and energy availability. However, most emissions tracking today still occurs through a patchwork of carbon disclosure systems rather than through a true accounting framework.

The limitations of today’s carbon disclosure systems are increasingly consequential as governments adopt trade and procurement policies that require accurate emissions data. For example, emerging carbon border tariff policies, such as the European Union’s mandatory Carbon Border Adjustment Mechanism (CBAM) that is aimed at encouraging trade in low-emissions products, require that each transaction be linked to a specific emissions footprint. Yet existing disclosure systems cannot consistently provide such granular and comparable information across borders or complex supply chains. To implement the tariffs, jurisdictions have resorted to simplified, partial accounting methods that cover only a narrow set of upstream, easy-to-measure products while excluding many downstream goods. This workaround, in turn, can create inadvertent deindustrializing effects and adds confusion and unnecessary compliance costs in the economy.

Market and policy developments suggest that there is an urgent need for a single, comprehensive, robust, and cost-effective carbon accounting system worldwide: one that identifies low-emissions production across all products and services and across all jurisdictions and consistently over time.

This issue brief proposes a concrete and achievable first step toward such a global carbon accounting system: for a group of proactive member countries in the intergovernmental Climate Club to launch a call for tender to select a single, robust, and cost-effective method for computing the carbon footprint of all products (and, by extension, companies) worldwide.

A common, trusted carbon accounting system would unlock several critical levers in the race to drive decarbonization while meeting global energy demand. It would enable finance to flow more efficiently toward high-impact, high-return decarbonization investments, allow governments to steer foreign trade and public procurement toward lower-emissions options, and support credible carbon labeling for customers seeking “greener” purchasing options.

Together, these mechanisms would accelerate decarbonization while strengthening economic security, energy resilience, and international competitiveness.

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about the authors

Vincent Aussilloux is an economist at the European Commission’s Directorate General for Trade. Just prior to his current position, he served as special adviser to the general commissioner of France Stratégie, a public think tank responsible for anticipating major challenges for the country, evaluating public policies, and informing and improving the quality of public debate. He served as the director of its economics department between 2014 and 2023. Aussilloux was also general rapporteur for the French National Productivity Council, a member of the cabinet of two ministers, and served in the Office of the Secretary of State for Foreign Trade and the Directorate General of the Treasury in France. He holds a doctorate in economics from the University of Montpellier.

Yann Coatanlem is an economist and the president of Club Praxis, a multidisciplinary think tank that promotes the use of big data in policymaking, in particular in revamping the tax and welfare system. His work has won multiple awards, including the special prize of the political economy, statistics, and finance section of the Académie des sciences morales et politiques. He spent most of his research career at Citigroup as managing director and head of multiasset quantitative analysis. He is also a co-founder of GlassView—the inventors of Neuro-Powered Media^TM—and a member of the board of the Paris School of Economics. He co-authored Capitalism against Inequalities, with a postface from Nobel laureate Philippe Aghion, and was awarded the Prix Turgot and the Prix Louis Marin. He graduated from the École nationale supérieure d’informatique et de mathématiques appliquées and the École des hautes études commerciales de Paris. He is a recipient of the French National Order of Merit, the Gold Medal of La Renaissance Française, and the Médaille d’honneur des Conseillers du commerce extérieur.

Karthik Ramanna is a professor of business and public policy at the University of Oxford’s Blavatnik School of Government and a fellow at St John’s College. He teaches at the Blavatnik School on managing organizations in polarized times, which led to his 2024 book, The Age of Outrage. He also serves as principal investigator and co-founder of the E-ledgers Institute, a nonprofit organization advancing rigorous greenhouse gas accounting practices. From 2023 to 2025, Ramanna was on partial public-service leave from Oxford to advise the US Public Company Accounting Oversight Board, an “auditor of auditors” in global markets. From 2016 to 2023, he was director of the school’s master of public policy program. Ramanna has also taught at the Harvard Business School in both the MBA and senior executive-education programs. His scholarship has won numerous awards, including the Journal of Accounting and Economics Best Paper Prize, the Harvard Business Review McKinsey Award for “groundbreaking management thinking,” and the international Case Centre’s prizes for “outstanding case-writing.” He has a doctorate from MIT’s Sloan School of Management.

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Why the Arctic matters to the United States

Julia Nesheiwat — Wed, 25 Feb 2026 22:02:46 +0000

WASHINGTON—The recent debate over the future of Greenland sparked by US President Donald Trump has brought Arctic security to the American public’s attention, but there’s a wider story to tell about the region’s importance, too.

The Arctic is an increasingly important region for global energy, security, and geopolitics. Melting sea ice continues to open access, yet heightened great-power rivalry has transformed the High North into a front line of strategic competition. Russia’s dominance over half the Arctic coastline and China’s deepening “no limits” partnership with Moscow are reshaping access to resources, routes, and influence, raising risks of escalation.

While there are many attention-grabbing hotspots in the world, policymakers in Washington besides the president need to focus more on the Arctic—not only on how it is changing and what opportunities are emerging, but also on how Moscow and Beijing are acting in the region.

Significant reserves of oil, gas, and critical minerals

The Arctic holds immense untapped hydrocarbon reserves—estimated at ninety billion barrels of oil (16 percent of global undiscovered totals) and natural gas reserves—as well as significant deposits of valuable minerals essential for cutting-edge technology and the clean energy transition.

Given these resources, Russia’s Arctic development remains a national priority, fueling its economy through projects along the Northern Sea Route (NSR). While lacking Arctic territory but self-identifying as a “near-Arctic state,” China, too, has invested heavily in resource extraction and infrastructure, often through partnerships with Russia. This includes joint ventures in mining, energy projects, and critical minerals, positioning Beijing to secure supplies for its industrial and tech needs. Western sanctions on Russia have accelerated this Sino-Russian economic alignment, with China providing capital and markets in exchange for discounted resources and access.

Greenland also features prominently in this resource competition due to its substantial deposits of rare earth elements and other critical minerals vital for defense, renewable energy technologies, and high-tech industries. While Greenland’s development remains under Danish oversight, and the territory prioritizes strong Western partnerships, concerns persist about potential external interest—particularly from China—in these assets, which could imperil the security of these Arctic supply chains.

New shipping routes and the Northern Sea Route

Thinning ice has made the NSR and the Northwest Passage more viable, promising shorter transit times between Asia and Europe/North America. Russia treats the NSR as a sovereign waterway, promoting it for international shipping while building ice-capable infrastructure. China integrates this into its “Polar Silk Road” extension of the Belt and Road Initiative, funding icebreakers, ports, and navigation tech.

Recent developments include plans for high ice-class container ships, which can maintain their speed through thick ice, and joint training for polar navigation. These routes could disrupt global trade patterns, reducing reliance on traditional chokepoints such as the Suez and Panama canals, but they also heighten concerns over control, freedom of navigation, and potential militarization.

Geopolitical competition: The Russia-China axis

Russia has long viewed the Arctic as core to its security and economy. As a result, it has sought to modernize its military bases, air defenses, and nuclear capabilities in the region while conducting operations to deter NATO. Over half of the Arctic Ocean coastline is Russian, and Moscow has rebuilt dozens of Soviet-era sites and facilities to assert dominance. The shortest route for ballistict and cruise missiles to strike North America is over the Arctic.

China’s role has expanded significantly, from observer status in the Arctic Council (since 2013) to active economic, scientific, and dual-use engagement. Beijing builds icebreakers (five have been completed so far), conducts research expeditions (often paying Russia for access), deploys satellites for polar coverage, and pursues subsea cables and infrastructure with potential military applications. Sino-Russian cooperation has deepened markedly: joint naval and coast guard patrols (including in the Arctic Ocean and near Alaska), air patrols with bombers, maritime law enforcement agreements, and collaborative research. NATO leaders have flagged this as a concern, noting increased joint exercises and patrols that challenge Western presence.

Greenland’s role as a vantage point for surveillance and emerging shipping routes underscores its importance in the broader great-power contest.

This Beijing-Moscow partnership—bolstered by mutual isolation from Western sanctions and shared interests in countering US and NATO influence—displays unity in signaling Arctic ambitions, though underlying tensions persist over sovereignty and influence (e.g., Russia’s wariness of Chinese encroachment). The Arctic Council, once a model of cooperation, faces paralysis due to Russia’s isolation following its invasion of Ukraine, creating governance gaps that Russia and China exploit through bilateral ties and alternative frameworks.

Greenland’s strategic location further amplifies these dynamics. Positioned at the intersection of North America, Europe, and the Arctic, it anchors the western edge of the critical Greenland-Iceland-UK (GIUK) gap, a maritime corridor for monitoring and containing Russian naval forces transiting to the North Atlantic. The United States maintains Pituffik Space Base (formerly Thule Air Base) in Greenland under longstanding defense agreements with Denmark, supporting Golden Dome missile early warning, space surveillance, and homeland defense—capabilities that enhance NATO’s deterrence posture amid rising Russian militarization and Chinese activities in the region. Greenland’s role as a vantage point for surveillance and emerging shipping routes underscores its importance in the broader great-power contest, while respecting Denmark’s sovereignty and the strong allied cooperation that underpins regional security.

New frontier for energy and security implications

Beyond fossil fuels, the Arctic offers potential for both renewable and nuclear power, the latter through small modular reactors. However, geopolitical tensions overshadow these. US policy emphasizes defending homeland interests, including Arctic approaches, amid concerns over Russian militarization and Chinese dual-use activities. Enhanced NATO presence (with Finland and Sweden’s accession to the Alliance) counters this, but it also increases the risk of miscalculation in a confined space.

The Arctic—a fragile home to Indigenous peoples and unique ecosystems—remains threatened by rogue actors and melting sea ice, yet strategic priorities now dominate discourse. Protecting routes, resources, and stability requires robust diplomacy, but the Russia-China dynamic introduces new risks of sub-threshold competition and hybrid challenges.

The Arctic is no longer just a climate or resource story—it’s a geopolitical arena where Russia and China’s deepening cooperation challenges Western dominance, reshaping energy, security, and trade. Multilateral forums must adapt, or bilateral power plays could dominate the High North’s future.

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Can Project Vault fortify the US industrial base against mineral chokepoints?

Morgan D. Bazilian and Lt. Col. Jahara “FRANKY” Matisek — Wed, 25 Feb 2026 18:20:58 +0000

In February 2026, the US Air Force started receiving new F-35s without their next-generation AN/APG-85 radars. This wasn’t a technical failure or a budget cut, but something far more mundane and strategically alarming: a sourcing delay for gallium, a critical mineral under China’s export control since 2023. Beijing is systematically using its near-total control over a range of critical materials to create chokepoints that directly impact the US defense industrial base.

This weaponization of industrial supply chains is the urgent context for Project Vault, launched in February 2026 as a new “strategic critical mineral reserve,” backed by $10 billion in financing from the US Export-Import Bank and an additional $2 billion in private-sector funding. Major firms, including original equipment manufacturers, are joining forces to counter these supply chain threats through market-oriented mechanisms.

It may be tempting to view the Vault as a fresh pile of “stuff” that automatically equals resilience. But stockpiles are no panacea. Like any other government program, they are political instruments vulnerable to bureaucratic turf wars and pork barrel politics. Their strategic value is defined by a series of deliberate governance choices: what form of material to hold, who gets access, when it is released, and at what price. Those choices will determine whether Vault becomes a force multiplier for US defense readiness or a parallel system that competes with the National Defense Stockpile (NDS) by absorbing scarce midstream capacity at the worst possible time.

The baseline: The defense stockpile is real, but limited

It’s worth remembering that China has long had a minerals stockpile that is operated flexibly between military and civilian economic needs. Although there is no public record of China’s stockpiled reserves of grains, minerals, natural gas, and oil, estimates put its stockpiles at 35 percent to 133 percent of the country’s annual demand. Western debates often imagine stockpiles as inert piles of material that act as insurance policies. Beijing treats them as a geopolitical tool: buy when prices are low, tighten when it wants discipline in the market, and wrap the whole thing in administrative opacity.

In contrast, the US system has historically been more rigid. The NDS, formed in 1939 and managed by the Defense Logistics Agency (DLA) since 1988, has served as a “break the glass” mechanism for defense critical minerals. Yet even internal government reports have long underscored the gap between what is held and what a national emergency would demand.

A 2023 assessment noted that the NDS contained about $1.3 billion in total assets, but only $912.3 million in actual stockpiled materials. More alarming, the report concluded that this current inventory would mitigate less than half of the military’s estimated shortfalls and less than 10 percent of essential civilian demand shortfalls in base-case national emergency scenarios, such as a prolonged war with China. This is because a significant portion of the material is held in unprocessed, ore-grade forms that would require extensive refining before they could be used in defense applications.

At the same time, the Pentagon has been moving more aggressively to rebuild depth. In 2025, the DLA pushed for spending $1 billion on critical materials including: $500 million of cobalt, $245 million of antimony, $100 million of tantalum, and $45 million of scandium. All have a direct impact on producing weapon systems across the entire defense enterprise.

The policy question, therefore, is not whether to stockpile, but how. This is where Project Vault enters, with its design being a fundamentally different mission than the NDS. While defense stockpiles are tied to statutory wartime requirements, Vault is being framed as a flexible economic security tool to buffer market shocks before a crisis begins.

If that distinction holds, Vault can be a strength: a shock absorber that keeps industrial throughput alive well before a crisis or war. If the distinction collapses, the Vault risks becoming a second buyer, chasing the same bottlenecked materials that the defense stockpile is trying to secure. One way to think of this two-reserve world is that the NDS prepares for a crisis, while Vault prevents one, absorbing the economic shocks and coercive trade pressures that adversaries use to weaken the US defense industrial base. This division of labor makes the NDS the reserve for war, and Vault the reserve for the “war before the war.”

Warehouses of rock don’t win wars

Most commentaries treat critical minerals as a single bucket of sixty different goods. Defense production does not. The journey from mine to missile reveals a series of industrial truths: ore is not a magnet, oxide is not a metal, and even a purified, qualified alloy is still a world away from a flight-critical part. The true chokepoints of defense production happen midstream: the highly specialized stages of separation, refining, conversion, and powder production.

China’s strategic dominance extends beyond just mines. Beijing controls most of the processing, refining, and machining downstream. These processes require immense expertise, much of which has been lost in the United States over decades, leaving only a handful of irreplaceable, capital-intensive facilities. A stockpile of raw ore is strategically inert if the nation lacks the capacity to transform it into a usable form.

This presents Project Vault with a decisive choice. If it warehouses mostly upstream raw materials, it can help stabilize commodity prices but will fail to solve the most pressing operational constraint for the defense industrial base. If, however, Vault is designed to hold a reserve of the processed, high-purity materials needed to keep production lines running, it could preserve the industrial capacity that the Pentagon cannot otherwise surge on command. This choice will determine whether Vault is a tool for economic symbolism or a genuine instrument of national security.

Governance is strategy: Five principles for integration

Every reserve is a set of rules masquerading as a warehouse. While the NDS operates on statutory logic for wartime mobilization, Project Vault’s commercial architecture suggests a more flexible “draw-and-replenish” approach. This begs the central governance question: In a crisis, do Vault’s rules ensure that materials flow where they’re most needed for the industrial base, or do they inadvertently crowd out defense priorities? The risk of creating bidding wars for scarce processed materials or facing allocation ambiguity in a gray zone conflict is real. Aligning Vault’s rules with national security needs is key to making it a strategic asset.

Success depends on five core integration principles. First, form-factor tiering must separate bulk market stabilizers from the processed, defense-usable forms of materials that translate into industrial surge readiness. Second, anti-crowding guardrails must be established to coordinate procurement via the DLA, preventing self-defeating bidding wars. Third, a “trigger ladder” must define release protocols for gray zone coercion scenarios. Fourth, this trigger ladder must include defense priority clauses for a small set of critical nodes, preventing the problem of an existing but inaccessible inventory. Finally, the entire two-reserve architecture must be validated through rigorous stress testing. Joint force and interagency exercises, alongside effective “red teaming,” would help identify where rules break before a real crisis breaks the industrial base.

Vault is a welcome signal that Washington is finally treating mineral supply chains as strategic terrain. If Vault is carefully integrated with the NDS through proper governance, it can harden the entire transatlantic industrial base against gray zone pressures Beijing wields—or any other crisis that disrupts mineral markets.

The choice is now simple. Craft a reserve built to withstand adversarial economic coercion or settle for the expensive illusion of security.

Morgan D. Bazilian is the director of the Payne Institute for Public Policy and professor at the Colorado School of Mines. Previously, he was lead energy specialist at the World Bank and has over two decades of experience in energy security, natural resources, national security, energy poverty, and international affairs.

Lt. Col. Jahara “FRANKY” Matisek is a US Air Force command pilot, nonresident research fellow at the US Naval War College and the Payne Institute for Public Policy, and a visiting scholar at Northwestern University. He has published over one hundred articles on strategy and warfare.

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In Guinea, the US has a rare opportunity to gain an edge over China

Rose Keravuori, Maureen Farrell — Tue, 24 Feb 2026 14:49:34 +0000

This article is part of a series published by the Atlantic Council’s Africa Center and the GeoStrategy Initiative of the Scowcroft Center for Strategy and Security exploring the nexus between US security and economic interests across Africa. The previous edition can be read here.

When Mamady Doumbouya was sworn in as Guinea’s president in January 2026, the ceremony drew an illustrious crowd, including the presidents of Rwanda, Gabon, Guinea-Bissau, and Mauritania, as well as Nigeria’s vice president.

But the guest list extended beyond regional leaders. It also included a senior US delegation and a special envoy of Chinese President Xi Jinping.

The presence of both Washington and Beijing at the event was, of course, far from coincidental. Guinea sits at the intersection of regional insecurity, global competition for critical minerals, and the future of democratic governance in West Africa. Consequently, it has become a focal point for global powers.

For the United States, in particular, the country represents not only an investment and economic opportunity, but also a chance to align private-sector engagement with targeted security cooperation to generate geostrategic outcomes. US investment in Guinea—particularly in mining and energy—cannot succeed without stability, and stability cannot be sustained without credible economic prospects.

A western-leaning nation surrounded by insecurity

Guinea is vulnerable to instability spilling over from threats in the Sahel, where 51 percent of global terrorism-related deaths occurred in 2024. Illicit trafficking networks permeate the subregion. Military juntas govern Burkina Faso, Mali, Niger, and Guinea-Bissau, while the Africa Corps—a paramilitary group controlled by the Russian defense ministry—maintains influence throughout the region.

Yet Guinea stands out in this environment. Following the 2021 coup, the country maintained close relations with the West. Unique among Sahelian coup states, the US government supported Guinea’s democratic transition through the African Democratic and Political Transitions program in 2023. Back then, General Doumbouya, now the elected civilian president, set a timeline for elections and delivered in December 2025, formally concluding a four-year transition period.

While these political developments signal alignment with US interests, Guinea’s stability remains fragile. The country has experienced three coups since independence in 1958. Institutions are weak, and opaque revenue management fuels public distrust regarding accountability for natural-resource wealth. With approximately 75 percent of the population under the age of thirty-five, Guinea faces heightened risk of unrest, including threats to mining sites that symbolize both opportunity and elite capture.

That said, President Doumbouya won his December 2025 election with 78 percent of the vote, demonstrating national confidence rarely seen in Guinea’s historically fragmented, ethnically divided politics.

Bauxite, iron, and more

Despite its relatively small size compared with mining giants such as the Democratic Republic of the Congo and Botswana, Guinea plays an outsized role in global critical minerals markets and Africa’s energy supply chains. The country holds approximately 25 percent of the world’s known bauxite reserves, making it the single most important source of the primary input for aluminum production, which is used in automotive, aerospace, and construction industries.

Guinea is also a prominent gold producer, and new exploration has revealed commercial quantities of gallium, lithium, uranium, and graphite, among others. The Simandou mine, ostensibly divided between Chinese- and Australian-led consortia but with overwhelming participation by China, contains extraordinary iron ore stocks representing more than 10 percent of the world’s deposits, drawing sustained diplomatic and commercial attention from Beijing to Conakry.

Recognizing the risks of overreliance on a single external partner and frustrated with Chinese firms’ opacity and noncompliance with local obligations, Doumbouya has signaled his willingness to push back against China’s mining dominance. In 2025, his government canceled more than 250 mining licenses held by Chinese companies, citing environmental damage, contractual noncompliance, and insufficient project development. The move opened space for Western, particularly US, mining companies to compete more evenly for licenses and tenders. US and allied mining and energy companies are now seeking to take advantage of this window, creating an opportunity to reorient Guinea’s supply chains toward the West.

Doumbouya also ended China’s monopoly on rail and port infrastructure for Simandou in favor of a joint venture with the Chinese and Australian consortia, each holding equal 42.5 percent shares, and the government holding 15 percent equity. Guinea’s stake served as a critical swing vote, enabling the joint venture to procure US-made Wabtec locomotives and rolling stock in a deal surpassing $1 billion.

Aligning US private-sector and security interests

With the 2025 National Security Strategy’s emphasis on critical minerals in Africa, Guinea should play a central role in US-Africa policy. The White House has signaled its intent to invest in the relationship and has invited Doumbouya as one of only three African leaders to Washington in early February to discuss critical mineral supply chains. Its Atlantic coastline also positions Guinea as a key partner in supporting a stable Atlantic basin.

China’s influence, however, remains significant, given its long history of investment in Guinea’s bauxite and aluminum sectors and the control Chinese firms exert over logistics, refining, and long-term offtake. If Washington intends to compete, it must offer tangible alternatives beyond diplomatic overtures before Beijing consolidates its advantage. This requires coordinated investment in security cooperation focused on counterterrorism and maritime security, infrastructure supporting the extractives industry, programs to strengthen governance in the resource sector, and efforts to diversify Guinea’s economy.

Although Guinea lacks robust counterterrorism and maritime capabilities, political will provides a platform for engagement. Coordinated with French and European Union initiatives, the United States can help Guinea strengthen maritime threat monitoring, conduct regional exercises with partners in the Gulf of Guinea, deploy low-cost surveillance platforms, improve border security, and share intelligence on smuggling, trafficking, and Sahel spillover risks.

Prior to the 2021 coup, the United States played a significant role in providing pre-deployment training to all of Guinea’s peacekeeping contingents. US legal restrictions led to the cancellation of this program after the coup. However, Guinean authorities are keen to resume the cooperation, which would advance the US interest in promoting regionally based solutions to insecurity. US Africa Command should also prioritize civil affairs and civil-military engagement around mining and energy sites, supporting community-based security approaches that reduce local tensions and protect critical infrastructure.

Completing the Liberty corridor and strengthening transparency

Building on the Millennium Challenge Corporation’s compact with Liberia, the United States should finance and incentivize private-sector participation in completing the Liberty corridor through Guinea to Liberia, which is still in pre-construction. The corridor would advance critical mineral supply chain diversification by enabling iron ore exports from Ivanhoe Atlantic’s US-owned and operated Kon Kweni mine.

To reinforce and sustain these investments, the United States, Canada, and European partners should work with Conakry to design and implement transparency standards, including technical assistance on contract design and revenue management to ensure Guinea captures fair value from its extractive sector. Private philanthropies may support journalists and civil society organizations to reinforce accountability mechanisms.

Such reforms benefit US and Western firms, whose corporate governance standards align with transparency and financial disclosure requirements. The Aluminum Company of America—a joint venture partner in Guinean bauxite operations for over sixty years—is widely considered the “gold standard,” offering reputational advantages to other US companies.

While mining remains central to Guinea’s economy, diversification is critical for long-term stability. Opportunities exist in hydropower, liquefied natural gas, digital infrastructure, and agriculture. Investment in these sectors can generate employment, reduce reliance on extractives, and mitigate demographic pressures. US development finance institutions can catalyze commercially viable projects tied to governance and human-rights benchmarks, managing risk while advancing shared interests. Bilateral investments should incentivize sustainability as well as human-capital and technology development.

A strategic opportunity for the US

Guinea may not feature prominently in US public discourse, but it is of great strategic importance. It is a Western-engaged, Atlantic-facing country, rich in minerals essential to the global economy and navigating a democratic transition in a challenging neighborhood. As authoritarian influence expands across West Africa, Guinea’s willingness to diversify partnerships presents a meaningful opportunity. This is particularly significant given the country’s role in China’s broader strategic calculations.

By pairing private investment with targeted security cooperation and governance support, the United States can help Guinea strengthen stability while advancing its own strategic objectives. The country offers a practical setting for US economic statecraft and light-touch security engagement to reinforce one another—a sustainable model for partnership in Africa.

Maureen Farrell is a nonresident senior fellow at the Atlantic Council’s Scowcroft Center for Strategy and Security and vice president for global partnerships at Valar, a Nairobi-based strategic advisory and risk firm. She previously served as the deputy assistant secretary of defense for African affairs and director for African affairs at the US National Security Council.

The Africa Center works to promote dynamic geopolitical partnerships with African states and to redirect US and European policy priorities toward strengthening security and bolstering economic growth and prosperity on the continent.

The GeoStrategy Initiative, housed within the Scowcroft Center for Strategy and Security, leverages strategy development and long-range foresight to serve as the preeminent thought-leader and convener for policy-relevant analysis and solutions to understand a complex and unpredictable world. Through its work, the initiative strives to revitalize, adapt, and defend a rules-based international system in order to foster peace, prosperity, and freedom for decades to come.

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The US-Lithuania LNG partnership exposes the myth that there are ‘no alternatives’ to Russian gas

jcookson — Mon, 23 Feb 2026 18:21:25 +0000

WASHINGTON—This week marks ten years since the first-ever export cargo of US liquefied natural gas (LNG) departed the contiguous United States from a Gulf Coast terminal in Sabine Pass, Louisiana. Made possible by the twenty-first-century shale revolution, this moment was a turning point in the global energy landscape, after which the United States rapidly grew from a net importer of natural gas in the early 2010s to the world’s top exporter by 2022.

In commemorating this milestone, Lithuania’s LNG partnership with the United States stands out as a powerful example of transatlantic cooperation. It demonstrates how expanded US export capacity—combined with strategic infrastructure development, resolute energy-sector reform, and sufficient political will in Europe—can produce real alternatives to Russian gas. Once regarded as an isolated “energy island” on the Baltic Sea, Lithuania today has reshaped the regional energy landscape in Central and Eastern Europe by becoming a key gateway for US LNG imports in markets spanning Finland to Ukraine.

Today, Lithuania imports more than three-quarters of its LNG from the United States, helping bolster Vilnius’s status as a “model ally” to Washington. The rest of Lithuania’s imports come from Norway and some other smaller suppliers, allowing the country to preserve flexibility amid any potential fluctuations in the global LNG market. As Hungary and Slovakia attempt to disrupt European Union (EU) plans to phase out Russian gas by 2027, Lithuania’s experience directly challenges their claims that geography or historical dependence leave certain countries with “no alternatives” to Russian supply.

Lithuania’s path toward “Independence”

The Baltic states’ energy transition away from a complete dependence on Russian gas began in 2014 with the opening of a floating storage and regasification unit at the port of Klaipėda, Lithuania. The first of its kind in the Nordic-Baltic region, this offshore LNG terminal—symbolically named “Independence”—marked a turn away from the legacy of Soviet-era infrastructure inherited by Lithuania, Latvia, and Estonia from decades of foreign occupation.

Lithuanian policymakers began this transition because they understood that the country’s complete reliance on Russian gas supplied via a single Gazprom-controlled pipeline posed profound risks to national sovereignty. This assessment was rooted in more than two decades of experience, including politically motivated pricing, supply cutoffs, sustained energy blackmail, and even a full energy blockade by Moscow.

Diversification required more than just the construction of new energy infrastructure. Russian influence also extended to governance, including through Gazprom’s dominant role in Lithuania’s national gas company. Overcoming this influence required comprehensive gas sector reform: This meant unbundling transmission from supply, ensuring third-party access, and creating a regulatory framework capable of attracting alternative suppliers. The EU’s role was pivotal in supporting Lithuania throughout this process.

Lithuania inaugurated its LNG terminal at a time when Western Europe continued to deepen its energy dependence on an increasingly aggressive Russia and LNG was still seen as an expensive novelty. While some critics questioned the project’s economic viability, Lithuania nevertheless accepted the upfront infrastructure costs and initially higher prices for LNG compared to pipeline gas in exchange for long-term security and resilience.

February 24: When foresight met geopolitical reality

That bet paid off. By the time the United States shipped its first LNG cargo in 2016, Lithuania already had the infrastructure and regulatory environment needed to engage Washington as a strategic energy partner. Exactly six years after the first export of US LNG on February 24, 2016, Russia’s full-scale invasion of Ukraine in 2022 validated longstanding Baltic fears about the use of energy coercion as a deliberate instrument of war. Long-term investment in diversification allowed Lithuania and its Baltic neighbors to become the first EU member states to ban all Russian energy imports, which happened in April 2022. After Russia’s full-scale invasion, the export of US LNG to Europe became an asset of immediate geopolitical necessity—including in helping Ukraine strengthen its energy resilience under wartime conditions.

In recent months, the US-Lithuania partnership has enabled shipments of US LNG to Ukraine through Klaipėda under contracts between Ukraine’s Naftogaz and Poland’s ORLEN. In parallel, US-sourced LNG was also delivered to Ukraine ahead of this year’s especially harsh winter under a direct agreement between Ukraine’s DTEK and Lithuania’s LNG terminal operator, KN Energies.

US LNG, after regasification in Klaipėda, travels through the Lithuania-Poland gas interconnector and Poland’s transmission system until it reaches the gas exit-entry point on the Polish-Ukrainian border. Beside the entry point in Klaipėda, Ukraine is also increasing imports of US gas via LNG terminals in Poland and Greece, further strengthening the importance of the north-south energy transit corridor.

Hungary and Slovakia: Dependence by design

Last month, EU countries approved a new law to end European gas imports from Russia, which have totaled more than $129 billion since February 2022. However, the agreement—which would phase out all Russian LNG and pipeline gas imports by 2027—has faced pushback from Budapest and Bratislava.

Their arguments against a phaseout cite price increases, technical constraints, and geographical limitations, as Hungary and Slovakia are both landlocked countries sitting on the traditional east-west gas supply routes. However, when measured against Lithuania’s experience, these arguments are unconvincing.

Hungary and Slovakia stand to benefit from an abundance of alternatives in today’s far more favorable energy environment. Both countries are embedded in a highly interconnected European gas network, with access to LNG terminals in Poland, Croatia, Lithuania, and Greece. Hungary and Slovakia do not need to engage in high-level advocacy aimed at persuading the United States to open access to its gas reserves, as Lithuania once did. US LNG is available and accessible, as proven by the existence of US LNG supply agreements with both countries. The fact that Slovakia has already received a US LNG shipment through the Klaipėda LNG terminal only underscores this point.

Yet Hungarian and Slovak leaders appear to be making the political choice to continue their countries’ reliance on Russia. Instead of committing to strategic reorientation away from Russian gas, Hungary chose to expand a long-term contract with Gazprom in 2024. In the case of Slovakia, a Poland-Slovakia gas interconnector remains largely unutilized. Current agreed US LNG import volumes for both countries remain marginal relative to continued Russian imports. By resisting a more comprehensive shift away from Russian gas, Hungary and Slovakia weaken the EU’s efforts to stop financing Russia’s war in Ukraine and dilute the strategic impact of US LNG exports designed to reinforce European resilience.

Message to Washington

Transatlantic energy cooperation is only expected to grow in the coming years as the Trump administration continues to oversee record-high levels of LNG exports, which are on track to double from 2025 levels by 2029.

A longtime advocate of energy diversification in Central and Eastern Europe, US President Donald Trump has rightfully criticized Europe for its continued purchases of Russian energy, but his administration has wavered by providing Hungary a one-year exemption from US energy sanctions on Moscow. Instead, Washington should work with its Hungarian and Slovak allies to encourage complete energy independence from Russia without buying into the arguments that a Russian gas supply phaseout would be unrealistic and economically damaging. Lithuania’s experience reveals these claims to be unfounded. Alternatives exist and have been implemented—with US LNG at the core of this effort. The acceleration of a Europe-wide phaseout will benefit US industry and build a stronger Europe, while reducing funds for Russia to wage war.

Proof of concept—and political will

Ten years after the first US LNG shipment, the US-Lithuanian partnership stands as a proof of concept. Deliberate steps taken early can reshape regional energy flows, supply allies under threat, and reinforce transatlantic strategic alignment. Lithuania shows that diversification away from Russian gas is not only feasible but strategically empowering.

Against this backdrop, the “no alternatives” narrative currently advanced by Hungary and Slovakia should be challenged. This stance signals to Washington that Budapest and Bratislava are choosing to delay diversification, allow Russia to maintain leverage, and resist deeper transatlantic energy cooperation. Energy dependence is not destiny but a deliberate choice, with its consequences increasingly visible to both Moscow and Washington.

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How Trump and Erdoğan can turn US LNG energy dominance into Black Sea stability

Nataliya Katser-Buchkovska, Landon Derentz — Fri, 20 Feb 2026 14:49:29 +0000

LONDON and WASHINGTON—US liquefied natural gas (LNG) exports to Ukraine via the Black Sea would provide Washington and its allies with a new lever of influence in the pursuit of peace—one that strengthens Ukraine’s resilience and directly pushes back against Russia’s malign activities in the western Black Sea. By encouraging Turkey to change its current prohibitions on large-scale traffic of US LNG through the Bosporus Strait, US President Donald Trump can extend Western economic and strategic presence into one of the most contested theaters of the conflict.

Russia’s ability to finance and sustain its war against Ukraine is already under real pressure. Coordinated US and European actions targeting Moscow’s shadow fleet of oil tankers are constraining the Kremlin’s capacity to move its crude oil, generate revenue, and project power. Applying similar competitive pressure through US natural gas would shift the balance further against Moscow—converting US energy dominance into an additional instrument of strategic leverage.

Trump can do exactly that by acting at the NATO Summit in June—using the moment to broker a three-party agreement between Washington, Ankara, and Kyiv to unlock LNG exports to Ukraine. To do so, the United States will need to ensure that Turkey, which will need to forgo current restrictions on LNG traffic through the Bosporus, emerges a winner too.

At a moment when Russia continues to test NATO’s resolve through drone incursions, maritime harassment, and intimidation across the Black Sea, LNG can serve as more than a commodity. It can become a strategic asset for peace. Delivering US LNG to Ukraine would reshape the regional balance by further reducing Russia’s energy leverage, hardening the resilience of Ukraine’s battered energy sector, and anchoring Western interests in a domain Moscow has long held exclusive influence over.

Despite sustained Russian attacks, Ukraine has kept its energy system functioning. Its electricity grid has been synchronized with the European Union’s since 2022. Its gas transmission system spans more than 38,000 kilometers—one of the largest in the world—and its underground gas storage capacity, approximately 32 billion cubic meters, is the largest in Europe. These facilities already serve European utilities and traders as a seasonal balancing and hedging platform. Integrated with a Black Sea LNG entry point, they would become a strategic buffer for Ukraine and its partners, strengthening security of supply while stabilizing regional markets, complementing other import routes through Slovakia, Poland, Romania, and Hungary.

The principal obstacle to this vision is political, not technical.

For years, Ankara has restricted the transit of most US LNG tankers through the Bosporus. While smaller LNG cargoes have been approved, prohibitions on vessels longer than two hundred meters make shipping natural gas to markets in the Black Sea costly and difficult to scale. Most US LNG is carried on tankers measuring roughly 290 to 300 meters in length, effectively limiting access under current rules.

Importantly, there is no legal prohibition on transporting LNG through the Bosporus under international law. The 1936 Montreux Convention, which governs passage through the Turkish Straits, guarantees freedom of transit for merchant vessels in peacetime, “under any flag and with any kind of cargo,” and it affirms that this principle applies without time limitation. LNG transit through the Bosporus is legally allowed but operationally constrained, politically sensitive, and commercially fragile due to insurance, liability, and risk-management considerations. Turkey has regulatory authority over maritime safety procedures in the strait, and it therefore makes the decisions on what is allowed through.

In discussions with us in recent months, several veteran diplomats in the United States and Europe insist that changing Turkish President Recep Tayyip Erdoğan’s position on the Bosporus is unrealistic, arguing that the policy is entrenched and immovable. But this assessment underestimates the power of Trump-style diplomacy. From the Abraham Accords to breakthroughs between Azerbaijan and Armenia, Trump has repeatedly demonstrated an ability to strike deals where conventional approaches have stalled.

As the self-proclaimed “peace president,” Trump now has an opportunity to apply that approach to the Black Sea.

A three-party agreement between Washington, Ankara, and Kyiv—bringing together Trump, Erdoğan, and Ukrainian President Volodymyr Zelenskyy—could unlock LNG exports to Ukraine while ensuring Turkey emerges a clear winner. Structured correctly, such an agreement would align incentives, transforming a long-standing constraint into a shared strategic asset.

For its part, Turkey could potentially secure engineering, procurement, and construction contracts to build and operate LNG import and regasification infrastructure, anchoring its role as a guarantor of Black Sea stability and reinforcing its strategic relevance within the Alliance. Ukraine would gain a durable source of energy security at a moment when its infrastructure remains under constant attack. Through a new US-protected maritime energy security corridor via the Bosporus, Trump would help open a new strategic LNG market, converting energy dominance into lasting economic and geopolitical relationships.

Concerns about safety in the Bosporus, often raised in public debate, should be placed in context. LNG has an exceptional global safety record and routinely transits some of the world’s most important waterways, including the Panama and Suez canals. The Bosporus already accommodates far more hazardous cargo, including crude oil and chemicals, while also authorizing small-scale shipments of LNG. The objection to larger LNG vessels transiting the strait is therefore less technical than political—and political barriers can be overcome when leadership aligns interests and incentives.

For NATO, the payoff is substantial. A Black Sea LNG corridor tied to US supply would create a stronger buffer against Russian aggression in the western Black Sea—one Moscow would be highly reluctant to challenge directly. Russia may harass, probe, and intimidate smaller European states, but it is unlikely to risk escalation against infrastructure and shipping linked to US energy interests.

That is what makes the NATO Summit in June—hosted in Turkey—the opportune moment to alter the status quo in Black Sea security. With all the necessary leaders at the same table and allied attention already focused on the region, the summit creates a natural diplomatic deadline for the White House to concentrate political will on the issue.

Industry has the energy, the ships, and the engineering capacity to make LNG a reality for Ukraine. Leadership will determine whether those tools are finally used.

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Temnycky in Forbes on Europe’s move to phase out Russian LNG in 2026

Mark Temnycky — Thu, 19 Feb 2026 17:00:12 +0000

ORIGINAL SOURCE

On January 7, Mark Temnycky, nonresident fellow at the Atlantic Council’s Eurasia Center, was published in Forbes on Europe’s plan to strengthen its energy markets and phase out Russian LNG in 2026.

By distancing themselves from the Russian Federation, EU leaders argue they can gain greater energy independence and strengthen European energy security across the continent.

Mark Temnycky

Fellow

Mark Temnycky

Nonresident Fellow

Eurasia Center

Ukraine Geopolitics & Energy Security

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Key questions on how Project Vault can secure minerals supplies

Evan Musolino — Tue, 17 Feb 2026 14:22:54 +0000

The US announcement of a new critical minerals effort, dubbed Project Vault, is a long time in the making. Stockpiling has been at the center of years of debate around the best way for the US to promote mineral supply security. This new investment appears positioned to bring commercial purchase commitments and government stockpiling together to advance US critical minerals supply chain security.

But a stockpile is not a monolithic concept. Stockpiles can be implemented in multiple ways to achieve many different goals, from providing a backstop for manufacturers to a tool for making purchases to bolster new supply options. The wave of recent export controls from China restricting access to commodities like antimony, gallium, germanium, and rare earths has led industry advocates and government officials to call for physical stockpiling of key material to help companies weather supply disruptions. Continued price manipulation that makes it difficult for Western producers to operate competitively has led many of those same groups to call for some form of economic backstop for US and allied producers. Critical minerals cooperation between allies, including on price support mechanisms, has been the subject of high-level dialogues hosted by Secretary of State Rubio and Treasury Secretary Bessent in the last month alone.

With the introduction of Project Vault, the US government has clearly demonstrated it believes that stockpiles have a role to play in promoting supply security. Credit is due to the National Security Council and Export-Import Bank (EXIM), which led these efforts, for moving beyond talk and putting a real solution, backed by real capital on the table. What we don’t know yet is exactly how the stockpile will be designed and in what way it will be used to strengthen mineral supply chains.

What is Project Vault?

Project Vault isn’t the critical minerals version of the Strategic Petroleum Reserve (SPR), which many have drawn comparisons to. Those SPR references elicit images of a government program storing physical piles of material deep within caverns spread out across the country to be released under orders from the president. In contrast, the Project Vault stockpile will be established as a public-private partnership to act on behalf of participating companies based on upfront purchase commitments. Stockpiled minerals will then be procured and stored on companies’ behalf. Upon release, reserves will be sold back to the specific companies who made purchase commitments rather than into the open market. The stockpile will be established as an independent entity with its own management team and board, a more private sector aligned structure than the SPR.

EXIM will provide a loan of up to $10 billion and up to $1.67 billion in preferred equity from private investors, which have not yet been named. This is a big move for EXIM, which more than doubled the size its previous largest investment, a nearly $5 billion loan for a Mozambique LNG project that was first approved in 2019.

Key questions as the stockpile takes shape

EXIM’s Project Vault fact sheet describes the stockpile’s objective as “reducing dependence on foreign-controlled supply chains, strengthening the domestic industrial base, and ensuring uninterrupted access to materials essential for advanced manufacturing and critical technologies.” Those are big, and laudable, goals. While the initial Project Vault announcement outlined the concept for the plan, it’s likely that final terms are still being worked out. As Project Vault moves to implementation, there are a few key areas worth watching that will define the scope and success of the new initiative.

What minerals will be purchased and stored?

The cross-section of companies referenced in initial reporting shows the stockpile will focus on more than just defense applications. That’s positive for some industries that have important economy-wide implications, including automotive (i.e., General Motors) and energy technology manufacturers (i.e., GE Vernova), but have struggled to get government support from increasingly defense-centric funding priorities. EXIM’s Chairman has said the stockpile will include all sixty critical minerals with an initial focus on rare earth elements. In practice, that will be very difficult to do at scale. The size of the budget seems best suited to providing a backstop for low-volume, high-criticality minerals that are necessary in manufacturing processes. It also means the stockpile is unlikely to have a meaningful impact on higher volume markets like copper. Importantly, it appears that the ultimate decision on what will be purchased and stored will be directed by end-customers rather than a centralized attempt to predict future market needs.

Where will these stockpiled minerals be sourced from, and will this stimulate offtake?

Experienced trading houses Hartree Partners LP, Traxys North America LLC, and Mercuria Energy Group Ltd. will manage the initial purchase of material for the stockpile. But where those minerals come from is an open question. Will the US government insist that products be purchased from non-Chinese sources that often don’t exist? If so, can that be done at prices that consumers will be happy with? Or will the structure allow trading firms to buy today at the lowest prices available to build a reserve that can be drawn down when supplies are disrupted?

Long-term offtake is the holy grail for companies looking to develop a Western critical minerals supply chain. Miners and processors have long-lamented the difficulty of getting deep pocketed OEMs or big-tech companies to lock in future purchases for fixed volumes at prices that support Western producers. In the absence of commercial contracts, direct purchasing through a government stockpile is often cited as the next best alternative to provide project developers with the cash flow certainty needed to secure financing. The absence of either option keeps projects stuck in an endless loop of financiers requiring offtake before they’re comfortable deploying capital, and potential offtakers requiring projects to demonstrate that they have financing before they’re seen as serious options for meeting supply needs.

Using the stockpile to purchase from Western suppliers could provide a lifeline to some emerging mining and midstream operations. However, their higher prices may make participation less appealing to end-consumers. Whether the demand signal from the stockpile is enough for Western miners and refiners to invest their own money, and private financiers to put their money on the line alongside them, to bring new supply to market will be critical to the mechanism’s success if the US government intends for the stockpile to help rebuild the US mining industry. While some individual suppliers will undoubtedly benefit from offtake commitments, it’s more likely that the stockpile will act as a shock absorber without the ability to restructure entire mineral supply chains.

What happens to companies not in the club is also an open question. If a significant amount of non-Chinese supply is captured by the stockpile, it risks distorting commodity markets and further squeezing US or allied companies looking for the same feedstock.

Is this enough to incentivize long-term purchasing?

Many within the industry have argued that manufacturers have been reluctant to pay higher prices to secure less vulnerable supplies despite recognizing the threat posed by supply disruptions. Cheap financing from EXIM and bulk purchasing and storage on behalf of multiple companies should result in more attractive all-in economics for participants than if they were looking to secure supplies on their own. The ability to lock in future prices with limited money out of pocket should also incentivize upfront purchase commitments. It remains to be seen whether the Project Vault structure will be enough to change a consumer dynamic that has historically prioritized pricing and flexibility—resulting in an addiction to lowest cost sourcing and an unwillingness to commit to fixed volumes of offtake far into the future. The subsequent announcement of the revamped Minerals Security Partnership, now known as the Forum on Resource Geostrategic Engagement (FORGE), provides another potential avenue for ensuring that minerals sourced from US and allied producers end up in US supply chains.

There’s no right or wrong answer on some of these questions. How Project Vault is implemented over the coming months will show exactly what problem the US government expects the stockpile to solve, where a stockpile fits with the myriad of other critical minerals actions being taken by the United States and its allies, and how willing industry is to be a partner in that effort. The one thing we do know today is that experts will undoubtedly continue to disagree about the best use of a critical minerals stockpile.

Evan Musolino is a senior vice president in the critical infrastructure practice at Venn Strategies. He was formerly a managing director at the US International Development Finance Corporation and coordinated US government-wide strategic investment on the White House National Security Council staff.

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The road to the AI Impact Summit: How to build AI infrastructure from the ground up

Ryan Pan, Coley Felt, Raul Brens Jr. — Fri, 13 Feb 2026 22:44:43 +0000

The central question for AI in 2026 is not whether governments have an artificial intelligence (AI) strategy—it’s whether they can operationalize it and quickly deliver the benefits to their citizens. Governments are increasingly treating AI as an essential capability for economic competitiveness, public service delivery, and political legitimacy. The United States and China may frame the global narrative most loudly, but other countries are feeling the same pressure in a more practical way. They are increasingly confronted with the difficulties of building AI-enabled infrastructure from the ground up, including the dependencies that come with it.

What does it take to build a comprehensive AI infrastructure and policy environment for widespread adoption? Last month, the Atlantic Council GeoTech Center, the Internal Telecommunication Union, and Access Partnership convened a roundtable titled “Laying the Digital Foundations” to address this question. For many countries, the answer carries significant geopolitical weight. It can narrow gaps between the Global North and Global South when it comes to the ability to adopt and benefit from AI technologies. It can also create space for transatlantic cooperation on ensuring the AI models of the future are embedded with human-centered values.

The discussion touched on several main areas: energy supply, data centers, cultural-specific models, network equipment, data authentication regimes, and other innovative technologies that could shape infrastructure choices over the next several years. The consensus was that AI readiness does not mean building an “AI Stack” that can be easily copied and pasted from country to country, because the enabling conditions for AI readiness in each country often vary significantly. Instead, it will require a set of interoperable choices that must be adapted to local conditions. Below are more takeaways from last month’s roundtable, which should be top of mind for policymakers as they convene for the AI Impact Summit in New Delhi, India, from February 16 to 20.

Electricity is becoming a binding constraint

The growing demand for data centers arising from AI is creating immediate pressure on electricity grids. Demand for data centers globally could triple by 2030. This means that even if governments can’t add power capacity, they will struggle to keep pace with demand even if they have strong policy ambitions. Finding ways to decentralize the power supply from the grid without destabilizing local systems may be a critical pathway to supporting and connecting a larger number of data centers.

At the roundtable, there was cautious optimism that AI can support parts of the energy transition over time, including by improving system efficiency and accelerating pathways for renewable energy sources such as nuclear fusion and geothermal energy. Yet, these pathways have little to no impact on near-term delivery dependence, and novel and efficient approaches are needed to reduce the current bottlenecks.

Infrastructure patterns are diversifying beyond data centers

Building data centers may not be the only answer, as such facilities cannot realistically be built everywhere. Distributed AI infrastructure that can overcome data latency or disconnection may be within reach. Edge devices, such as smartphones, tablets, smart cars, and smart glasses, have been seen as emerging tools to complement data centers by distributing workloads away from centralized data infrastructure. These devices can reduce latency for data transmission and optimize output. Edge devices don’t just distribute data; they also create new data and analyze it in real time. Such “inference on the cloud”—running a trained machine learning model on the cloud to generate data close to or at the source—is on the rise with the proliferation of generative AI on smart devices. China has been developing a competitive market for edge devices; enterprises are also bringing data to on-premises facilities rather than relying on centralized data centers. This is a good reminder that capability is not defined by one layer alone. A comprehensive strategy for transatlantic and Global South tech diplomacy must consider multiple options, including data centers, edge devices, and on-premises services to shape the global AI ecosystem.

Connectivity still determines who benefits

Beyond data center considerations, connectivity for populations in lower- and middle-income countries remains a critical determinant of access. Online access is still a prerequisite for using AI. Investing in the right kind of networks beyond data centers or edge devices matters. A key issue is modernizing network equipment, as outdated equipment not only hinders users from being digitally connected effectively but also creates security risks. Governments must identify, segment, or replace that equipment for it to remain secure. Network access and security are also increasingly confronted with another issue: the rise of AI agents. The market for agentic AI is expected to reach $103.28 billion by 2034. Some participants stressed that governments would need to adapt to the new challenges from agentic AI with its always-on capabilities, which allow it to constantly make automatic decisions for systems and users.

Data governance, sovereignty, and the cooperation problem

The discussion surfaced a set of geopolitical tensions underlying infrastructure decisions. There was concern at the roundtable about global data governance being shaped by the European Union. The bloc’s regulatory environment for data, as well as its ambition for AI sovereignty, could complicate transatlantic cooperation. At the same time, fragmentation of data sharing remains a barrier to building and improving systems across border—a clear area of need for mutual cooperation. Respecting user rights continues to be a critical part of discussions of transatlantic AI governance. Meanwhile, middle powers, such as India, are caught in the middle of these pressures. That is because India faces the question from partners of whether to adopt US or Chinese AI models, even as its domestic priorities focus on services for the most economically vulnerable communities, language inclusion, and data ownership.

Six pathways to lay the digital foundations for AI

Participants at the roundtable proposed six practical pathways that policymakers can treat as general rules for 2026.

Treat financing as infrastructure policy. Governments and the private sector should restructure financing approaches that support data center construction and related capacity. This should include making permitting more predictable and providing clearer incentives for construction where appropriate.
Reduce grid pressure through practical energy planning. As data center demand grows, decentralizing parts of the power supply, where feasible, can help reduce the energy burden on the grids and speed connections for new loads.
Plan for multiple deployment models. Beyond centralized data centers, policymakers should also invest in edge devices and on-premises services to widen adoption pathways and reduce latency.
Modernize networks as a core AI requirement. Closing connectivity gaps and upgrading network equipment is essential for performance and security, especially as automated and persistent systems increase baseline network demand.
Build content governance alongside infrastructure. Governments should enact policies to ensure that AI models reflect local cultural context and language, support standards for the verification of AI-generated content, and strengthen media literacy to protect information integrity.
Cooperate on cross-border data rules that protect rights and reduce fragmentation. Governments should develop practical approaches for cross-border data sharing that preserve user rights and accountability while enabling legitimate access for system improvements and public interest use cases.

What to watch in the year ahead

In the year ahead, expect to see AI infrastructure gain momentum as more countries move beyond the simplistic debate around innovation versus regulation and adopt more pragmatic approaches to AI competitiveness. Several global fora this year, such as the AI Impact Summit, the Group of Seven (G7), Group of Twenty (G20), and the United Nations General Assembly, will also dedicate time to understanding what it will take to build more AI infrastructure. It is important to keep in mind that there is still no consensus on what a “complete AI stack” includes, and that is partly because it spans both physical and digital layers. Policymakers would do well to opt for flexibility, whether it is policy frameworks, physical and digital requirements, or end users, rather than adopting a one-size-fits-all approach. However, following the steps above can allow nations to strengthen their AI infrastructure muscles, allowing them to become not just AI-ready, but AI-competent—able to deliver systems that work, earn trust, and can endure real-world conditions.

Ryan Pan is a program assistant at the Atlantic Council GeoTech Center.

Coley Felt is an assistant director at the Atlantic Council GeoTech Center.

Raul Brens Jr. is the director of the Atlantic Council GeoTech Center.

The GeoTech Center champions positive paths forward that societies can pursue to ensure new technologies and data empower people, prosperity, and peace.

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How Europe can shape—not fear—the US ‘hydrocarbon-state’

Michał Kurtyka and Mateusz Kędzierski — Thu, 12 Feb 2026 21:46:28 +0000

Last year was a turning point in US energy policy. In 2025, the United States became the first country to export more than 100 million tons of liquefied natural gas (LNG) in a single year, while oil production reached a record high of 13.6 million barrels a day.

Over the past decade and a half, the United States has moved from the shale revolution, through the 2014–2015 oil and gas crisis, to a phase of consolidation in its domestic upstream sector. The energy dominance agenda during President Donald Trump’s first term contributed to an improved market environment for shale gas. Large players acquired smaller, highly leveraged entities whose value lay in strong business fundamentals—excellent shale basin economics and technical expertise—but whose balance sheets had become unsustainable. Business and political goals aligned: the administration emphasized domestic investment and keeping US hydrocarbon deposits in US hands.

The results are now clear. The United States is the world’s largest producer of hydrocarbons and biggest exporter of LNG. Not only is the country fully energy self‑sufficient in terms of oil and gas, but it’s also playing a pivotal role in global markets for crude oil, natural gas, LNG, and liquefied petroleum gas (LPG), with a strong outlook for maintaining this position over the next ten to fifteen years. From dominance to abundance, the United States has become the most powerful “petrostate” in the world—or, more expansively, a “hydrocarbon-state” that combines resource abundance with technological, financial, and geopolitical power. The hydrocarbon-state is in direct competition with “electrostates,” whose influence rests primarily on electricity systems, new energy supply chains, and critical raw materials. Taking into account that China can be now considered an electrostate, Washington’s pursuit of an essential position in global hydrocarbons brings this choice into a wider logic of geopolitical rivalry.

This competition for global energy primacy pushes Europe to the sidelines. However, rather than yielding, European leaders have an opportunity to cultivate agency in the evolving global energy architecture to ensure the region’s economic resilience, while strengthening long-standing ties with the United States.

The US dual-pronged overseas strategy

Parallel to the latest US security strategy and mounting geopolitical tensions, the US oil and gas industry is expanding its efforts overseas. It is doing so in two ways: by intensifying exports of domestically produced hydrocarbons, and through direct investments outside of the United States. The directions of export are already shifting as a result of tensions with China and the realignment of Russian hydrocarbon flows. Europe and Southeast Asia have gained importance in US exports of crude oil, LNG, and LPG, and, in the medium-term, India and selected African countries are likely to join this pattern.

In terms of production, foreign assets are designed to complement the US shale foundation—in both production and reserves—while diversifying upstream portfolios and reducing exposure to single‑basin risk. The underlying logic of the current overseas push is to focus on regions and basins where American firms can deploy the competitive advantages they have refined in shale: data‑driven reservoir management, drilling and completion efficiency, disciplined capital allocation, and integrated supply chains. And obviously financial resources.

The closest area of interest geographically is the Montney shale basin in British Columbia and Alberta, Canada. Montney remains attractive for building inventory, offers promising LNG export prospects, and currently features lower asset prices than the Permian Basin. Latin America is another natural theater of expansion. Beyond Venezuela, unconventional resources such as Vaca Muerta in Argentina and emerging production in Mexico are prime candidates for US majors in the coming decade. Production from Vaca Muerta—the largest unconventional hydrocarbon deposit in South America, with a low breakeven price—and other plays may in the near future become significant competition for US LNG and LPG, which further sharpens US interest in being present there as an investor rather than merely as an exporter.

In the Eastern Mediterranean, US companies have been active for almost a decade, particularly in the Levant Basin and on the Israeli shelf. Today, this presence is extending to Turkey, ultra‑deepwater prospects in the Black Sea basin, and attempts to acquire assets previously held by Russian firms, such as Qurna‑2 in Iraq. Chevron and ExxonMobil have long maintained a strong position in Kazakhstan’s Tengiz field (and in ExxonMobil’s case, a stake in Kashagan).

Europe in the new energy architecture: dependence with agency

These developments are profoundly reshaping Europe’s energy landscape. As Russian hydrocarbon flows have been curtailed or redirected, US LNG and, increasingly, US‑linked production in Europe’s extended neighborhood have taken on a central role in the continent’s security of supply. Hydrocarbon exports from the United States to Europe are likely to continue—or even increase—despite rising tensions and growing awareness of the European Union’s energy dependence on American molecules. The growing share of US companies in hydrocarbon production in regions that underpin Europe’s hydrocarbon base—such as Algeria, the Levant Basin, Turkey, and Kazakhstan—further increases US influence over the European energy market.

This trend unfolds against a backdrop of difficult debates among allies. European policymakers and publics have raised legitimate concerns about price levels for imported LNG, about the risk of “replacing one dependence with another,” and about the interaction between US energy policy, domestic industrial support, and European climatepolicy. Transatlantic rhetoric has at times been sharp, and energy has not been immune to broader trade and regulatory disputes. World leaders are still far from resolving these challenges, yet these tensions do not alter the structural reality: for the foreseeable future, a US‑centric hydrocarbon system is becoming one of the pillars of Europe’s energy security.

The key strategic question for Europe is therefore not whether this hydrocarbon-state will exist—that question is already answered by market trends and investment decisions—but whether European actors will remain mostly passive importers, or whether they will claim agency as co‑investors and co‑architects of this new system.

Why European companies should join—not just buy from—America’s hydrocarbon-state

The current investment trend outside the United States is opening a window of opportunity for other players from different geographies—including national oil companies—to collaborate with US firms on joint projects. As long as these partners bring tangible value and can adapt to the US way of operating, there is space for durable partnerships. European companies should be at the forefront of this shift.

There are reasons for that. First, risk management: equity stakes and long‑term partnerships in upstream and midstream projects provide a more resilient hedge against supply disruptions and price spikes than relying solely on contractual arrangements at European terminals. Second, industrial strategy: tighter integration into hydrocarbon value chains can support Europe’s energy‑intensive industries and chemical sector as they navigate an uneven and often volatile transition.

This logic should not be confined to traditional oil and gas majors. Large utilities, midstream operators, and industrial champions in chemicals, steel, and fertilizers, as well as European financial and infrastructure investors, all have a stake in the stability, affordability, and predictability of hydrocarbon supply during the transition period. For them, joining the second wave of US‑led expansion—as partners in the Montney, Vaca Muerta, Eastern Mediterranean, North African gas and LNG, or Caspian projects—is a way to move from the position of pure price‑takers to that of co‑shapers.

Managing asymmetry: toward a balanced transatlantic framework

None of this eliminates the asymmetries inherent in a world where the United States is the central hydrocarbon-state. In crises, Washington and US companies will inevitably hold levers that affect European energy prices and flows. But the appropriate response for Europe is not to wish this reality away, nor to retreat into defensive rhetoric about dependence. It is to embed US strength in a balanced, rules‑based framework and to use transatlantic cooperation to manage that asymmetry.

This implies several parallel tracks. On the commercial side, long‑term contracts and joint investments should be structured to share risks and benefits more equitably across cycles. On the regulatory and security side, closer coordination is needed so that critical energy infrastructure in Europe and its neighborhood is not dominated by adversarial actors, and so that climate and energy security policies on both sides of the Atlantic reinforce rather than undermine each other. On the political level, the difficult conversations among allies about pricing, industrial policy, and climate ambition should be understood as part of the necessary calibration of a maturing energy partnership—not as a reason for Europe to abstain from engaging with the United States’ second overseas wave.

In this sense, the emergence of the United States as a hydrocarbon-state is both a challenge and an invitation. If European companies and policymakers choose to participate actively, they can help ensure that the new energy architecture doesn’t only strengthen US power, but also enhances the resilience and strategic autonomy of the wider transatlantic community.

Michał Kurtyka is a distinguished fellow at the Atlantic Council’s Global Energy Center.

Mateusz Kędzierski is a public and regulatory affairs manager at GASPOL and senior energy advisor at the JTI, a boutique advisory and analytical platform operating at the intersection of energy and natural resources policy, regulation, markets and infrastructure.

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US critical minerals policy goes collaborative with FORGE

Reed Blakemore, Alexis Harmon — Thu, 12 Feb 2026 14:54:17 +0000

WASHINGTON—The Forum on Resource Geostrategic Engagement (FORGE), announced last week at the inaugural Critical Minerals Ministerial in Washington, DC, marked the opening salvo of the Trump administration’s 2026 critical minerals agenda. Coming on the heels of a frenetic year of executive actions, bilateral dealmaking, and the launch of the twelve-billion-dollar Project Vault stockpiling initiative, FORGE is the Trump administration’s clearest attempt yet to translate its sizeable ambitions around critical minerals into a functional architecture.

At its core, FORGE reflects a belief that the hardest challenges in the minerals markets are better addressed with partners. Collaboration is slower and harder but ultimately more durable and impactful. By attempting to align trade policy, price signals, and market access across partner economies, FORGE aims to elevate cooperation itself as a strategic asset that could reshape minerals markets in a way no country—not even the United States—could achieve on its own. Though operational details and membership are still being clarified, the opening of a plurilateral pathway represents a marked shift for 2026.

Bilateralism meets plurilateralism

The Trump administration has positioned FORGE as a successor to the Minerals Security Partnership, launched in 2022, but with sharper teeth and a commitment to speed. FORGE is not envisioned as a traditional multilateral coordination forum. Instead, it’s designed as a plurilateral coalition, creating a preferential trade-and-investment zone for critical minerals with coordinated price floors to counter adversarial market manipulation.

At the ministerial, US Vice President JD Vance described “reference prices for critical minerals at each stage of production,” maintained through “adjustable tariffs to uphold pricing integrity.” The objective of this approach is to create stable investment conditions for mining and processing projects that often require decades to deliver returns. If successful, it will help protect projects from the predatory pricing that hollowed out Western critical minerals production in previous decades.

Exactly which countries will ultimately participate in FORGE remains unclear. Still, the ministerial produced eleven new bilateral framework agreements—with Argentina, Morocco, Peru, the Philippines, the United Arab Emirates, and the United Kingdom, among others—bringing the total to twenty-one deals in five months. US officials claim seventeen more countries have completed negotiations. Beyond several memoranda of understanding (MOUs), the Trump administration unveiled more operational commitments, including a sixty-day action plan with Mexico and a joint commitment with the European Union and Japan to develop coordinated trade policies (such as border-adjusted price floors) and identify priority investment opportunities.

That’s impressive dealmaking velocity, but framework agreements are not operational mines. Each bilateral deal requires different concessions, obligations, and political risks. The administration hopes FORGE, chaired by South Korea through June, will link these disparate agreements into a functioning plurilateral system covering two-thirds of the global economy. That’s a much harder proposition than signing MOUs—but it also could permanently transform the critical minerals landscape.

The overarching question is whether a network built on bilateral leverage can be transformed into genuine plurilateral coordination. There are reasons for optimism. The Minerals Security Partnership’s struggles with similar challenges counsel caution, but the administration’s willingness to back frameworks with capital and concrete mechanisms may give FORGE more bite than its predecessor.

The power of price coordination

In January, Reuters reported that the United States is “moving away” from price floors on critical minerals, leading to panicked discourse among industry stakeholders and volatility in the market. The ministerial clarified the administration’s actual position: Coordinating price supports with partners through both bilateral deals and the FORGE network remains a top priority. The shift is not away from private interventions but toward internationalizing them, moving the burden away from solely resting on US taxpayers and restructuring price supports as a coordinated action among like-minded countries. This approach is arguably more effective given the scale of the challenge: A distributed burden is more sustainable, and coordinated intervention could be effective enough to deter Chinese market manipulation.

FORGE appears to be the forum through which the administration intends to pursue this coordination. Following last year’s Commerce Department 232 investigation into the national security implications of critical mineral imports, the White House concluded that supply chain vulnerabilities pose national security threats but that bilateral dealmaking and possible price interventions remain more effective than tariffs for addressing them—at least for now. The ministerial operationalized that conclusion and revealed an administration attempting something ambitious: practicing statecraft through markets rather than around them.

The challenges lie in the details. Prices vary by mineral, production stage, jurisdiction, and market conditions. Coordinating reference prices that function as effective floors without creating perverse incentives requires sophisticated policy design and sustained diplomatic consensus. The United States and its allies have spent months negotiating on this front, and operational details remain sparse.

Deploying capital and making deals

The meeting last week also highlighted just how much capital the administration is prepared to mobilize in service of supply-chain security. In its post-ministerial fact sheet, the State Department cited more than thirty billion dollars in letters of interest, investments, loans, and support mobilized by the US government over six months. Just days before the ministerial, Project Vault secured ten billion dollars from the Export-Import Bank (more than double the bank’s largest previous financing) plus two billion dollars in private capital.

Beyond government-to-government frameworks, the administration continues to facilitate business-to-business deals. This reflects a broader pattern: the administration positioning itself as dealmaker and convener, connecting companies with partners, projects with financing, and supply with demand across its bilateral network.

This approach raises an unresolved question for FORGE. While explicitly positioned as a successor to the Minerals Security Partnership, it remains unclear whether FORGE will take on a comparable role in catalyzing pooled investment or dealmaking, which was the primary focus of the Minerals Security Partnership and its associated public-private network, MINVEST. Instead, FORGE appears more likely to operate on a “membership by trade” model, in which participation is conditioned on adherence to shared trade rules rather than joint capital deployment. Under this approach, investment would remain largely bilateral, but within a plurilateral market framework designed to reinforce and de-risk those investments. This could allow the administration to shape outcomes across multiple supply chains without the institutional complexity of pooled financing. Whether that trade-led model proves sufficient or whether pooled investment coordination becomes a necessary next step remains an open question.

Digging deeper

The gathering in Washington last week succeeded in establishing an institutional architecture through FORGE, rapidly expanding the network of bilateral deals, and demonstrating a willingness to deploy capital through tools such as Project Vault. It also revealed a fundamental tension: the administration is moving fast, but minerals projects move slowly.

The central questions now are whether frameworks translate into functioning mines, whether coordinated price mechanisms can be operationalized without fracturing under divergent interests, and whether policy commitments outlast electoral cycles. The administration delivered speed and ambition. Execution and durability are the harder tests ahead.

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Mining corridors as catalysts: Building on the Lobito model

Aubrey Hruby — Tue, 10 Feb 2026 12:01:41 +0000

Bottom lines up front

In December 2025 the US and the DRC signed a strategic partnership agreement giving the US preferential access to Congolese mineral deposits.
The next step should be to build the infrastructure necessary for African nations to derive sustainable wealth from their mineral assets, and for the US to reap the benefits of the strategic partnership agreement.
The financing approach and public-private cooperation used to build the Lobito transportation corridor offers a playbook for the US and African governments and investors.

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Executive summary

In an era defined by technological advancement and strategic competition, African critical minerals are central to US economic competitiveness and national security. The continent holds approximately 30 percent of the world’s known mineral reserves, including inputs vital to defense systems, energy technologies, and the digital economy. This geological endowment places Africa at the nexus of the global supply chain and energy security.

Current US dependence on adversarial nations—particularly China—for processed critical minerals creates strategic exposure that African partnerships can mitigate. Since launching the Belt and Road Initiative in 2013, Beijing has established significant economic inroads through billions of dollars of investments in transportation, infrastructure, and energy across the continent. The US response must prioritize not only access to raw materials but also the development of processing infrastructure, transparent governance frameworks, and equitable partnerships that deliver mutual prosperity. Logistic corridors and processing hubs are key to this approach.

The successful development of the Lobito Corridor linking Zambia and the DRC to Angola’s port of Lobito over the past three years has demonstrated that collaborative partnerships between the US government and African development finance institutions (DFIs) can deliver transformative infrastructure, unlock mineral wealth, and promote regional integration.

This model can be replicated through four additional mining corridors and hubs. These include the proposed Liberty Corridor connecting Guinea’s iron ore belt to Liberia’s coast; the Northern Corridor linking Kenya’s port of Mombasa to landlocked East African states and eastern DRC via a multimodal network; the Nacala Corridor, which connects northern Mozambique to Malawi and Zambia through rail, road, and the Port of Nacala; and Morocco’s emergence as a near-term mineral processing and manufacturing hub, particularly for battery supply chains. Together, these projects have the potential to deepen US-Africa partnerships, strengthen supply chain resilience, counter Chinese influence, and advance sustainable development.

By applying lessons from the Lobito Corridor and pursuing corridor-based strategies in resource-rich African markets, the United States can position itself as the partner of choice for infrastructure development while securing access to the critical minerals needed for long-term economic competitiveness and national security.

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Global Foresight 2036

Andrea Ratiu — Tue, 10 Feb 2026 10:00:00 +0000

Global Foresight 2036

The authoritative forecast for the decade ahead

Welcome to the fifth edition of Global Foresight. Produced by the Atlantic Council’s Scowcroft Center for Strategy and Security, home to one of the world’s premier strategic foresight shops, Global Foresight gathers the best thinking about how the coming decade could unfold.

In this year’s installment, a part of the Atlantic Council Strategy Papers series, our experts analyze exclusive new findings from a survey of leading strategists and foresight practitioners around the world on how human affairs could unfold over the coming decade across geopolitics, diplomacy, the global economy, technological disruption, changing Earth systems, and other domains. Our team scans the horizon for hidden or under-the-radar phenomena—which we call “snow leopards”—that could have significant consequences in the future. And the Atlantic Council’s best tech minds take a critical look at how artificial intelligence could reshape not only the future, but our ability to predict it.

Welcome to 2036

What the world could look like in ten years, according to nearly 450 experts

To survey the future, we polled geostrategists and foresight experts on our most burning questions about the biggest drivers of change over the next decade. Check out their forecasts on everything from the future of NATO to the rise of cryptocurrency.

Six snow leopards to watch for in the decade ahead

The underappreciated phenomena that could have outsize global impact

Receiving relatively little attention in the press, these phenomena can be hard to spot as drivers of change. Yet just like the stealthy big cats, they could sneak up and vividly remind us of their power.

AI and the future

Can artificial intelligence predict global affairs?

Our experts on the ability of artificial intelligence to forecast the decade ahead—and how AI itself will change over that time.

Interact with Global Foresight 2036

We’ve partnered with BanterBox, an artificial-intelligence platform that creates interactive reading experiences, to produce a special edition of Global Foresight 2036 tailored to you. Ask questions, dig deeper, and explore what you’re most interested in.

Launch the adaptive briefing

Meet your expert guides to the future

Full survey results

Atlantic Council Strategy Paper Series

Feb 10, 2026

The Global Foresight 2036 survey: Full results

In the fall of 2025, the Atlantic Council’s Scowcroft Center for Strategy and Security surveyed the future, asking leading geostrategists and foresight experts around the world to answer our most burning questions about the biggest drivers of change over the next ten years. Here are the full results. 

Africa China

Strategy Paper Editorial Board

Executive editors

Frederick Kempe
Alexander V. Mirtchev

Editor-in-chief

Matthew Kroenig

Editorial board members

James L. Jones
Odeh Aburdene
Paula Dobriansky
Stephen J. Hadley
Jane Holl Lute
Ginny Mulberger
Stephanie Murphy
Dan Poneman
Arnold Punaro

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The post Global Foresight 2036 appeared first on Atlantic Council.

Welcome to 2036: What the world could look like in ten years, according to nearly 450 experts

Mary Kate Aylward, Peter Engelke, Uri Friedman, and Paul Kielstra — Tue, 10 Feb 2026 10:00:00 +0000

Welcome to 2036

What the world could look like in ten years, according to nearly 450 experts

By Mary Kate Aylward, Peter Engelke, Uri Friedman, and Paul Kielstra

Explore findings on…

1. China’s power

2. NATO’s future

3. The fate of Ukraine—and Russia

4. Human-like AI

5. Nuclear proliferation

6. European autonomy

7. Water wars

8. Weakening multilateralism and democracy

9. Crypto versus the dollar

10. The view from the Global South

China eclipses the United States economically. A diminished Russia’s war in Ukraine becomes a frozen one, while conflict over Taiwan turns hot and threatens world war. More countries acquire nuclear weapons. A democratic depression coincides with the decline of today’s multilateral system. Cryptocurrencies challenge the dollar. Artificial intelligence matches or even surpasses human capabilities. NATO endures, but fundamentally changes.

These are just some of the future scenarios that geostrategists and foresight practitioners pointed to when the Atlantic Council’s Scowcroft Center for Strategy and Security surveyed them in November and December 2025 on how they expect the world to change over the next ten years.

We found respondents generally in a dark mood, with 63 percent expecting the world in 2036 to be worse off than it is now. Just 37 percent think that it will be better off ten years hence—roughly on par with the results of this temperature-check question in the previous year’s survey.

The 447 survey respondents were citizens of 72 countries—the highest number of countries represented in the four years we’ve been conducting our annual Global Foresight survey. Roughly half were citizens of the United States, more than one-fifth were from Europe, and just under a fifth were from countries in the so-called Global South. Respondents skewed male and older (roughly three-quarters were male and a similar proportion were over 50 years of age) and were dispersed across the private sector, nonprofits (think tanks, advocacy groups, non-governmental organizations), government, academic or educational institutions, independent consultancies, and multilateral institutions.

So what kind of world do these forecasters envision in 2036? Below are the survey’s ten biggest findings.

Atlantic Council Strategy Paper Series

Feb 10, 2026

The Global Foresight 2036 survey: Full results

Africa China

1. Most respondents think China will surpass the US economically, as concern about a Taiwan conflict rises and 40 percent foresee another world war

Most survey respondents do not believe that the United States will be the world’s dominant power in 2036, with only seven percent saying that it will be. And while an even smaller percentage (four percent) believe that China will be the dominant global power, the great majority of polled experts (around nine in ten) believe that these powers will compete for supremacy either in a bipolar world largely divided into China-aligned and US-aligned blocs or in a multipolar one with multiple centers of power.

The survey results indicate widespread perceptions that China will wield considerable power over the coming decade. While nearly three-quarters of respondents predict that the United States will be the world’s leading military power in 2036, most respondents (58 percent) expect China to be the world’s top economic power within the next decade—with only 33 percent saying the same about the United States. Similarly sized minorities expect either China or the United States to be the leading power in technological innovation (47 percent for the United States, 44 percent for China) and diplomatic influence (38 percent for the United States, 33 percent for China), suggesting they could be peer competitors in these domains. The message respondents appear to be sending is that, by 2036, the “China rising” era will have given way to a “China risen” one, characterized by a significant erosion in relative US power in certain respects and an end to the US-dominated world order. (A deeper dive into the data reveals that Global South respondents rate China’s future power higher than respondents from other regions do; see finding 10 below.)

More than two-thirds of respondents (70 percent) believe that China will try to forcibly take Taiwan in the next decade—up from 65 percent in our previous year’s survey and 50 percent two years ago, signaling an increasing likelihood of this scenario materializing. The intensity of this concern seems to be growing as well: Twenty-one percent of respondents “strongly agree” that China will attempt to forcibly retake Taiwan over the next decade, up from 15 percent who felt this way in our previous two surveys.

And what starts in Taiwan wouldn’t necessarily end in Taiwan. In keeping with the top finding from our previous year’s survey, more than 40 percent of respondents envision another world war, involving a multifront conflict among great powers, erupting over the next decade. And within that group, 43 percent think the likely trigger will be in Taiwan or the East/South China Seas—the most-cited origin point for such a conflict, with Eastern Europe (25 percent) and the Middle East (13 percent) in second and third place. This result suggests that growing competition between China and the United States, if improperly managed, will become a global powder keg.

Expert insight by Dexter Tiff Roberts: China “could easily be derailed”

It’s clear that most respondents believe that China is poised to unseat the United States as the global economic superpower over the next ten years, challenging the United States on multiple fronts from currency to international institutions to political stability.

It’s also obvious that Beijing is feeling a newfound confidence as it leverages the international trade chaos wrought by President Donald Trump’s tariffs to position itself as a global leader advocating for a more open international trading system. Of course, Beijing continues to use a host of protectionist measures—from industrial subsidies to non-tariff barriers favoring domestic companies—to tilt the field in its favor.

But China’s ascent to economic supremacy could easily be derailed by its limited progress in shifting from export-driven growth to a more sustainable, consumption-driven economy. China’s present model is facing ever larger challenges as countries push back against a flood of Chinese electric vehicles, solar panels, and electronics.

— Dexter Tiff Roberts, founder and publisher of the newsletter Trade War on Chinese economics and politics, former China bureau chief and Asia News Editor at Bloomberg Businessweek, and nonresident senior fellow at the Atlantic Council’s Global China Hub

Expert insight by Markus Garlauskas: Military power alone won’t deter China

The clear majority of respondents who assessed that China will attempt to take Taiwan by force in the next decade included those respondents who also assessed that the United States would be the strongest military power at the time—suggesting many respondents believe overall military power alone is insufficient to deter Beijing.

Given that Beijing has ramped up its aggressive rhetoric and military exercises against Taiwan, which are starting to look like dress rehearsals for an attack, now is the time for action. To strengthen deterrence, the United States and its allies should improve intelligence to provide timely attack warning, posture forces to decisively win a first battle against China, and establish a victory plan to prepare for a long war. Meanwhile, the United States should encourage Taiwan to further strengthen its defenses and mobilize the whole of its society to deter China.

While Taiwan was most commonly cited as the flashpoint for a potential global multifront war in the coming decade, only one respondent cited the Korean peninsula, which suggests respondents are underestimating the potential for a larger war to start with North Korean aggression there. As we explored in a report based on a tabletop exercise, either a conflict in the Taiwan Strait or on the Korean Peninsula could escalate into a broader war, including nuclear escalation.

— Markus Garlauskas, former National Intelligence Officer for North Korea on the US National Intelligence Council and director of the Indo-Pacific Security Initiative of the Atlantic Council’s Scowcroft Center for Strategy and Security

Expert insight by Josh Lipsky and Jessie Yin:
A day may come when the United States
is not the world’s largest economy, but it won’t be in 2036

The experts are very likely wrong on this one—or at least, they’re missing crucial context.

This idea that China was on track to take over the United States as the world’s largest economy was conventional wisdom in Washington (and New York) before the COVID-19 pandemic. Before 2020, Bloomberg Economics expected China to surpass US nominal GDP by the early 2030s. Even during the pandemic, many were impressed by the resilience of China’s economic growth when other major economies faltered. As late as 2022, Goldman Sachs predicted that China would overtake the US economy around 2035. But economists have been re-adjusting their predictions across the board. In 2023, Bloomberg Economics changed its forecast and projected that it would take until the mid-2040s for China’s economy to catch up to that of the United States. Simply put, Beijing’s economy in 2026 isn’t what it was in 2020.

While China’s growth has slowed down from pre-pandemic expectations, the United States has actually outperformed previous growth projections. In 2019, the International Monetary Fund projected that China’s GDP growth would hit 5.5 percent in 2024, while the United States would only grow by 1.6 percent. In 2024, however, the United States grew by 2.8 percent, while China grew by 5 percent. It’s definitely strong growth coming out of Beijing, but the United States’ nominal GDP was $10 trillion more than China’s in 2024. This makes it less likely, as China’s growth slows, that it will surpass the United States in 10 years. Assuming that 2025 growth rates continue, China would surpass the United States in nominal GDP in 2041. And some experts question the veracity of the growth numbers China releases, with some suggesting a 2025 growth rate as low as 2.5 percent.

Economic forecasting is not a precise science, but there are a few factors to look at when it comes to forecasting China’s economic growth vis-a-vis the United States. Let’s break down some of these factors behind China’s economic slowdown. Beijing is dealing with the sticky negative effects of its prolonged real estate slump—a sector which used to be a major driver of economic growth and investment. As the housing market struggles, consumer confidence remains low, and local governments are bogged down by debt. The country also has a population crisis on the horizon. By 2060, it’s projected that there will be around 70 elderly dependents for every 100 working-age people. China remains a strong export-driven economy with a high-tech sector that is continuing to innovate, but Chinese high-tech firms are only one sliver of its overall economy, and we’re still seeing the vast majority of AI investments worldwide being directed towards the United States. Indeed, it’s the United States that is leading the development of the most important technology of the twenty-first century.

None of this is to downplay the strengths of China’s economy or to neglect the headwinds that are facing the United States, but so far, the data doesn’t suggest that China will overtake the United States as the world’s largest economy by 2036.

— Josh Lipsky is chair, international economics at the Atlantic Council and the senior director of the Atlantic Council’s GeoEconomics Center.

— Jessie Yin is an assistant director with the Atlantic Council’s GeoEconomics Center.

2. Expect NATO to endure but undergo fundamental changes

Amid major ups and downs for NATO in the first year of the second Trump administration—from commitments to ramp up defense spending at The Hague summit in 2025 to the standoff between Denmark and the United States over the status of Greenland—survey respondents are split evenly on whether the Alliance will grow more influential (35 percent) or less (35 percent) in ten years’ time. Behind these equivocal answers about NATO’s future power, however, is a clear and substantial measure of doubt regarding the future of the Alliance itself: Nearly half of respondents (44 percent) believe that NATO will no longer exist in its current form in 2036. Among this group expecting fundamental change, half (51 percent) anticipate that a reconfigured NATO will be less influential than the current alliance.

This finding likely relates to the part that the United States is expected to play in the Alliance going forward. A significant minority of respondents—39 percent—don’t envision the United States, by the year 2036, still having the central, commanding role in NATO that it has had since the Alliance’s founding, though the majority (61 percent) believe the United States will remain in this position. Among the group that envisions the United States no longer retaining its dominant role in the Alliance, 65 percent expect a coalition of states to take a leading role in NATO if Washington steps back, with smaller but still significant percentages citing Germany (33 percent), Poland (20 percent), France (19 percent), and the United Kingdom (18 percent) as potential Alliance leaders. (Respondents could choose more than one answer.)

Respondents also indicated that several NATO member states without nuclear weapons might acquire them by 2036. Among the 85 percent of survey respondents who think that at least one new country or territory will obtain nuclear weapons within the next decade, about 30 percent expect Turkey to acquire these weapons, 24 percent believe Germany will do so, and 15 percent anticipate Poland doing the same. This may reflect an assessment that a possible US withdrawal of its nuclear umbrella from Europe or from its leading role in the Alliance could prompt these NATO member states to go nuclear.

Notably, of the respondents who believe that the United States will be the world’s leading military power a decade from now, 70 percent think that the United States will retain its security alliances and partnerships in Europe, Asia, and the Middle East; among those who think another power will lead in the military field , that figure drops to 49 percent. Similarly, among those in the camp of the United States as the leading military power in 2036, 67 percent expect Washington to maintain a central role in NATO relative to just 39 percent who see another country or bloc leading militarily. These findings indicate a link between US military leadership and the maintenance of the country’s alliances and partnerships around the world.

Expert insight by Ian Brzezinski: NATO “will not function” without Washington

The polling serves as a troubling warning sign. It reflects frustration with the long-term failure of European allies to fulfill their defense obligations and the Alliance’s failure to leverage its massive overmatch in power over Russia to end Vladimir Putin’s invasion of Ukraine on just and enduring terms. Another factor is surely the Trump administration’s determination to dilute US military commitment to and leadership in NATO. The Alliance simply will not function in the absence of robust leadership from Washington and a demonstrable commitment of force that inspires confidence in US allies and fear in US adversaries.

The good news for NATO is that the Europeans are now finally increasing their defense spending with haste, the United States continues to have vital interests in Europe that justify the aforementioned leadership and commitment, and the American public expect that of their government. Polls consistently show that some 65 to 75 percent of the American public believe that the United States should sustain or increase its commitment to NATO. That is what gives me an optimistic outlook about NATO’s future.

— Ian Brzezinski, former US deputy assistant secretary of defense for Europe and NATO policy and resident senior fellow with the Transatlantic Security Initiative in the Scowcroft Center for Strategy and Security

Trackers and Data Visualizations

Jun 20, 2025

NATO Defense Spending Tracker

By Kristen Taylor, Julia Salabert

The Transatlantic Security Initiative’s NATO defense spending tracker delves into data and figures to analyze current defense spending trends.

Europe & Eurasia NATO

3. Many respondents envision a diminished Russia heading toward a frozen conflict in Ukraine

A high-profile, US-led push for a final negotiated settlement to the war in Ukraine dominated headlines while this year’s survey was in the field. Despite that, respondents shifted in the direction of anticipating a frozen conflict. Just 34 percent of respondents think that the war will end on terms largely favorable to Russia, down substantially from the nearly half of respondents (47 percent) who answered that way in our previous year’s survey. Conversely, slightly more than half of respondents (52 percent) now think the war ultimately will turn into a frozen conflict, up from 43 percent a year ago.

Meanwhile, respondents believe that Russia is destined to be a lesser power. By 2036, respondents expect minimal Russian clout across all five metrics of power tested in the survey. Just 2 percent of those surveyed believe that Russia will be the world’s leading country in cultural or soft power by 2036 and 1 percent say the same regarding military power. In all other areas, the figure rounds down to 0 percent. Respondents also cited Russia more than any other world power as a candidate to break up internally as a result of developments such as revolution, civil war, or political disintegration, with 36 percent expecting such an outcome relative to 30 percent in the previous year’s survey. (The latest figure is only slightly below this question’s high of 40 percent of respondents forecasting Russia’s breakup a few years ago, shortly before Yevgeny Prigozhin staged a rebellion against the Kremlin.)

Russian weakness, however, doesn’t necessarily reduce the danger it poses in Ukraine and beyond; in fact, it could increase the threat. Among the minority of respondents (22 percent) who expect a state or terrorist group to use nuclear weapons in the coming decade, 60 percent believe that Russia will do so, making it the most-cited actor.

Expert insight by John Herbst: Only pressure on Putin will lead to durable peace

Contrary to pundit chatter, in 2025 US policy largely did not veer in Putin’s direction. It has jumped back and forth between criticizing and placing pressure on Ukraine and Russia. It is fair to say that the US president seems reluctant to hammer Putin for his clear rejection of numerous American ceasefire and peace proposals, and rarely criticizes Putin without also hitting Ukrainian President Volodymyr Zelenskyy. Yet Trump still has sanctioned Rosneft and Lukoil, Russia’s two largest oil firms. And he continues to provide essential military intelligence to Ukraine that has enhanced the effectiveness of Ukraine’s very successful attacks on Russia’s hydrocarbon production, with serious impact on Russia’s revenue and its staggering economy.

If the White House policy continues, it is safe to expect another year like 2025—at most minor gains for Putin on the battlefield, at a terrible cost in casualties, and with no strategic success and more strain on the Russian economy. The Ukrainians will muddle through because Western support will be at least adequate, and because they have no other choice if they want to live freely as Ukrainians.

If Team Trump is able to digest the lessons of the past year, the United States will provide more support for Ukraine—with the sale of more advanced weapons, including Tomahawks—and put more pressure on the Kremlin in the form of sanctions. The administration would also embrace the position some of its members spoke about publicly a year ago and use its influence to persuade Belgium and other influential players to provide remaining frozen Russian state assets to Ukraine. This combination of measures, if pursued consistently for many months, would 1) weaken Moscow’s position on the battlefield and 2) increase the odds of Putin accepting terms to establish a durable peace, which is Trump’s stated aim and something Putin would only agree to under duress.

— John Herbst, former US ambassador to Ukraine and senior director of the Atlantic Council’s Eurasia Center

4. AI could match human capabilities within a decade, as concerns about the technology’s impact mount

Survey respondents expect artificial intelligence (AI) to progress rapidly over the coming decade. A clear majority (58 percent) believe that, by 2036, the world will have gone beyond today’s predictive and generative AI systems to achieve artificial general intelligence (AGI), which is defined in the survey as “an artificial intelligence system matching or exceeding the cognitive abilities of human beings across any task”—one of the most ambitious goals AI companies are currently pursuing.

More than half of respondents (56 percent) expect that, on balance, AI will have a positive effect on global affairs over the next decade, while less than a third (32 percent) believe it will have a negative effect. These results suggest that the polled experts generally are more optimistic about the technology’s future impact than, for example, the general public in the United States is. But notably, expectations of AI’s negative impact are increasing, rising three percentage points relative to the previous year’s results.

Similarly, while worries about AI’s economic impact remain low among respondents, they are growing. Fourteen percent of respondents now see job losses and economic disruption due to advancements in technology such as AI as the single biggest threat to global prosperity in the coming decade. That’s more than double the previous year’s figure of 6 percent.

When it comes to social media, our survey respondents have expressed consistently negative views about the technology’s impact on the world—perhaps because social media is now a mature technology with clear downsides, in contrast with the positive expectations people had for the technology fifteen or twenty years ago. Views about AI could follow a similar course if its downside impacts ultimately outweigh its positive ones.

Expert insight by Tess deBlanc-Knowles: We don’t know if we’re on track for AGI

It is not certain that we’re going to get to artificial general intelligence with current trajectories, and there’s also a tremendous amount of uncertainty about which approaches would get us to more generalizable and true reasoning capabilities—or whether those capabilities are even possible to achieve. What we’re seeing with each generation of the current models is higher performance, but it is not clear that training on larger and larger swaths of data, using more compute, is necessarily going to get us to that breakthrough capability of true artificial thinking.

— Tess deBlanc-Knowles, senior director of Atlantic Council Technology Programs

5. Brace for more countries with nuclear weapons—including Iran despite the Israel-Iran war—though not necessarily nuclear use

Our respondents overwhelmingly expect greater proliferation of nuclear weapons over the next decade, with 85 percent believing additional countries or territories will acquire these arms during that timeframe. The most-cited next entrant in the nuclear club is Iran, selected by 66 percent of those anticipating the spread of nuclear weapons—indicating a widespread assumption that the war waged this past summer by Israel and the United States to destroy Iran’s nuclear program did not definitively extinguish that program or Tehran’s nuclear ambitions. This finding may also explain why the second-most-cited actor to obtain nukes in the next ten years (chosen by 53 percent of those expected nuclear spread) is Iran’s rival and neighbor Saudi Arabia.

But many surveyed experts also foresee nuclear proliferation beyond the Middle East. Those who imagine additional nuclear powers emerging also point to East Asia (with 47 percent citing South Korea, 37 percent Japan, and 11 percent Taiwan) and to non-nuclear NATO members as mentioned in our second finding above.

Respondents appear to believe that this nuclear proliferation will occur in the absence of global governance to curb the spread of these weapons, with only 4 percent expecting the greatest expansion of global cooperation over the next decade to occur in the realm of nuclear nonproliferation.

Even with this likelihood of proliferation, however, respondents seem less concerned that nuclear weapons will actually be used over the next ten years, with 78 percent of respondents predicting no nuclear use relative to 52 percent who said the same in the previous year’s survey. Among the fifth of respondents who are forecasting nuclear use, 60 percent envision Russia employing such weapons, with 42 percent pointing to North Korea and, notably, 34 percent citing the United States.

The reduced expectation of nuclear use may stem from assessments that particular actors seem less likely to take such a drastic step relative to assessments a year earlier. For example, 15 percent of all respondents expect Russia to use nuclear weapons in the next ten years—down from 26 percent in the previous year’s survey. For North Korea those numbers dropped from 24 to 10 percent, for terrorist groups 19 to 8 percent, and for Israel 12 to 5 percent. The only actor registering a notable increase is the United States, with 8 percent of all respondents foreseeing US nuclear use. That’s up from 5 percent in the previous year’s survey.

Expert insight by Amy Woolf: Growing concern about China’s nuclear arsenal—and US deterrence

The results present a somewhat contradictory picture. More than 80 percent of the participants expect more nations to acquire nuclear weapons in the coming decade, but nearly the same percentage (78 percent) expect that nuclear weapons will not be used in conflict. It’s possible these responses reflect reduced concern about Russia potentially using nuclear weapons in Ukraine. It does, however, raise questions about why respondents believe more nations would seek nuclear weapons in the absence of circumstances where they might need to employ them in a conflict.

The answer to this conundrum may be evident in respondents’ concerns about the potential for proliferation in Asia, where 47 percent of those anticipating nuclear proliferation expect South Korea to acquire nuclear weapons and 37 percent expect Japan to do so. These numbers likely reflect continuing concerns about a threat environment that includes China’s regional ambitions and the growing nuclear arsenals of both China and North Korea.

They may also reflect concerns about the reliability of US extended nuclear deterrence and credibility of the US commitment to come to the defense of allies. In Europe, this concern has led to occasional discussions among US allies about developing an independent nuclear deterrent. Respondents may have considered whether the nuclear threat environment and proliferation risks might evolve in response to ongoing changes in US national security goals and frequent threats of US military intervention. If the United States is seen as a threat to stability, it could become a source of nuclear risk rather than the foundation of a stable nuclear order.

— Amy F. Woolf, former specialist in nuclear weapons policy at the Congressional Research Service of the US Library of Congress and nonresident senior fellow with Forward Defense in the Scowcroft Center for Strategy and Security

6. Respondents are forecasting a more autonomous Europe, but one that still lags behind China and the US across most measures of power

Our latest survey offers mixed results for Europe and the European Union (EU). Respondents are bearish on the EU’s prospects for joining the top tier of global powers. No respondents forecast the EU becoming the world’s foremost military power in 2036, which isn’t surprising given its history as an economic union. Yet respondents are also pessimistic about the EU’s prospects for becoming the world’s foremost economic power (only 3 percent expected this) or tech power (5 percent) in ten years’ time. Just 8 percent of respondents predict that the euro will make the biggest inroads into the US dollar’s dominance over the next decade. Cryptocurrency, the renminbi, and gold all rated higher as challengers to the dollar. A significant minority of respondents (22 percent) foresee the EU breaking apart by 2036.

However, there is another more bullish side to the ledger. A substantial portion of respondents envision the EU as an important player in the diplomatic arena (17 percent say the EU will be the world’s foremost diplomatic actor in 2036). Thirty percent believe the EU will be the leading power in cultural or soft power, just below the percentage that say the same of the United States and nearly twice the percentage that foresee China occupying this position. For three years now, Global Foresight survey results have also shown steadily rising expectations that Europe—not necessarily defined in this instance as the EU—will have achieved “strategic autonomy” by 2036 through taking more responsibility for its own security, with 57 percent of respondents answering to that effect in our latest survey. That’s up from 48 percent in the previous year’s survey and just 31 percent the year before that.

Expert insight by Jörn Fleck: Europe is facing “simultaneous abandonment and entrapment”

The survey results about Europe’s quest for strategic autonomy seem to track the prevailing sentiment on the continent about its future in a brave new world of power politics.

A year into the Trump administration’s second term, the terms of Europe’s debate about greater sovereignty have changed under the impression of simultaneous abandonment and entrapment by the United States. Europeans still remember last year’s disconcerting Oval Office meeting with the Ukrainian president and the freeze of US military and intelligence support for Kyiv—even if it was ultimately temporary. That episode accelerated a fundamental shift for Europeans as they faced up to some deeply uncomfortable and costly realities about the continent’s posture in a new geopolitical era without predictable US support. French politicians and strategists could hardly hold back their collective “told you so.” But even among former skeptics of “strategic autonomy” in Central and Northern Europe, there has been a growing realization that Europe has to rapidly address capability gaps and grow its independent military, economic, and technological means to confront an aggressive Russia, an exploitative China, and a disruptive America.

In fact, we can see this already happening. In her September 2025 State of the European Union speech, European Commission President Ursula von der Leyen called for Europe’s “independence moment” after launching a slew of defense-related initiatives including the “Rearm Europe 2030” plan and “Security Action for Europe” to mobilize fresh cash for European defense spending.

The policy follow-up to this realization has been more mixed. Europe has stepped up financially and politically to keep Ukraine in the fight against Russia. It has proposed a package for €800 billion in new defense spending. European NATO countries have committed to new spending and capability targets. Some, like Poland, are already meeting them. Others are obliterating long-held orthodoxies—for example, Germany with its half-trillion-euro surge in defense investment. Beyond defense, the EU has sought to address its economic competitiveness, diversify its trade relations, counter China’s unfair economic practices, boost investment in technology and research and development through a restructured multi-annual budget, and more. But as so often happens in Europe, fragmentation, national interests, and pet projects, plus weak leadership from Brussels to Berlin to Paris, are holding back a more ambitious and concerted drive toward greater autonomy in any one area.

The survey responses share the contradictions and ambiguities of Europe’s political realities around strategic autonomy. Over a fifth of respondents believe the EU could break up over the next decade—not exactly a boost for building up European capacity. Even more strikingly, only miniscule minorities see the EU becoming the leading global power when it comes to diplomatic influence, the economy, or technology. Without Europe-wide coordination and leadership in at least some of these categories, European sovereignty will remain little more than an aspiration.

— Jörn Fleck, senior director of the Atlantic Council’s Europe Center

7. Respondents see water wars coming, as global warming surpasses key thresholds and climate cooperation cools

Our polling results surfaced some warning signs for climate change as a priority item on the global policy agenda. For the first time in three years of asking this question in Global Foresight surveys, climate change is not the leading perceived threat to global prosperity over the next decade. In our latest survey, just 17 percent of respondents cite climate change as the single biggest threat, relative to the 30 percent who mention war between major powers. That’s roughly half of the percentage of respondents who identified climate change as the biggest threat in our past two surveys. Moreover, only 19 percent of respondents now believe that climate change will generate the greatest increase in international cooperation over the coming decade, just behind technology governance (20 percent) and well down from the 49 percent of respondents who listed climate change just two years ago.

These findings on international climate action contrast with respondents’ forecasts about the changing climate itself. More than 80 percent of respondents expect the world to become hotter, including at least one year over the next decade where the global average temperature is 2 degrees Celsius (or more) warmer than preindustrial levels. The 2-degree increase is a threshold beyond which scientists believe the climate will become less stable; the central goal of the Paris climate accord, negotiated a decade ago, was to limit warming to 1.5 degrees Celsius—a temperature level that was passed in 2024.

This pessimism about limiting global warming may be connected to another finding: Only 40 percent of respondents think that global greenhouse-gas emissions will have peaked and begun to decline by 2036 (up only slightly from our prior year’s survey). Perhaps because of the expectation of rising temperatures, 57 percent of respondents think that public support for action to counter climate change will have increased by 2036. But as our findings indicate, that surge in public support may not correspond with more cooperation at the global level on these issues.

Likely anticipating this hotter, drier, and more unstable climate, two-thirds of respondents (64 percent) expect a war to be fought, at least in part, over access to fresh water in the next decade.

Expert insight by Kathleen Euler: When climate impacts feel “remote,” effective action gets harder

Climate change remains a threat—whether or not it is perceived as an urgent one. This is clear from the science and the 80 percent of respondents who anticipate a hotter world, which will mean more deaths, illnesses, and dramatic, untenable changes to our infrastructure, economies, and way of life.

Yet climate change is increasingly absent from the global news cycle. Headlines are crowded with concerns about AI, immigration debates, and extreme weather events that are ironically often climate-driven but rarely identified as such. Climate change, as a result, feels to some like an abstract, remote threat rather than an immediate one. We can only process so many crises each day, but climate change is a constant undercurrent. Unfortunately, deprioritizing climate change only intensifies its consequences, leading to more costly disasters and losses in the not-far-off future.

— Kathleen Euler, deputy director of the Atlantic Council’s Climate Resilience Center

8. Many experts anticipate international institutions decaying as democracy weakens

There’s been a lot of speculation recently about whether the decades-old rules-based international order is collapsing. Our survey respondents suggest we should prepare for such a reality. They express little confidence that today’s multilateral architecture will be influential a decade hence.

The international system put in place at the Congress of Vienna in 1815 endured, with modifications, for nearly a century. The international system associated with the Treaty of Versailles and related treaties ending World War I lasted a much shorter time. The international infrastructure that arose after World War II, including the United Nations (UN), regional security arrangements and alliances such as NATO, and the Bretton Woods economic institutions not only weathered the Cold War but came through it with enhanced authority.

Eighty years on, respondents seem to assess these bodies as increasingly creaky. An overwhelming majority of respondents (71 percent) believe that the UN will become less influential in the coming decade, compared with just 6 percent who say the opposite. For the Security Council, the UN’s most powerful body, 58 percent expect a decline in influence by 2036 and only 9 percent a rise.

On the economic front, survey participants also are much more likely to expect the post-World War II global financial institutions to grow less influential by 2036 than they are to anticipate them becoming more influential. A majority of respondents (65 percent) foresee the World Trade Organization losing influence relative to only 11 percent who imagine it gaining influence. For the World Bank, the equivalent figures are 50 percent and 14 percent; for the International Monetary Fund, 41 percent and 14 percent. Perhaps even more remarkable, only 5 percent of respondents cite declining trade as a result of protectionism as the biggest threat to global prosperity over the next ten years—a decline from the 14 percent who said the same in the previous year’s survey. The fact that this decline occurred after Trump dramatically increased tariffs on countries around the world indicates, apparently, minimal concern about the decline of free trade as a challenge to global prosperity.

This year’s survey also shows that nearly half of respondents (44 percent) believe that over the coming decade the current democratic recession will deepen into a democratic depression. In contrast, only 24 percent foresee a democratic renaissance during that timeframe.

Predictions about the decline of the international order intersect with those of global democratic decline. Respondents expecting a democratic depression are more likely to foresee core international bodies losing influence over the coming decade than those who forecast a democratic renaissance: from the UN (77 percent vs. 60 percent) and UN Security Council (64 percent vs. 53 percent) to the World Trade Organization (71 percent vs. 48 percent), International Monetary Fund (50 percent vs. 27 percent), and World Bank (53 percent vs. 44 percent).

Respondents who envision continued democratic decline have less faith that over the coming decade major-power war will be avoided, global cooperation will expand, and minority rights around the world will be protected. The vast majority of those anticipating a worsening democratic recession (83 percent) believe that the world overall will be worse off in ten years’ time, whereas 66 percent of those expecting a democratic renaissance think the world will be better off a decade from now.

Expert insight by Matthew Kroenig: US leadership and the strength of democracy worldwide are intertwined

Many respondents predict democratic decline, decaying international institutions, a risk of major-power war, and generally fear the world will be worse off in ten years’ time. These findings make sense given emerging challenges to US global leadership coming from both without and within.

The US-led, liberal international system has produced unprecedented levels of global peace, prosperity, and freedom over the past eighty years. In this timeframe, we have witnessed zero great power wars, a quintupling of per capita gross domestic product in the United States and dramatic growth in global GDP, and a tenfold increase in the number of people living in liberal democracies. Contrary to a common perception that US grand strategy went off the rails in the post-Cold War world, the data show that the world was safest, richest, and freest during America’s unipolar moment in the 1990s and 2000s.

Unfortunately, these indicators have leveled off and begun to decline in the 2010s and 2020s. Global democracy, for example, has declined in each of the past nineteen years. Our respondents project a continued diminution of US leadership and a corresponding acceleration of these negative trends in the decade to come.

— Matthew Kroenig, former US official in the Department of Defense and the intelligence community during the Bush, Obama, and Trump administrations, and vice president and senior director of the Atlantic Council’s Scowcroft Center for Strategy and Security

9. The dollar is likely to remain the world’s currency of choice, but keep an eye on crypto

Economists are engaged in an intense debate right now about whether the US dollar can hold on to its status as the world’s leading reserve currency—a position it’s held since World War II. (The Atlantic Council’s GeoEconomics Center tracks the dominance of the dollar on an ongoing basis.) Although the dollar is likely to remain the world’s currency of choice in 2036, our survey results indicate that it won’t go unchallenged. About 80 percent of respondents expect other currencies, commodities, or assets to make inroads into the dollar’s dominance over the next ten years.

The most-cited asset expected to make the biggest inroads into the dollar’s dominance is not a national currency but rather cryptocurrency (34 percent of respondents), with a further 11 percent saying that a commodity—gold—will pose the greatest challenge (we conducted the survey before Bitcoin suffered a precipitous decline in value, dimming optimism about crypto’s future prospects—for the time being at least). Contrast those findings with those for other national currencies besides the dollar: Twenty-one percent of respondents predict that China’s renminbi will make the biggest gains relative to the dollar, while just 8 percent say the same for the euro and 5 percent for the Japanese yen, with no votes for the British pound.

Respondents who foresee China as the world’s leading economic power a decade from now are more likely to imagine the dollar’s dominance eroding. But they are split on its most formidable challengers, with higher figures for China’s currency but also the Japanese yen and gold.

Expert insight by Alisha Chhangani: Dollar dominance under increasing threat

The dollar has had a turbulent year, down more than 9 percent against major currencies in 2025. Against that backdrop, it is interesting that survey respondents see cryptocurrency as the greatest threat to dollar dominance.

The concern is understandable. Crypto’s volatility and recurring crises have coincided with the growth of a “grey economy” where crypto-assets increasingly facilitate sanctions evasion, tax avoidance, and illicit trade beyond US oversight. This undermines the effectiveness of US financial sanctions, a cornerstone of dollar dominance. At the same time, the rise of dollar-backed stablecoins, alongside the United States’ first stablecoin regulation (the 2025 GENIUS Act), suggests Washington increasingly sees these crypto-assets as a way to preserve dollar dominance and bolster demand for dollar assets such as US Treasuries, even as the long-term risks and global spillovers are not yet fully understood.

When it comes to China, the survey results align with reality. While Beijing has been discreet about diversifying away from the dollar, it continues to do so methodically. Its wholesale central bank digital currency (CBDC) project has tested transactions in the digital renminbi, and China’s Cross-Border Interbank Payment System (CIPS) has expanded significantly over the past five years, reducing reliance on dollar-based payment infrastructure.

Still, the dollar’s status remains stable. Data from the Bank for International Settlements shows the dollar on one side of 89 percent of all foreign-exchange trades. Its liquidity keeps it embedded in the plumbing of global markets. Ultimately, the foundations of dollar dominance still lie in trust in US political and legal institutions, including the preservation of central bank independence, which has come under increasing threat.

— Alisha Chhangani, associate director at the Atlantic Council’s GeoEconomics Center

Dollar Dominance Monitor

This monitor analyzes the strength of the dollar relative to other major currencies. The project presents interactive indicators to track BRICS and China’s progress in developing an alternative financial infrastructure.

10. The Global South sees the future differently

Roughly one-fifth (18 percent) of this year’s survey responses came from citizens of countries located in what is often called the Global South. Although it’s an inexact and contested term, the Global South is a useful shorthand to describe countries that are outside the wealthiest group of industrialized nations. While respondents in this category are heavily weighted toward Latin America and the Caribbean (54 percent of the Global South group), forecasts from geostrategists and foresight practitioners across the Global South countries differ from those in the Global North in significant ways.

For example, respondents from Global South countries are much more likely to rate Russia’s chances in its war in Ukraine higher than other survey participants: Forty-six percent say that the outcome will be on terms favorable to Russia, versus 31 percent who say the same among the rest of the pool. Those from the Global South are also much more likely to see China as a leader in key fields, with 76 percent expecting it to be the top economic power by 2036 compared with 54 percent who feel that way among the rest of the respondents. Global South experts also are more skeptical about the longevity of US power, with only 60 percent of this group expecting the US to retain military dominance over the next ten years relative to 76 percent of other respondents. Remarkably, 22 percent of respondents in the Global South expect the United States to break up internally in the next ten years, compared with 10 percent of other respondents. Those from the Global South are more likely than respondents from elsewhere to expect a global multifront war in the coming decade (48 percent relative to 40 percent) as well, with a larger proportion expecting such a conflict to be sparked by events in the Middle East (35 percent compared with 8 percent).

Expert insight by James Mazzarella: Concerns about US stability may reflect Global South history

The percentage of respondents from the Global South who expect the United States to break up internally in the next ten years is more than twice as high as that of respondents from outside the Global South. Similarly, 76 percent of Global South respondents expect China to overtake the United States as the world’s dominant economy, compared with 54 percent for the rest of the respondents.

These expectations may be due to a combination of factors. One is the US withdrawal to a position of greater economic isolation. Another is the perception that the United States is pulling back from humanitarian engagement in the Global South, and that it is undergoing a period of political discord—an assessment that may reflect the Global South’s own experiences with weak institutions.

Perceptions aside, political discord as a factor is measurable, especially when examined alongside data from the Freedom and Prosperity Indexes. Among “high freedom” countries since 1995, no country has experienced a greater decline in freedom than the United States. The decline is driven by institutional erosion and executive aggrandizement. Because some developing countries in the Global South have more recent history with political discord and breakdown than others, it is very possible that Global South respondents view political developments in the United States as existential threats to America’s unity, while others living in countries with stronger institutions have different understandings of and greater faith in the resilience of American democracy.

— James Mazzarella, former senior director for global economics and development at the National Security Council, now senior director of the Atlantic Council’s Freedom and Prosperity Center.

Scowcroft Center for Strategy and Security Transatlantic Security Initiative

About the authors

Mary Kate Aylward, Publications Editor, Atlantic Council

Aylward was an editor at War on the Rocks and Army AL&T before joining the Council. She was previously a junior fellow at the Carnegie Endowment for International Peace.

Peter Engelke, Senior Fellow, GeoStrategy Initiative

Engelke is on the adjunct faculty at Georgetown University’s School of Continuing Studies and is a frequent lecturer to the US Department of State’s Foreign Service Institute. He was previously a member of the World Economic Forum’s Global Future Council on Complex Risks, an executive-in-residence at the Geneva Centre for Security Policy, a Bosch fellow with the Robert Bosch Foundation, and a visiting fellow at the Stimson Center.

Uri Friedman, Senior Editorial Director, Atlantic Council

Friedman is also a contributing writer at The Atlantic, where he writes a regular column on international affairs. He was previously a senior staff writer at The Atlantic covering national security and global affairs, the editor of The Atlantic’s Global section, and the deputy managing editor of Foreign Policy magazine.

Paul Kielstra, Freelance Analyst

Kielstra is a freelance author who has published extensively in fields including business analysis, healthcare, energy policy, fraud control, international trade, and international relations. His work regularly includes the drafting and analysis of large surveys, along with desk research, expert interviews, and scenario building. His clients have included the Atlantic Council, the Economist Group, the Financial Times Group, the World Health Organization, and Kroll. Kielstra holds a doctorate in modern history from the University of Oxford, a graduate diploma in economics from the London School of Economics, and a bachelor of arts from the University of Toronto. He is also a published historian.

Atlantic Council Strategy Paper Series Feb 10, 2026

Welcome to 2036: What the world could look like in ten years, according to nearly 450 experts

We polled geostrategists and foresight practitioners on our most burning questions about the biggest drivers of change over the next decade. Check out their forecasts on everything from the future of NATO to the rise of cryptocurrency.

Atlantic Council Strategy Paper Series Feb 9, 2026

Six ‘snow leopards’ to watch for in the decade ahead

By Uliana Certan, Nikita Shah, Ginger Matchett, Sarah Wallace, Dominique Ramsawak, Tatevik Khachatryan

Our scholars scan the horizon for the underappreciated phenomena that could have outsize impact on the world, driving global change and shaping the future.

Artificial Intelligence Climate Change & Climate Action

Atlantic Council Strategy Paper Series Feb 10, 2026

AI and the future

What does the next year, decade, and beyond hold for AI? We interviewed the Atlantic Council’s tech experts to learn more about AI’s future, and whether it can help us better understand our own.

Artificial Intelligence Technology & Innovation

The post Welcome to 2036: What the world could look like in ten years, according to nearly 450 experts appeared first on Atlantic Council.

The Global Foresight 2036 survey: Full results

Andrea Ratiu — Tue, 10 Feb 2026 10:00:00 +0000

The Global Foresight 2036 survey

Full results

This survey was conducted from November 14, 2025, through December 5, 2025.

Demographic data

Survey questions

Atlantic Council Strategy Paper Series Feb 10, 2026

Welcome to 2036: What the world could look like in ten years, according to nearly 450 experts

Atlantic Council Strategy Paper Series Feb 9, 2026

Six ‘snow leopards’ to watch for in the decade ahead

By Uliana Certan, Nikita Shah, Ginger Matchett, Sarah Wallace, Dominique Ramsawak, Tatevik Khachatryan

Our scholars scan the horizon for the underappreciated phenomena that could have outsize impact on the world, driving global change and shaping the future.

Artificial Intelligence Climate Change & Climate Action

Atlantic Council Strategy Paper Series Feb 10, 2026

AI and the future

What does the next year, decade, and beyond hold for AI? We interviewed the Atlantic Council’s tech experts to learn more about AI’s future, and whether it can help us better understand our own.

Artificial Intelligence Technology & Innovation

The post The Global Foresight 2036 survey: Full results appeared first on Atlantic Council.

Six ‘snow leopards’ to watch for in the decade ahead

Mon, 09 Feb 2026 21:00:00 +0000

Six ‘snow leopards’ to watch for in the decade ahead

Panthera uncia—the snow leopard that inhabits high mountain ranges in Central and South Asia—is one of nature’s best-camouflaged animals. The majestic cat’s beautiful white coat, with gray and black spots, blends seamlessly into the rocky and snowy landscape in which it lives. Known as “the ghost of the mountains,” it seems to appear out of thin air. The reality, of course, is the snow leopard has been there all along, an unseen sight.

In world affairs, there are numerous under-the-radar phenomena that are difficult to spot but crucial to understand given their capacity for disruption and transformation. Like the Himalayan cat, these metaphorical “snow leopards” may appear invisible but in fact are all around us: early-stage technologies that, if developed and scaled, might yield revolutionary results; social movements that, while just beginning to gather strength, could have enormous political consequences in the years to come; demographic trends that only a few experts study but that could overhaul societies in the long run; ecological changes that are not yet fully understood by scientists but could portend disaster ahead should they worsen. These phenomena present underrated risks or opportunities. Each of them could reshape the future. Some already are. We just need to know where to look.

Each year, our Global Foresight series identifies a new set of snow leopards. In this year’s edition, as in previous editions, this challenging task fell to the Atlantic Council’s younger staff, who are well-positioned to identify trends, events, technologies, and forces that their older colleagues might overlook. They scrutinized the world around them and came up with a list of underappreciated but potentially world-changing phenomena.

In the years to come, keep an eye on these six snow leopards.

The tech companies altering the course of conflicts

When businesses are first movers on the battlefield

When Russia invaded Ukraine in February 2022, among the first responders were a conglomeration of cyber and tech companies of all sizes. These companies did critical work to ensure that Ukraine’s cyber defenses held up against an unprecedented onslaught of Russian cyberattacks. Combined with assistance from allied governments, such efforts helped keep the lights on in Ukraine. But the companies’ interventions amounted to entering a conflict of their own volition, without a state’s authorization or direction—which triggered profound geopolitical risks.

The private sector participating in conflict is nothing new; governments have contracted with private companies in war and peacetime for centuries. But three elements are new: First, cybersecurity companies have begun entering interstate conflicts without the authorization of or at least direction from states. Second, these companies effectively possess state-grade capabilities—and, with that, the ability to make world-changing decisions—but without the policy, legal, or risk frameworks states erect around such capabilities to constrain their use. Third, states, citizens, and businesses are increasingly dependent on these companies’ infrastructure and services in peacetime and for cyber defense in conflict. Microsoft recognized this in a June 2022 reflection on the company’s assistance to Ukraine, declaring that the technology sector has an “inevitable” role to play in the “cyber defense of nations.”

The risks of this kind of private-sector involvement in conflict are already emerging. Civil society has raised questions about whether cyber and tech companies constitute combatants under international humanitarian law, particularly where their capabilities intersect with state capabilities—as when, for example, private firms identify exploitable vulnerabilities (or “zero days”) in other companies’ software code. As states and others increasingly contest privately owned digital infrastructure, ideologically motivated cyberattacks (“hacktivism”) have also risen—creating heightened risks of retaliation. The whims of tech executives also have geopolitical consequence. In September 2022, for example, Elon Musk reportedly cut internet access in Ukraine provided via his Starlink satellite technology, disrupting a key Ukrainian counteroffensive. In response, a British member of parliament decried the “dangers of concentrated power in unregulated domains.”

Where these risks could amount to world-changing impact is during a potential Chinese invasion of Taiwan, and both Taipei and Beijing are clearly paying attention. Musk’s reported decision to cut Ukraine’s internet access was one reason Taiwan set up its own satellite internet infrastructure. There is some evidence that the Chinese state also is learning lessons from Russia’s war in Ukraine about the role of US cyber and tech companies as a source of advantage in conflict. This development might not be so concerning were it not for the significant business dependencies that Apple and other US tech giants have in China, which could muddy decision-making during any period of conflict. The clarity and unity of purpose seen in cyber companies’ efforts to help Ukraine cannot be guaranteed in the future.

This is an issue that the international security community must address through dialogue and policy development with the private sector. Goals should include firmer guardrails and improved accountability mechanisms—or outright deference to states as primary decision-makers. Such dialogue will prepare states and industry to jointly navigate future conflicts and collective preparedness without generating unintended consequences when the private sector jumps ahead of states.

Nikita Shah is a former senior resident fellow in the Atlantic Council’s Cyber Statecraft Initiative with ten years’ experience as a national security professional in the UK government specializing in cyber security.

The migrants moving in loops, not lines

Leave, learn, return—and start a business?

Many countries have experienced migration as a driver of “brain drain”—a one-way outflow of human capital. But a more dynamic pattern is reshaping global talent flows in some parts of the world. A growing number of migrants who work or study overseas are returning to their home countries with new skills—a pattern known as “brain circulation”—or staying closely connected to their home countries and turning their global experiences into new opportunities there.

Brain drain refers to the loss that occurs when a country’s citizens, especially highly skilled and educated workers, pursue opportunities abroad. Host countries often gain productivity, tax revenue, and innovation—except when migrants are pushed into low-skilled work (such as when immigrants holding master’s degrees work at jobs requiring a high-school diploma), a phenomenon known as “brain waste.”

Another concept, “brain gain,” captures the positive effects of emigration for sending countries: The prospect of opportunities abroad motivates more people to pursue higher education, most of whom remain at home. Those who do leave often continue to contribute through remittances and stronger trade ties.

But these concepts overlook the circulation of talent that is quietly changing the geography of opportunity worldwide. “Brain circulation” first became visible in countries such as India and China, where engineers and entrepreneurs who had lived and worked in the United States returned and used their US career experience to start businesses at home.

What began as a modest trend in the early 2000s is accelerating as travel and digital connectivity become more accessible. The circulation of skilled, educated workers is now remaking national and regional economies. Studies show that returning immigrants tend to be more entrepreneurial and resilient than their peers and are significantly more likely to start businesses. Migrants return with expertise and global exposure they could not have acquired domestically.

Central and Eastern Europe illustrate how transformative this loop can be. After experiencing decades of outward migration, Central and Eastern European countries are now registering rising return flows. Romania, for example, has had three consecutive years of positive net migration driven by returning citizens. They launch startups, invest in local ecosystems, and open doors to new practices and global markets, sometimes with the support of government financing programs. Such ventures are helping power a regional boom. In 2024, startups in the region raised nearly €3.7 billion, a 56 percent increase from the previous year. Nearly half of that total—more than a billion euros—came from companies whose founders studied or worked abroad, or worked at big multinational companies.

At a time when many countries are grappling with aging populations, talent shortages, and relentless competition, this loop of leaving, learning, and returning is becoming a critical source of national advantage. Brain circulation offers a replicable model for countries that need to catalyze growth and sustain innovation. Countries that recognize this opportunity build policies and institutions that drive people, skills, and capital to move in loops, not lines, so that yesterday’s emigrants become tomorrow’s nation-builders. The future belongs to dynamic societies that treat mobility as a renewable resource, turning migration into a story of shared prosperity and, ultimately, into the backbone of a global innovation system that can respond to challenges and opportunities no country can tackle alone.

Uliana Certan is an assistant director for European engagement at the Atlantic Council’s Global Energy Center and Atlantic Council Romania.

The underwater forests helping heal the climate

Big seaweed could be big business

In the waters off one-third of the world’s coastlines grows a powerhouse plant: kelp. Towering kelp forests capture twenty times more carbon dioxide (CO₂) than do land forests of equivalent size. They promise lower-cost and lower-carbon ways to feed the world’s population, and they protect coastlines from the effects of more powerful storms. As scientists and policymakers increasingly turn to nature-based solutions to take on climate change, these colorful stalks of algae may be the next big thing.

Kelp forests can remove one ton of carbon emissions from the atmosphere for somewhere between $20 and $85. To do the same with direct-air-capture machines costs $1,000 per ton. Not only is kelp an incredible carbon sink, it drives other forms of environmental conservation and protection. The stalks reduce the size of tidal waves by up to 60 percent, prevent soil erosion, and absorb agricultural runoff. Studies show that kelp supports the development of the biogenic aerosols that help clouds form, reducing the temperature of water, soil, and air. Kelp also is an ingredient in biodegradable biopolymers, which can replace petroleum-based plastics.

In the food and agriculture sectors, kelp is both a nutritional food source and a protective habitat for hundreds of plant and animal species, including commercial fish such as cod, crab, octopus, and lobster.

And it doesn’t stop at seafood: Sprinkling seaweed on cattle feed can reduce cows’ methane emissions by between 40 and 80 percent. Kelp can be processed into natural, liquid biostimulants for agriculture, which can reduce the need for artificial fertilizers that release greenhouse gases. These kelp-based treatments also could reduce the large amounts of water required by many high-value cash crops such as almonds, avocados, strawberries, and grapes.

Beyond the environment and agri-food industries, kelp generates health and cosmetic products, attractive tourist destinations for snorkeling, and critical supplies for indigenous communities.

Kelp, however, faces an uncertain future due to predators, pollution, and marine heatwaves induced by climate change. Efforts to regrow damaged kelp forests off the coast of California offer a prime example for other coastal governments. Scientists and conservationists are planting specific kelp varieties that grow three times faster and absorb double the amount of CO₂ compared with other kelp. When this kelp matures, by some calculations it could absorb as much CO₂ as the global aviation sector emits. Kelp could help the state meet its target of reaching net-zero emissions by 2045—five years sooner than the target set in the 2015 Paris Agreement.

To help kelp survive in warmer oceans, scientists use remotely operated vehicles and motorized growing lattices, raising the kelp toward the water’s surface during the day to absorb sunlight and lowering it into deeper, more nutrient-rich water at night.

The effects of climate change on the world’s coral reefs have grabbed headlines. The United Nations Decade on Environmental Restoration has increased attention on coral-reef, mangrove, and seagrass restoration efforts. But so far, there has been limited funding focused specifically on kelp growth and management.

Global cooperation on kelp will be crucial for future climate efforts, as new research proves that oceanic carbon sinks are 15 percent larger than land sinks. But even in the absence of such coordination, expect continued momentum for work on kelp. Kelp and seaweed farming is the fastest-growing global aquaculture industry, increasing 6.2 percent per year over the last twenty years. Countries in Asia, particularly China and Indonesia, produce 98 percent of farmed seaweed by volume globally, but there is enormous potential for growth and applications in Europe, Africa, and the Americas. And with a $500 billion market, kelp has plenty of potential to combat climate change, mitigate the biodiversity crisis around the world, and develop a more profitable and sustainable “blue economy.”

Ginger Matchett is an assistant director for the GeoStrategy Initiative in the Scowcroft Center for Strategy and Security.

The crumbling human rights order

Are we going back to the bad old days?

In recent years, an alarming number of countries have withdrawn from or defied human rights treaties and humanitarian conventions. Global norms about how human beings should be treated were a key part of the international system that arose after World War II, including the 1948 adoption of the Universal Declaration of Human Rights. Specialists have said for years that this postwar system is under stress. But the consequences for individuals are underappreciated. If the postwar order was a bulwark against the horrors of the twentieth century, the idea that ordinary citizens should be protected from unrestrained state power was a load-bearing pillar. The weakening of that pillar is ominous and risks a future with fewer human rights than exist today.

The retreat from human rights is happening at two levels: through actors exiting treaties, and through changes in the societal expectations that those treaties both reflect and reinforce.

Consider the developments of just this past year. In 2025, the United States, Israel, and Nicaragua withdrew from the United Nations Human Rights Council, reducing the reach and legitimacy of one of the few multilateral bodies tasked with universal monitoring of rights.

That same year, Lithuania, Estonia, Finland, Latvia, and Poland withdrew from the 1997 Anti-Personnel Mine Ban Treaty, while Lithuania separately pulled out of the 2008 Convention on Cluster Munitions. Proposals for other NATO members to take similar steps further highlight the erosion of norms against weapons that can indiscriminately harm civilians long after conflicts end. These shifts are coming as countries facing new security pressures increasingly prioritize military flexibility over humanitarian restrictions. The withdrawing states—all of which border Russia or Belarus—have cited the dangers they are confronting in the wake of the Kremlin’s full-scale invasion of Ukraine, which has been rife with human rights abuses. In light of the withdrawing countries’ statements, it seems unlikely that any would have withdrawn had Russia not invaded Ukraine—which underscores the snowball effect of diminishing postwar humanitarian norms, and why each violation matters.

Norms may be intangible, but after 1945 countries codified many of them into binding commitments in an effort to build a better world with such norms at its core. Once these norms are weakened, as appears to be occurring now, they may never recover. This diminishes international law, emboldens perpetrators of human rights violations and war crimes, fuels cycles of impunity, and leaves civilians increasingly vulnerable. The cumulative effect is a weakened global system of accountability at precisely the moment when conflicts and authoritarian forces are on the rise.

Sarah Wallace is a former program assistant for the GeoStrategy Initiative and Adrienne Arsht National Security Resilience Initiative in the Scowcroft Center for Strategy and Security.

The cultural erasure driven by AI

Out of the dataset, out of mind

We know who we are because of our memories, our history, and our stories. Today, artificial intelligence (AI) is becoming an important part of how people store information, as generative AI tools are woven into search engines, social media platforms, and everyday interfaces like virtual assistants. The data these generative AI tools draw on to answer our questions or summarize our emails shapes how people understand the world.

The current generation of AI, however, is built on Western-centric datasets that are disproportionately produced, curated, and governed in North America and Western Europe, largely in English. Knowledge that is oral, community-held, locally archived, or produced outside these systems is far less likely to be captured. Optimized for volume rather than nuance, these systems put cultures that fall outside dominant data flows at risk.

The phenomenon of cultural erasure can take two forms: omission, where cultures fail to appear entirely, and simplification, where complex traditions are reduced to stereotypes. The cases of small and developing states illustrate these risks most vividly. Much of the intangible heritage of the world’s island states, for instance, remains under-digitized, preserved instead through oral storytelling, music, ritual, and collective memory. When generative AI encounters such cultures, it often only reflects what can be easily retrieved from training data. For example, AI-generated media depicting “Caribbean culture” tends to reproduce a narrow canon of beaches, rum, and steelpan. Missing are the complexities: linguistic diversity and multi-ethnic histories that define the region’s melting-pot identity. Pre-AI search engines didn’t return a complete, nuanced picture of these small cultures either. But generative AI can process so much data so quickly that the speed and scale of the threat have changed. The kind of responses AI tools offer can also create the impression of a more definitive answer. Where search engines returned a page of links or a variety of pictures for the user to browse and evaluate, generative AI products offer a more finished-looking result: complete sentences and paragraphs, or a single composite image. For the people living in these smaller states, AI-driven “data colonialism” shapes how the world sees them and, potentially, how they see themselves.

If AI advances to a point where it becomes the default lens through which people encounter culture, then nations and groups underrepresented in AI training data risk losing authorship of their own stories. The version that survives may be the one defined by external markets. Indigenous groups, minority-language speakers, and marginalized communities around the world all face this threat.

But small island states can use their position at the United Nations and elsewhere to elevate concerns around cultural data representation and press for international standards, compelling actors who can shape the global AI ecosystem to take action. These nations can play a catalytic role in making cultural representation a priority for technology governance, even if the power to execute change lies elsewhere.

Preventing cultural erasure means embedding diverse heritage into datasets, creating frameworks and metrics that assess cultural harm through an interdisciplinary lens, and ensuring AI governance treats cultural erasure as seriously as information manipulation or digital privacy. The question is not just whether AI models are accurate, but also whether they reinforce or erode the cultural foundations communities rely on. As AI increasingly shapes what the world finds, learns, and imagines, we must confront a pressing question: If a culture isn’t in the dataset, can it survive the AI era?

Dominique Ramsawak is the associate director of communications at the Atlantic Council’s Digital Forensic Research Lab.

The neurotechnology that could read your mind

Whether you want it to or not

The next tech disruption could be the human mind paired with cutting-edge neurotechnology. New kinds of neurotech create pathways for communications between the human brain and external devices, some implanted in the brain. Recent developments in neurotech that don’t require an implant—and could eventually even be portable—signal a future in which there could be ways to read someone’s thoughts, with or without their permission.

One such development is a semantic decoder that translates the brain’s electromagnetic waves into a continuous stream of text capturing what someone is thinking about, with varying degrees of precision. Currently, the decoder works with a trained model—a version of the large language models powering chatbots—using brain activity measured on a functional magnetic resonance imaging (fMRI) scanner. Earlier versions required a user to lie down in an MRI machine for the better part of a day to train the system. In 2025, researchers tested a version of the decoder that only requires an hour of training. Developments like these, coupled with investments expected to surpass four billion dollars in 2025, indicate the potential for additional advances in the field. And if neurotech follows the trajectory that computers did—the first computers took up an entire room; now billions of people carry one in their pocket—it’s possible there will be portable systems in the future.

While the idea of something invading your thoughts might be alarming, there are both positive and negative potential applications of this technology. Any patient with a medical condition that makes it difficult or impossible for them to speak—Parkinson’s disease, aphasia, the aftereffects of a stroke—could benefit. So could patients suffering from post-traumatic stress disorder who find it difficult to speak about their trauma.

Ethical considerations must also be taken into account. While it’s hard to predict exactly how this technology will evolve, laws protecting neural data privacy will be needed. In November 2025, UNESCO adopted the first global ethical framework for neurotechnology, seeking to ensure that “neurotechnological innovation benefits those in need without compromising mental privacy.”

In 1992, the physicist and theologian Ian Barbour observed that all technological advances are multifaceted in nature, acting as a liberator, a threat, and an instrument of power. That framework will hold true for the neurotech transformations we’ll experience in the years ahead.

Tatevik Khachatryan is an assistant director for events at the Atlantic Council.

Atlantic Council Strategy Paper Series Feb 10, 2026

Welcome to 2036: What the world could look like in ten years, according to nearly 450 experts

Atlantic Council Strategy Paper Series Feb 9, 2026

Six ‘snow leopards’ to watch for in the decade ahead

By Uliana Certan, Nikita Shah, Ginger Matchett, Sarah Wallace, Dominique Ramsawak, Tatevik Khachatryan

Our scholars scan the horizon for the underappreciated phenomena that could have outsize impact on the world, driving global change and shaping the future.

Artificial Intelligence Climate Change & Climate Action

Atlantic Council Strategy Paper Series Feb 10, 2026

AI and the future

What does the next year, decade, and beyond hold for AI? We interviewed the Atlantic Council’s tech experts to learn more about AI’s future, and whether it can help us better understand our own.

Artificial Intelligence Technology & Innovation

The post Six ‘snow leopards’ to watch for in the decade ahead appeared first on Atlantic Council.

Mining without rules: The risky US bet on the deep sea

Elisabeth Braw — Mon, 09 Feb 2026 14:00:00 +0000

Bottom lines up front

In April 2025, President Donald Trump issued an executive order permitting deep-sea mining in international waters.
This is contrary to the United Nations Convention on the Law of the Sea, and might mean that the United States has violated customary international law.
The executive order raises questions regarding the legal status of any mining that might take place under US license, particularly whether insurers and companies based outside the US would be willing to participate.

The increasingly tense geopolitical landscape has brought into sharp relief Western dependence on rare earth minerals. The minerals exist in minuscule concentrations (hence the “rare” label) in rock around the world, but where the rare earths are found is less important than how they are processed. Because the processing is cumbersome and extremely polluting, Western countries have long been reluctant to permit large-scale processing, which has instead become the domain of Chinese companies.

That has resulted in rare earths overwhelmingly being processed in China: As of 2025, some 90 percent of rare earths are processed there.¹ Western governments have long tolerated this situation, even though it involved minerals crucial to the functioning of modern societies, because they believed in the rules of globalization and calculated that China would not weaponize other countries’ rare earth dependence. (Products such as smartphones, electric vehicles, wind turbines, and fighter jets require one or more rare earths.) However, escalating geopolitical competition has raised concerns that China could ban exports of these minerals to Western countries. At various points, Beijing has suspended rare earth exports to specific countries or threatened to do so. The most infamous case occurred in 2010, when Beijing banned exports to Japan after the latter detained a Chinese fishing-boat captain for trespassing in Japanese waters (over which China also claims sovereignty).² Such actions, however, were so limited that most countries considered continued reliance on Chinese-processed rare earths an acceptable risk. Or, rather, they knew that citizens would vehemently oppose processing the rare earths domestically.³

But as geopolitical tensions between China and the West have intensified, Beijing has increasingly threatened to impose restrictions on rare earth exports to Western countries. In April 2025, China responded to Trump’s announcement of steep tariffs on Chinese goods (as well as goods from other countries) by imposing export restrictions on seven rare earths.⁴ At the end of that month, Trump issued an executive order, “Unleashing America’s Offshore Critical Minerals and Resources,” giving US-based companies the right to mine for critical minerals in seabed areas beyond national jurisdiction; that is, in international waters.⁵ In the order, the president instructs his administration to identify “private sector interest and opportunities for seabed mineral resource exploration, mining, and environmental monitoring in the United States Outer Continental Shelf; in areas beyond national jurisdiction; and in areas within the national jurisdictions of certain other nations that express interest in partnering with United States companies on seabed mineral development.”⁶ In October 2025, Beijing imposed further export restrictions on rare earths. This was an apparent response to the US announcement of significant tariffs on Chinese goods; after the United States lowered the tariffs, China suspended the restrictions.⁷

Mining in the law of the sea

The existence of valuable minerals—manganese, cobalt, nickel, copper, and rare earth elements—at the bottom of the ocean has been known since the 1800s, and the minerals’ locations are well documented. The largest concentrations are in the deep sea; that is, outside countries’ territorial waters and exclusive economic zones (EEZ).⁸ (The Clarion-Clipperton Zone between Hawaii and Mexico is home to particularly large amounts.) The minerals are found in so-called polymetallic nodules the size and shape of potatoes, which lie on the seabed at depths of 3,500–6,000 meters.⁹ Because the nodules reside primarily in international waters, reaching agreement on the circumstances under which they can be mined has long been considered a task for the global community of nations.

In 1982, when the vast majority of the world’s nations adopted, signed, and later ratified the United Nations Convention on the Law of the Sea (UNCLOS), they included a section dedicated to the deep-sea mining of these minerals, which Part XI of UNCLOS calls “the common heritage of mankind.”¹⁰ UNCLOS specifies the conditions under which polymetallic nodules can be mined from the areas of the international seabed where they can be found: “All rights in the resources of the Area are vested in mankind as a whole, on whose behalf the Authority shall act. These resources are not subject to alienation. The minerals recovered from the Area, however, may only be alienated in accordance with this Part and the rules, regulations and procedures of the Authority.” UNCLOS continues: “No State or natural or juridical person shall claim, acquire or exercise rights with respect to the minerals recovered from the Area except in accordance with this Part. Otherwise, no such claim, acquisition or exercise of such rights shall be recognized.”¹¹

The authority referenced is the International Seabed Authority (ISA), which was created when UNCLOS came into force in 1994. With UNCLOS universally considered the constitution of the oceans, the ISA is ipso facto the global seabed regulator. (UNCLOS also encompasses elements of customary law.) Since the ISA’s inception, its member states—the countries that have ratified UNCLOS—have tried to reach an agreement governing deep-sea mining. Because the United States has not ratified UNCLOS, it is not a member of the ISA, though it has participated in the negotiations as an observer.¹²

Legal challenges

A key reason why the United States decided not to sign or ratify UNCLOS was opposition to Part XI. This issue aside, the United States has long abided by UNCLOS’s key tenets, not least because a functioning maritime order also benefits the United States. Indeed, the United States has always treated UNCLOS as a reflection of customary international law, save for Part XI. It is also worth highlighting that the part of UNCLOS regarding the settlement of disputes does not, and cannot, reflect customary international law as it lacks a “norm-creating” character, said Iva Parlov, an associate professor at BI Norwegian Business School who specializes in the law of the sea.

This means that if you, for example, are a party to UNCLOS, mandatory settlement of disputes applies to you. You can have certain reservations about it, but essentially another state can bring you to an international court or tribunal, as specified under UNCLOS. When you’re not a party to a certain treaty, you don’t face mandatory settlement of disputes mechanism under UNCLOS, even though that treaty can reflect customary international law, precisely because settlement of disputes is not part of the customary international norm. That means you can be bound by the customary international norm reflected in UNCLOS, but not by the settlement of disputes provisions.

—Iva Parlov

Because UNCLOS codifies and thus functions as customary international law, Trump’s executive order permitting deep-sea mining under US license—which runs contrary to UNCLOS—presents an obvious and immediate legal experiment. The US government can argue that, as a non-UNCLOS signatory, it is free to pursue actions that violate the convention. That argument, however, rests on whether the United States can convincingly present itself as a persistent objector to UNCLOS provisions that reflect customary international law. Under international law, a persistent objector is “a State which persistently objects to a rule of customary international law during the formative stages of that rule will not be bound by it when it becomes established.”¹³

“UNCLOS in general is considered a reflection of customary international law,” Parlov said. “This is clear when it comes to shipping, but deep-sea mining is more complicated. In general terms, the obligation not to unilaterally launch deep-seep mining may be considered customary international law. However, the United States had a problem with Part XI when UNCLOS was being negotiated. This was the main reason why the 1994 Implementation Agreement was adopted—i.e., to bring the United States on board.”¹⁴

Despite the Implementation Agreement, the United States did not ratify UNCLOS, but it did sign the Implementation Agreement and participated in ISA as an observer. That complicates the United States’ potential identification as a persistent objector. “Scholars are divided on this issue. Some US scholars argue that the US is a persistent objector, while others would say that’s not the case,” Parlov noted.¹⁵

To qualify as a persistent objector, the United States would need to demonstrate that it has indeed “persistently” objected to the specific parts of customary international law it wishes to violate—in this case, the prohibition of unilateral decisions and the treatment of seabed resources in international waters as the common heritage of mankind. “Part XI has been conceptualized as an ‘objective regime,’ which, under an orthodox understanding of international law, reaches non-States Parties through CIL [Customary International Law]. The US understood this when it voted for the 1970 Declaration of Principles Governing the Area,” notes Eduardo Cavalcanti de Mello Filho of the Centre for International Law at the National University of Singapore.¹⁶ International lawyer Coalter Lathrop observes that the United States gave up its opposition to the items included in Part XI when it consented to the 1994 Implementation Agreement, with President Bill Clinton writing to the Senate that “the Agreement meets the objections the United States and other industrialized nations previously expressed to Part XI.”¹⁷ James Kraska of the US Naval War College, in contrast, argues that the United States is a persistent objector. He argues that “Part XI of UNCLOS form customary international law, the United States has been a persistent objector to them and therefore is not restricted as a matter of customary international law” and that “the US signature on the 1994 Implementing Agreement does not make it sufficiently clear that the United States intended to be bound by it, especially in light of action under DSHMRA.”¹⁸ (The Deep Seabed Hard Mineral Resources Act from 1980 was “an interim measure to allow the United States to proceed with seabed mining activities in areas beyond national jurisdiction (ABNJ) until an international regime was in place.”)¹⁹

In practice, the issue of whether the deep-sea mining order violates customary international law might matter little to US policymaking: The world’s most powerful nation has the liberty to act in ways not available to less powerful nations. In January 2026, Trump told New York Times reporters, “I don’t need international law.”²⁰

The wider challenge arises around the implications for UNCLOS and the global maritime order. Although nations’ and companies’ commitment to UNCLOS and other maritime treaties has never been perfect, China has openly engaged in violations through its maritime harassment and construction of artificial islands in waters in the South China Sea that are either disputed or officially belong to other countries. So has Russia, through its systematic use and support of the shadow fleet, as have the Houthis through their attacks on merchant shipping. The US executive order risks contributing to an environment in which other nations launch activities that harm the maritime order.

The executive order and any licenses granted also raise questions for any companies that might become involved. Because the mining would be conducted by private companies rather than the US government, the fact that they would be mining outside UNCLOS places them in a novel and challenging position. Although they would be licensed by the US government, their operations would also involve businesses based in other countries, including suppliers, engineering firms, and insurers. It is unclear whether, and how, such companies would be willing or able to work with US-based deep-sea miners, as by doing so they would be violating their own countries’ laws. “When it comes to insurers, it’s unlikely that any of the well-known major names in underwriting deep ocean equipment would be willing to cover it,” noted Stephen Hall, a leading oceanographer and former chief executive officer (CEO) of the Society for Underwater Technology.²¹ “Projects in the EEZ, yes, but not in international waters. They may be willing to insure, for example, an autonomous underwater vehicle or an inspection system, but underwriting the actual mining equipment itself would be a tough, tough call. And that’s going to be the expensive kit.” Hall is currently part of an international undertaking mapping the seafloor.

On January 26, 2026, the National Oceanographic and Atmospheric Administration (NOAA) announced that it will map the ocean bed near American Samoa to find minerals for industry. “What an exciting time to know that within the next few years, under this administration, there will be companies pulling deep sea nodules out of the ocean and bringing them to the US,” the New York Times quoted Erik Noble, a NOAA deputy assistant secretary who oversees deep sea minerals, as saying.²²

Practical considerations

Over the years, the International Seabed Authority has granted exploration contracts to twenty-two companies and organizations from different countries.²³ The licenses allow the entities to mine allocated areas in international waters, though not for commercial purposes. Commercial mining will only be allowed once the ISA’s member states reach agreement on whether, and under what conditions, such mining will be permitted. The exploration contracts naturally allow exploratory mining, and some of the companies with such contracts have succeeded in bringing nodules from the seafloor to the surface. They include the Metals Company (TMC), a Canada-based firm that has exploration contracts through the governments of Nauru, Tonga, and Kiribati—South Pacific nations whose surrounding waters are also home to significant amounts of polymetallic nodules.²⁴ Days after the White House issued the executive order, TMC’s US arm applied for two US licenses.²⁵ The company plans to mine more than 1.6 billion wet tonnes of polymetallic nodules from which it will extract nickel, copper, cobalt, and manganese.²⁶ It has not announced plans to extract rare earths.

Commercial deep-sea mining might sound like a larger version of exploratory deep-sea mining, but it presents a host of additional complications. As discussed above, the first complication is the legal status of mining outside UNCLOS—including the challenges involved in getting insurance and equipment, as well as partnering with companies based in countries that adhere to UNCLOS. A perhaps even more significant hurdle involves the equipment transporting the nodules from the seabed to the surface. “The mining is easy,” Hall said. “The hard bit is getting the nodules you’ve mined from the bottom of the sea to the top.” That is because unlike oil and gas, which are extracted from the continental shelf (that is, at much shallower depths) and are soft, the deep-sea nodules are located at depths of several thousand meters and are, naturally, hard. “There have been a lot of people who’ve done small-scale experiments,” Hall explained. “Some firms have done really interesting work on using suction techniques to try to bring things up. Others have tried hoppers of various kinds or an elevator-type system where you’ve got underwater excavators loading up what almost looks like an underwater railway cart and then lifting the whole thing up on wires. There are different ways of doing it, but to do this on an industrial scale where trying to recover thousands of tonnes of material starts becoming quite tricky.”

The technique used, or envisaged, by most companies engaged in deep-sea mining exploration involves a massive pipe that transports the nodules. But, Hall warned, “transporting them to the surface is the point where you start running into complications. If, for example, your valve fails, tons of material suddenly fall back out of the pipe. You’re going to end up with a fallout plume. Then you’ve got to somehow scoop it all back up again and get it back into the pipe. It’s the same issue if you get breakages, cracks, and leaks in the pipeline. You’re going to have a lot of material loss. Depending on where the current is blowing at different depths, you could end up with a multi-directional fallout plume going into all points of the compass, depending on where the current is running at different depths of the water column.”

Such plumes of content being removed from the seabed and accidentally released in several other places would cause harm to the marine environment. In July 2025, NOAA, which is part of the US mining licensing regime, announced plans to accelerate the application process.²⁷ It is unclear how NOAA will assess the risk of environmental harm, but any such accidents bring the risk of lawsuits. (BP’s Deepwater Horizon accident in 2010 resulted in hundreds of lawsuits.)²⁸ “You won’t be able to state that any fallout is only going to go in one direction, because there might be a current going in completely the other direction a few thousand meters further up the water column,” Hall noted. “That means you might have to draw a big circle around the mining area and say ‘anywhere within this circle could potentially be impacted by the fallout from this mining activity.’ That opens you up to a lot of potential liabilities, a lot of litigation, a lot of insurance damages if anything goes wrong with your mining operation.”²⁹

To reduce the risk of such leaks during commercial mining (which would, at hundreds of millions of tonnes, involve far greater quantities than does exploratory mining), the pipe would need to be extremely sturdy. This would add considerable expense. Mining taking place outside UNCLOS would also raise the issue of whether a manufacturer willing to make the pipe could be found.

Any company operating under a US licence, outside UNCLOS, would also face a challenge finding certified engineers and other experts. Such experts are certified by different professional bodies, which might be reluctant to certify an engineer or other expert involved in a project that violates UNCLOS.

Ships taking the mined nodules to port would face related complications. Because the mining would violate UNCLOS, the ships would need to be owned and flagged in the United States. They would, however, still need to call at ports, and ports in countries that have ratified UNCLOS would likely be unwilling to accept ships operating in violation of UNCLOS. “You find out that the ship needs to refuel,” Hall said. “Where does it take on its fuel? Where can it do a crew change? You’ll probably find that the only nation the mothership was able to safely sail to and return to would actually be the US, because everybody else would just turn around and say, ‘As far as we’re concerned, you’re operating in, contravention of UNCLOS and the ISA. We’re not willing to open our facilities to your vessel.’ Instead of paying for only enough fuel to run from the nearest available port, you’re having to load up fuel and crew for a voyage lasting weeks or even months.” Ports in countries such as India and China regularly receive shadow vessels—which violate maritime rules—but that is because these ports benefit from receiving the cargo carried by the vessels. Though a few countries with limited maritime activities might service vessels involved in US-licensed deep-sea mining, it is unlikely that any major nations would do so, as doing so would undermine ISA and thus disadvantage efforts in which they themselves are involved.

Potential outcomes

The legal challenges related to deep-sea mining would naturally vanish if and when the ISA’s member states reach an agreement that allows commercial mining to begin. That is unlikely to occur in the near future, as forty countries including Mexico, Brazil, and most of the European Union have called for a moratorium on commercial mining.³⁰ These and other nations argue that far more research needs to be conducted into the potential implications of deep-sea mining on the marine ecosystem.

The technical challenges are also likely to remain. Many can be overcome, at considerable expense, especially if the ISA’s member states reach an agreement and mining in international waters becomes legal. Any operator would, however, need to weigh the expense involved in mining against the revenues the minerals could bring. That depends on what minerals the operator aimed to extract: copper, cobalt, nickel, and iron, which are relatively easy to extract but currently command low prices; or rare earths, which are extremely cumbersome and dirty to extract but command high prices and will likely become even more crucial to Western economies as China’s on-and-off ban on exports of them continues.³¹ To reduce their dependence on mining of both kinds of metals, from land and sea, countries including those in the European Union have also stepped up efforts to recycle metals currently in circulation.³² At the time of writing, TMC remains the only company that has submitted an application for a US license under the new executive order.

It seems the likely outcome of the executive order is, paradoxically, that it will result in little deep-sea mining but risks undermining the already precarious global maritime order.

About the author

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Elisabeth Braw

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1 “China Currently Controls over 69% of Global Rare Earth Production,” Mining Technology, January 18, 2025, https://www.mining-technology.com/analyst-comment/china-global-rare-earth-production/.

2 Keith Bradsher, “China Bans Rare Earth Exports to Japan amid Tension,” New York Times, September 23, 2010, https://www.cnbc.com/2010/09/23/china-bans-rare-earth-exports-to-japan-amid-tension.html.

3 Michael Standaert, “China Wrestles with the Toxic Aftermath of Rare Earth Mining,” Yale Environment 360, July 2, 2019, https://e360.yale.edu/features/china-wrestles-with-the-toxic-aftermath-of-rare-earth-mining.

4 Gracelin Baskaran, “China’s New Rare Earth and Magnet Restrictions Threaten U.S. Defense Supply Chains,” Center for Strategic and International Studies, October 9, 2025, https://www.csis.org/analysis/chinas-new-rare-earth-and-magnet-restrictions-threaten-us-defense-supply-chains.

5 “Unleashing America’s Offshore Critical Minerals and Resources,” White House, April 24, 2025, https://www.whitehouse.gov/presidential-actions/2025/04/unleashing-americas-offshore-critical-minerals-and-resources/.

6 Ibid.

7 Peter Hoskins and Laura Bicker, “China Tightens Export Rules for Crucial Rare Earths,” BBC, October 9, 2025, https://www.bbc.co.uk/news/articles/ckgzl0nwvd7o; “Trump Lowers Tariffs on China and Announces End to ‘Rare Earths Roadblock’ after Xi Meeting,” BBC, October 30, 2025, https://www.bbc.co.uk/news/live/cd7ry3x0nvet.

8 “Polymetallic Nodules,” International Seabed Authority, June 2022, https://www.isa.org.jm/wp-content/uploads/2022/06/eng7.pdf.

9 “Deep-Ocean Polymetallic Nodules and Cobalt-Rich Ferromanganese Crusts in the Global Ocean: New Sources for Critical Needs,” US Geological Survey, April 21, 2022, https://www.usgs.gov/publications/deep-ocean-polymetallic-nodules-and-cobalt-rich-ferromanganese-crusts-global-ocean-new.

10 “United Nations Convention on the Law of the Sea,” United Nations, 1994, Article 136, https://www.un.org/depts/los/convention_agreements/texts/unclos/unclos_e.pdf.

11 Ibid., Article 137.

12 Caitlin Keating-Bitonti, “U.S. Interest in Seabed Mining in Areas Beyond National Jurisdiction: Brief Background and Recent Developments,” Congressional Research Service, May 16, 2025, https://www.congress.gov/crs-product/IF12608#:~:text=International%20Seabed%20Authority%20(ISA)%2C%20an%20autonomous%20organization&text=The%20United%20States%20participates%20as%20an%20observer%20state%20in%20the%20ISA%20but.

13 Olufemi Elias, “Persistent Objector,” Oxford Public International Law, last updated April 2024, https://opil.ouplaw.com/display/10.1093/law:epil/9780199231690/law-9780199231690-e1455.

14 Interview with the author, October 27, 2025.

15 Interview with the author, October 27, 2025.

16 Eduardo Cavalcanti de Mello Filho, “May the United States Unilaterally Conduct or Regulate Activities in the Area According to International Law?” National University of Singapore, April 4, 2025, https://cil.nus.edu.sg/blogs/may-the-united-states-unilaterally-conduct-or-regulate-activities-in-the-area-according-to-international-law/.

17 Coalter Lathrop, “The Latest Trump Threat to International Law: Unilaterally Mining the Area,” EJIL:Talk!, May 6, 2025, https://www.ejiltalk.org/the-latest-trump-threat-to-international-law-unilaterally-mining-the-area/.

18 James Kraska, “The U.S. Executive Order on Seabed Mining Is Consistent with International Law,” International Law Studies 106 (2025), https://digital-commons.usnwc.edu/cgi/viewcontent.cgi?article=3113&context=ils.

19 “U.S. Interest in Seabed Mining in Areas Beyond National Jurisdiction: Brief Background and Recent Developments,” Congressional Research Service, last updated December 30, 2025, https://www.congress.gov/crs_external_products/IF/HTML/IF12608.html.

20 David E. Sanger, et al., “Trump Lays Out a Vision of Power Restrained Only by ‘My Own Morality,”” New York Times, January 8, 2026, https://www.nytimes.com/2026/01/08/us/politics/trump-interview-power-morality.html.

21 Interview with the author, October 14, 2025.

22 Eric Niiler and Sachi Kitajima Mulkey, “A Shift for NOAA’s Surveys: From Science to Mining,” New York Times, January 27, 2026, https://www.nytimes.com/2026/01/27/climate/noaa-deep-sea-mining.html

23 “Exploration Contracts,” International Seabed Authority, last visited December 11, 2025, https://isa.org.jm/exploration-contracts/.

24 “The Metals Company Advances Deep-Sea Research Program to Unlock World’s Largest Known Source of Battery Metals,” Metals Company, September 28, 2021, https://investors.metals.co/news-releases/news-release-details/metals-company-advances-deep-sea-research-program-unlock-worlds/.

25 “World First: TMC USA Submits Application for Commercial Recovery of Deep-Sea Minerals in the High Seas under U.S. Seabed Mining Code,” Metals Company, April 29, 2025, https://investors.metals.co/news-releases/news-release-details/world-first-tmc-usa-submits-application-commercial-recovery-deep.

26 Ibid.

27 “Deep Seabed Mining: Revisions to Regulations for Exploration License and Commercial Recovery Permit Applications,” Federal Register, July 7, 2025, https://www.federalregister.gov/documents/2025/07/07/2025-12513/deep-seabed-mining-revisions-to-regulations-for-exploration-license-and-commercial-recovery-permit?utm_campaign=subscription+mailing+list&utm_medium=email&utm_source=federalregister.gov.

28 “US Deepwater Horizon Explosion and Oil Spill Lawsuits,” Business and Human Rights Centre, April 25, 2010, https://www.business-humanrights.org/en/latest-news/us-deepwater-horizon-explosion-oil-spill-lawsuits.

29 Interview with the author, October 13, 2025.

30 Momentum for a Moratorium, Deep Sea Conservation Coalition,
https://deep-sea-conservation.org/solutions/no-deep-sea-mining/momentum-for-a-moratorium/

31 Hoskins and Bicker, “China Tightens Export Rules for Crucial Rare Earths.”

32 Jonathan Josephs, “How Europe Is Vying for Rare Earth Independence from China,” BBC, August 6, 2025, https://www.bbc.co.uk/news/articles/cm2zp6m4gy7o.

The post Mining without rules: The risky US bet on the deep sea appeared first on Atlantic Council.

Death by cold: Russia is attempting to freeze millions of Ukrainian civilians

Kristina Hook — Sat, 07 Feb 2026 15:31:20 +0000

Three years ago, when Ukrainians first began calling Russia’s winter bombing campaign a “kholodomor” (literally “death by cold”), some Western observers dismissed this language as excessive. Few would make the same criticism now. In recent months, Russia has unleashed the most extensive winter bombardment of the war, leaving millions of Ukrainians without access to heating and electricity amid arctic weather conditions. The term “kholodomor” now looks like an accurate and objective description of what is clearly a deliberate Russian strategy to cause a humanitarian catastrophe across Ukraine.

The international skepticism that greeted initial claims of a systematic Russian campaign to freeze Ukrainians was not a new phenomenon. On the contrary, it followed a familiar pattern. For years, Ukrainians have described Russia’s expansionist agenda and imperial ambitions in language shaped by lived experience, only to be told they were exaggerating, overly emotional, or trapped by history.

When Russia first invaded Ukraine in 2014, many international commentators downplayed the enormity of the situation. Rather than acknowledging that a major threshold had been crossed, some chose to amplify obvious Kremlin propaganda and legitimize false narratives of referendums and separatists. Others sought to diminish Russian responsibility by labeling Moscow’s undeclared war an internal conflict. This weak response only served to embolden Putin and helped set the stage for the full-scale invasion of 2022.

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Russia’s current attacks on Ukraine’s critical civilian infrastructure are neither accidental nor isolated. Power plants, transmission lines, substations, and heating systems have been repeatedly targeted throughout the entire country in a methodical manner to inflict maximum damage. These strikes have intensified in recent weeks as temperatures plunged, underlining the Kremlin’s deadly intent. During the coldest months of the Ukrainian winter, heating and power are not mere conveniences; they are essential for survival.

The present talk of a “kholodomor” in Ukraine not only captures the essence of Russia’s winter bombing campaign. This language also consciously echoes the term “Holodomor” (“death by hunger”), which is used to describe the artificially induced famine of the early 1930s that killed at least four million Ukrainians. Then as now, the Kremlin objective was the destruction of the conditions necessary for life in Ukraine.

Since the onset of Russia’s full-scale invasion in February 2022, Ukrainian analysts and other experts have been warning that history is in danger of repeating itself. By December 2022, humanitarian agencies assessed that 17.7 million Ukrainians would need emergency aid simply to survive the first winter of the war amid the large-scale bombardment of the country’s power grid, a campaign that later resulted in International Criminal Court arrest warrants for the Russian military commanders who orchestrated it.

Putin’s escalating weaponization of winter mirrors Stalin’s use of famine against Ukrainians almost one century earlier. Both atrocities are rooted in genocidal logic that treats the existence of a separate Ukrainian nation as an existential threat to Kremlin imperialism. However, unlike the Soviet authorities during the Holodomor, Putin has made no real effort to disguise or conceal the current targeting of Ukraine’s civilian population. On the contrary, Russian officials and media personalities have praised the destruction of civilian infrastructure and the suffering this inflicts.

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Russia’s winter bombing campaign is not only about depriving Ukrainians of the conditions to sustain life. It is also part of a broader strategy to reshape Ukrainian society and force the country to accept an artificially imposed Russian identity. This goal is most immediately apparent in occupied regions of Ukraine, where schools and social services have been repurposed to indoctrinate the population and erase all traces of Ukrainian identity. Rendering large parts of Ukraine unlivable is the first step; remaking the country on Moscow’s terms is the second.

Russian attacks on Ukraine’s energy infrastructure cannot be dismissed as an example of ordinary wartime brutality. Instead, the current bombing campaign must be viewed as part of a deliberate plot to destroy the conditions necessary for Ukrainian society to endure. Genocide is not defined only by mass killing; it is also defined by the deliberate destruction of the conditions of life required for a group’s survival.

As US-led peace talks continue, it is vital that the international community now avoid repeating the mistake of ignoring Ukraine’s warnings about Russia’s true intentions. In 2014 and 2022, Ukrainians were not taken seriously when they tried to alert the outside world to the danger. They are now once again raising the alarm over calls for Kyiv to cede heavily fortified areas of the Donbas to Russia in exchange for ambiguous promises of peace. Ukrainians warn that this would only encourage Moscow and create the ideal conditions for the next stage of Putin’s invasion.

When Ukrainians speak of facing death by cold, they are not attempting to shock or provoke. On the contrary, they are describing the latest stage in a Russian strategy that is historically all too familiar, and one that has become increasingly apparent since 2022.

The sheer scale of Russia’s current winter bombing campaign makes a mockery of attempts to broker a compromise peace and underlines the Kremlin’s determination to destroy Ukraine as a state and as a nation. While international audiences rightly acknowledge the remarkable resilience of the Ukrainian population, they must also recognize the need to address the sense of impunity driving Russia’s invasion. This impunity has convinced Putin that he can now freeze millions of Ukrainians in front of the watching world. Failure to hold him accountable for this crime will condemn other European countries to face a similar fate.

Kristina Hook is assistant professor of conflict management at Kennesaw State University and a nonresident senior fellow at the Atlantic Council’s Eurasia Center.

The unifying force in these protests is not ideology. It is the erosion of dignity. When officials demand “endurance” while connected networks profit from scarcity, the issue stops being technical. It becomes a judgment about whether the state considers citizens worth serving. That is when water stress becomes a political risk-multiplier: it raises baseline pressure, broadens participation beyond organized activists, and shifts perception from temporary hardship to systemic neglect.

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Feb 5, 2026

How Israeli technology could help solve Iran’s water crisis

By Joseph Epstein and Dalga Khatinoglu

Iran faces a stark choice: find ways to access the world’s most advanced water technologies, or continue toward a crisis.

Climate Change & Climate Action Energy & Environment

In Ilam, Abdanan, Lordegan, and much of southwestern Iran, the most visible marker of state failure is not a dry riverbed—it is the water tanker. Tankers are not just an emergency measure; they are a daily signal that the state can no longer deliver a basic public good. Once drinking water arrives by truck, life is reorganized around queues, uncertainty, and informal gatekeeping: who is served first, who waits, who is told “tomorrow.” That is where a technical shortfall becomes political—because people do not experience scarcity as a statistic. They experience it as humiliation.

That humiliation dynamic is not just “grievance,” it is a risk factor. When households depend on tankers, any additional shock—price spikes, fuel scarcity, electricity cuts that knock out pumps, or rumors of reduced deliveries—compresses the time between anger and mobilization. And because these protests emerge where services are already failing, the regime often meets them with faster, harder coercion—treating service breakdown as a security problem rather than a governance failure.

Ilam’s towns—Abdanan, Malekshahi, and the provincial capital—became flashpoints as protests spread and reports of lethal force, arrests, and fatalities mounted. The immediate catalysts are familiar—prices, repression, accumulated rage. Ilam’s deeper story is structural: unrest accelerates when a water system loses its buffers, and scarcity becomes routine rather than episodic.

Lordegan and other Zagros towns have followed a comparable path. For years, many analysts downplayed water as a decisive political factor in Iran, even as conditions worsened. That no longer holds. Water stress is now shaping events in real time. When household supply becomes unreliable, people experience it as a compounding burden that disrupts routines, drains incomes, and erodes dignity—conditions under which smaller shocks can trigger street-level mobilization. Water is not always the spark; it is the accelerant that makes every spark catch faster—and makes the state’s violent response more likely because the unrest is rooted in visible failure, not just political slogans.

Water bankruptcy is characterized by a persistent gap between societal demand and the hydrological system’s sustainable supply. In this condition, a wet year may slow deterioration, but it does not restore resilience. Groundwater—treated for decades as an emergency reserve—has been drawn down faster than it can recharge, with visible consequences including land subsidence and irreversible loss of aquifer storage in many areas. When scarcity is delivered through rationing, rotating cuts, and tankers, the pressure becomes daily, personal, and politically legible.

This water-driven vulnerability, affecting daily life, social cohesion, and the state’s ability to deliver basic services, amplifies other stressors. What changed in 2025 was stacking: water stress layered with energy shortfalls, international sanctions pressure, and security disruptions, while service delivery deteriorated and public trust continued to collapse. Under these conditions, shocks compress timelines. People move from frustration to action faster, because the margin for absorbing disruption has already been consumed. Recent reporting by major outlets ties this wave to prolonged planned cuts to water and electricity and to major air-pollution episodes that forced repeated shutdowns—conditions that make daily life feel ungovernable, even before politics enters the conversation. During severe smog episodes, authorities have shut schools and universities and repeatedly closed banks and public institutions for days at a time. In that setting, protests are not only sparked by single flashpoints, they are enabled, because normal routines have already been disrupted, and daily life starts to feel unmanageable long before politics enters the conversation.

Failure also persists because incentives reward the wrong outcomes: budgets, contracts, and political credit flow to visible mega-projects, while recharge, monitoring, pricing, and enforcement get treated as optional. Iran’s “water mafia” is not merely a slogan; it is a political economy. The pattern is that budgets and influence concentrate around big, ribbon-cuttable projects, dams, tunnels, and inter-basin transfers, because they create large contracts, subcontracting chains, and discretionary control, while quieter work like groundwater monitoring, enforcing pumping limits, pricing reform, leakage control, and managed aquifer recharge produces fewer rents and fewer photo ops.

Analysts have described the Islamic Revolutionary Guard Corps’s Khatam al Anbiya construction conglomerate as a central node in this ecosystem, an enormous contractor operating through layers of subsidiaries and thousands of subcontractors, with major state clients including the Ministry of Energy, and with procurement and oversight conditions that are often insulated from normal scrutiny.

Consulting engineering firms that design and justify megaprojects also sit inside the same incentive loop, including firms active across dams and water infrastructure, which further blurs the line between independent evaluation and project promotion. The result is structural: visible infrastructure gets financed and politically rewarded, even when it worsens basin-level depletion, while demand management and aquifer protection stay marginal. Climate change accelerates the consequences, but governance choices, and the incentives attached to them, determine the trajectory.

Finally, hydrology matters more than provincial borders. A basin is the natural water system, the connected rivers, groundwater, and watersheds that move water from upstream to downstream. Iran still governs water by administrative jurisdictions rather than basin-scale planning, which lets upstream allocations and diversions externalize costs onto downstream communities. In basins such as the Karun and Karkheh, many communities experience “development” as reduced water security and livelihood loss, not as protection from risk. In Khuzestan, water shortages have repeatedly spilled into the streets, including the July 2021 protests, which were met with lethal force, mass arrests, and communications disruptions, according to Reuters, Amnesty International, and Human Rights Watch. In wetland and farming systems linked to the Karkheh, the drying of border wetlands has been tied to dust storms, health impacts, and pressures on livelihoods and migration, making water decisions feel less like “management” and more like dispossession.

What the United States and partners should do

Washington already knows Iran is running out of water—and US political discourse has even adopted the “water mafia” framing. Iran’s crisis is no longer just political or economic, it is infrastructural. Treating water-system failure as a leading indicator helps predict where unrest may ignite, how quickly it may spread, and when coercion is likely to intensify.

First, Washington should build a water-driven, early-warning layer into Iran monitoring. Integrate service-failure signals—rotational cuts, tanker deployment, reservoir drawdowns, groundwater stress and subsidence, agricultural distress—with protest geography, labor unrest, and security posture. Add a “day zero” watchlist. Track cities and regions where household taps fail (not just “low reservoirs”) and treat that threshold as a leading indicator for rapid protest escalation and heavy-handed repression.

Second, Washington should treat the “water mafia” as a networked political economy. Map contractors, front companies, financiers, procurement channels, and security-linked actors tied to extractive mega-projects, then coordinate exposure and financial pressure to raise the cost of the incentives that perpetuate failure.

Third, Washington should monitor allocation as closely as scarcity. In many cases, perceptions of favoritism and pay-to-play access determine when water stress becomes politically explosive.

Fourth, where external support is feasible through partners, Washington should design it to minimize regime capture. Prioritize reliability gains that are hard to turn into patronage—repairs, leak reduction inputs, treatment chemicals, and monitoring capacity—paired with verifiable distribution mechanisms.

Fifth, Washington should plan for spillover. Water mismanagement in western Iran can translate into cross-border tensions and migration pressures, making coordination with Iraq and other neighbors a practical requirement.

Post–Islamic Republic: no single fix

Even after a political transition, Iran’s water crisis will not be solved by a single national “fix” imposed from the center. The problems are basin-specific—recharge rates, aquifer geology and salinity, subsidence risk, crop patterns, industrial demand, and cross-provincial politics all vary. A groundwater crisis in the southwest is not the same as an exhausted aquifer in central Iran, and it is not the same as a tightly regulated river system in Khuzestan. Treating it as one problem produces one outcome: failure.

What makes this urgent now is the stacking of shocks. Large-scale unrest and communications disruptions have already hit daily life and commerce inside Iran. At the same time, the region is under heightened military tension, and shipping around the Strait of Hormuz is showing clear stress signals, raising the risk of supply-chain disruption, including food imports. Domestic instability is unfolding alongside a regional escalation risk, and the two can reinforce each other quickly.

In that environment, any transition window will be fragile, and basic service delivery will become a frontline test of legitimacy. The United States should plan for the transition period as a governance and stabilization challenge, not just a diplomatic milestone. That means anticipating the scramble over water allocation and backing a post-transition package that is practical and non-centralizing: emergency continuity plans for critical cities, basin-by-basin damage and subsidence assessments, open publication of groundwater levels, permits, and withdrawals, real environmental assessments for major projects, plus a basin-wide check that assesses the combined impacts before approving anything new, as well as independent technical oversight that can withstand the politics of the moment. The aim is straightforward: prevent a vacuum where water distribution becomes a coercive instrument or a trigger for local conflict and instead make early decisions transparent, locally tailored, and enforceable, because in Iran water governance is not just sustainability, it is legitimacy.

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

The post How Iran’s water bankruptcy seeped into the protest movement appeared first on Atlantic Council.

How Israeli technology could help solve Iran’s water crisis

Joseph Epstein and Dalga Khatinoglu — Thu, 05 Feb 2026 15:46:53 +0000

Iran is facing a water emergency that hydrologists and environmental experts warn may now be irreversible. Major reservoirs are depleted, groundwater reserves are collapsing, and senior officials are openly warning of citizens rationing water and even evacuating the capital due to water shortages. While the crisis is often attributed to drought or climate change, experts stress that it is overwhelmingly man-made—the cumulative result of decades of over-extraction, mismanagement, and failure to modernize water governance.

Paradoxically, many of the most effective technical solutions to Iran’s water crisis have already been developed by its regional adversary, Israel. Through innovations in drip irrigation, wastewater recycling, desalination, and integrated water management, Israel has achieved water security under harsher natural constraints than Iran faces today. This article argues that Iran’s crisis is no longer a problem of awareness or technology, but of political, financial, and institutional barriers—and that proven Israeli approaches, if accessed indirectly, could still mitigate the most destabilizing consequences of a crisis experts say can no longer be fully reversed.

The geopolitical paradox

The supreme irony is that the technological solutions most appropriate to Iran’s water crisis have been developed and proven by Israel—a country with which Iran has no diplomatic relations and maintains an adversarial posture. Direct technology transfer remains impossible under current political conditions.

However, indirect pathways exist. International water organizations, multilateral development banks, and specialized United Nations agencies could potentially serve as intermediaries for technology transfer and capacity building.

Some Israeli water technologies have become so widely adopted that they’re available through non-Israeli suppliers that manufacture under license or have developed parallel capabilities. The fundamental principles—precision irrigation, advanced wastewater treatment, efficient desalination, smart water management—can be implemented regardless of technology source.

The scope of Iran’s water crisis

Official statistics from the Iranian government show that the average storage level of Iran’s dams stands at only 33 percent, and four out of the five main dams supplying water to Tehran have dried up. The remaining dam is in a highly fragile state, holding only enough water for a few weeks of consumption by the capital.

President Masoud Pezeshkian recently highlighted the severity of the situation, noting that rainfall has been “zero” during the current water year that began two months ago. He warned, “If it does not rain in Tehran within a month, we will have to ration water; if it still doesn’t rain, we will have to evacuate Tehran.”

Conditions in several other provinces are significantly worse than in the capital.

According to Iran’s Ministry of Energy, Iran consumes around 100 billion cubic meters (bcm) of water annually, 90 percent of which is used in agriculture. This exceptional level of agricultural water use is primarily due to widespread reliance on traditional irrigation methods, especially flood irrigation.

More importantly, 60 percent of the country’s total water consumption comes from groundwater aquifers, which are being depleted at an alarming rate. Iran adds 5 bcm annually to its groundwater deficit, leading to widespread land subsidence in major urban areas, particularly Tehran and Isfahan.

Ali Beitollahi, head of the Seismology and Risk Department at the Road, Housing, and Urban Development Research Center, reports that “eighteen provinces are experiencing land subsidence rates exceeding ten centimeters per year. In central Tehran, the rate of subsidence over the past two years has tripled compared with the previous two-year period. Subsidence zones in south and southwest Tehran have expanded by about 40 percent in recent years.”

This is the state of Iran’s capital city—which would ideally be the center of water management. Yet 60 percent of Tehran’s water comes from underground sources. More than half of the city’s 2.5 bcm annual water consumption is used in agriculture, and 30 percent of drinking water is lost through the aging, deteriorating distribution network.

Another major dimension of the crisis is the rapid drying of Iran’s wetlands and lakes. Mohammad-Reza Rezaei-Kouchi, head of the Parliament’s Construction Commission, reports that 66 percent of Iran’s major wetlands have dried up.

Israel’s water revolution: A comparative model

Israel faces many of the same climatic challenges as Iran—limited rainfall, high evaporation rates, and growing demand. Understanding Israel’s approach illuminates the specific technological and policy gaps in Iran’s water system.

Israel pioneered drip irrigation technology in the 1960s, and today approximately 75 percent of Israeli agricultural land uses drip or micro-irrigation systems. These methods deliver water directly to plant roots with precision, reducing water consumption by 30 to 70 percent compared to flood irrigation while often increasing crop yields.

Tehran’s agricultural water waste leads the region. Iranian agriculture consumes around 90 bcm of water, yet neighboring Turkey—with 40 percent less water consumption—produces 30 percent more agricultural output. Iran receives less rainfall than Turkey, but 70 percent of Iran’s rainfall evaporates due to insufficient investment in rainwater harvesting and storage, while Turkey loses about 50 percent.

Taking these numbers into consideration, if Iran adopted Israeli-style drip irrigation across even 50 percent of its agricultural land, water savings could reach 20 to 30 bcm annually—four to six times the country’s current groundwater deficit.

Israel treats and reuses approximately 90 percent of its wastewater for agriculture—the highest rate globally. This contrasts sharply with Iran’s performance.

Iran ranks 103rd out of 180 countries globally in urban wastewater collection and treatment—the worst in its region. Only 50 percent of Iranian households are connected to sewer systems, and only 20 percent of collected wastewater is treated and reused for agriculture or industry.

If Iran had developed wastewater infrastructure comparable to Israel’s, a significant portion of the country’s 8 bcm per year of drinking water consumption could be recycled for non-potable uses. Instead, untreated wastewater is frequently discharged into wells or surrounding areas, contaminating groundwater aquifers.

Israeli wastewater treatment technology, including advanced biological and membrane processes, has been successfully exported to water-scarce regions worldwide. The country’s integrated approach combines centralized treatment plants with sophisticated distribution networks that deliver reclaimed water directly to agricultural users.

Israel now produces approximately 85 percent of its domestic water supply through desalination, operating five major plants along the Mediterranean coast. The country’s reverse osmosis desalination technology has become among the most energy-efficient globally, with costs declining to approximately forty-one cents per cubic meter.

Related reading

MENASource

Feb 5, 2026

How Iran’s water bankruptcy seeped into the protest movement

By Nik Kowsar

Many of Iran’s protest hubs overlap with areas where severe water shortages in recent years have made life increasingly difficult for people.

Climate Change & Climate Action Energy & Environment

Iranian officials have floated the idea of desalinating Caspian Sea water. Meanwhile, Iran has spent two decades examining a project to desalinate Persian Gulf water and transport it to central provinces, but given the overwhelming water consumption in agriculture and the government’s chronic financial constraints, such projects have remained economically unjustifiable. Israeli expertise in modular, cost-effective desalination could help Iran develop feasible projects scaled to municipal, rather than agricultural, needs.

Israel has reduced water network losses to approximately 7 percent through sophisticated monitoring systems, pressure management, and rapid leak detection. Israeli companies have developed artificial intelligence (AI)-powered systems that use acoustic sensors, satellite imagery, and data analytics to identify leaks and optimize distribution.

Tehran loses 30 percent of its drinking water through its aging, deteriorating distribution network. Applying Israeli leak detection and network optimization technology to Tehran’s system could save approximately 0.2 bcm annually for the capital alone—extending the city’s water supply by several weeks during crisis periods.

Israel has developed advanced techniques for managed aquifer recharge, storing treated wastewater and excess seasonal flows underground for later use. This approach stabilizes groundwater levels and helps prevent land subsidence—a critical concern given that 60 percent of Iran’s water consumption comes from groundwater aquifers being depleted at 5 bcm annually.

Israeli experience with aquifer management in the coastal plain, where over-extraction once caused severe saltwater intrusion, offers directly relevant lessons for Iranian cities facing similar threats.

Agricultural transformation: The Israeli model

Despite representing only 8 percent of Iran’s gross domestic product (GDP), agriculture employs one-fifth of the national workforce. Persistent droughts, combined with the government’s inability to support or modernize the sector, have already pushed a quarter of agricultural workers out of the sector over the past decade. Today, only 3.5 million people remain employed in agriculture.

Recent data from the Central Bank of Iran shows that agricultural GDP in spring 2025 shrunk by 8 percent, reinforcing the sector’s growing distress.

Israel’s agricultural sector provides a compelling alternative model. Despite having far less arable land and water resources than Iran, Israel has built one of the world’s most productive agricultural systems through precision irrigation, advanced crop selection, greenhouse technology, and data-driven farming techniques.

Such precision agriculture technology could help Iran maintain or increase agricultural output while dramatically reducing water consumption, potentially enabling a managed transition away from water-intensive crops without triggering mass unemployment.

The Israeli model demonstrates that agriculture can remain economically viable and employ significant populations even with drastically reduced water allocations—but only through technological transformation.

Economic and financial barriers

Since the reimposition of US sanctions in 2018, Iran’s government budget has maintained a deficit equal to one-third of its budget. As a result, government borrowing from banks and financial institutions has increased more than eightfold in seven years.

According to International Monetary Fund data, Iran’s public debt is now around 37 percent of GDP, almost entirely owed to domestic financial institutions, limiting the state’s fiscal flexibility.

The economic pressures underlying Iran’s water and agricultural crises have already sparked devastating unrest. In late December 2025, protests erupted across Iran following the collapse of the rial, rapidly spreading nationwide. The government responded with a brutal crackdown on January 8-9, 2026, with Iran International reporting more than thirty thousand killed—potentially one of the deadliest massacres in modern history. The crackdown underscores how Iran’s compounding environmental, economic, and political failures are creating conditions ripe for instability.

The government lacks both the financial capacity to modernize irrigation and the economic infrastructure to absorb displaced agricultural workers into other sectors. As a result, imposing restrictions on agricultural water use would trigger a surge in unemployment.

These financial constraints make Iranian adoption of Israeli technology particularly challenging. However, the modular nature of many Israeli water solutions—drip irrigation systems can be implemented field-by-field, leak detection can be deployed neighborhood-by-neighborhood—offers opportunities for phased implementation that could begin delivering returns before requiring massive capital outlays.

Moreover, the cost of inaction is becoming prohibitive. Water rationing, urban evacuation, agricultural collapse, and cross-border conflict all carry enormous economic costs that dwarf the investment required for technological modernization.

A choice between ideology and survival

The crisis in Iran is no longer abstract: major dams are empty, land subsidence is accelerating, wetlands are disappearing, and tensions are rising with neighboring countries over shared water resources. Without fundamental transformation, Iran faces escalating urban instability, agricultural decline, mass internal migration, and cross-border friction.

The technical solutions exist. Israel’s transformation from water scarcity to water security over the past six decades demonstrates that even severe natural limitations can be overcome through systematic innovation, integrated management, and sustained investment. The specific technologies Iran needs—drip irrigation, wastewater treatment and reuse, cost-effective desalination, leak detection, and smart management systems—have all been proven at scale.

The question is whether Iran can separate technical necessity from political ideology. The country’s water crisis will not wait for geopolitical realignment. Every year of delay adds 5 bcm to the groundwater deficit, pushes more farmers out of agriculture, accelerates land subsidence, and brings major cities closer to unlivable conditions.

In the absence of structural reforms and adequate financing—which could be partially addressed through adopting proven Israeli technologies and approaches via international intermediaries—the country is approaching a point where emergency measures such as water rationing, mass internal migration, and even partial evacuation of major cities may become unavoidable.

Iran faces a stark choice: find ways to access the world’s most advanced water technologies, regardless of their origin, or continue toward a crisis that threatens the viability of major population centers and the stability of the entire region. Water, unlike politics, cannot be negotiated with ideology. It simply runs out.

Joseph Epstein is the director of the Turan Research Center, a senior fellow at the Yorktown Institute, and a research fellow at the Post-Soviet Conflicts Research Program at Bar Ilan University’s Begin Sadat Center for Strategic Studies.

Dalga Khatinoglu is an expert on Iran’s energy and macroeconomics, and a researcher on energy in Azerbaijan, Central Asia, and Arab countries.

The post How Israeli technology could help solve Iran’s water crisis appeared first on Atlantic Council.

Memo to the president: Steps to secure a prosperous, US-aligned Venezuela

Tue, 03 Feb 2026 21:06:47 +0000

TO: POTUS
FROM: Jason Marczak, Ambassador (ret.) James Story, General (ret.) Laura J. Richardson, Geoff Ramsey
SUBJECT: Steps to secure a prosperous, US-aligned Venezuela

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What do world leaders need to know? Our “Memo to…” series has the answer with briefings on the world’s most pressing issues from our experts, drawing on their experience advising the highest levels of government.

Bottom line up front: In the wake of Venezuelan dictator Nicolás Maduro’s January 3 capture, the United States government can advance long-term goals by making the tough asks up front; time will decrease pressure on Delcy Rodríguez to make critical reforms. Clear benchmarks should be set for what Rodríguez must agree to do in the first three, six, nine, and twelve months. Washington should urgently address structural economic and security issues while laying the conditions for free and fair elections where the result will be respected.

First priority: Set clear benchmarks for what Delcy Rodríguez should do this year

In addition to economic reforms, the United States should push Rodríguez to take the following actions:

Stop torture and surveillance

Release all political prisoners immediately, and further in line with the newly announced amnesty law, guarantee that the arrest of political dissidents ceases immediately and that all Venezuelans can return to the country and exercise their fundamental human rights without risk of repression.
Ensure that the El Helicoide torture facility quickly closes, as promised in the January 30 amnesty announcement.
Abolish the use of the Chinese-designed Carnet de la Patria (Homeland Card) as a tool of political control; distribution of public goods must be transparent, de-politicized, and respectful of privacy rights.
Eliminate all forms of malign surveillance, including technology provided and operated by China National Electronics Import & Export Corporation.

Tackle security concerns

Identify and remove non-diplomatic personnel, including military trainers, from countries that pose risks to US security interests such as Russia, Iran, Cuba, and China, and from internal spoilers such as the FARC (Revolutionary Armed Forces of Colombia) and ELN (National Liberation Army) guerrilla groups.
Disband the colectivos paramilitary groups, provide the United States with assurances that the colectivos will not operate, and understand that the Venezuelan government will be held responsible for all actions the colectivos take.
Collect and warehouse all shoulder-fired anti-aircraft missiles, anti-ship missiles, drones, and other offensive capabilities. Surveillance of the warehoused weapons should be shared between the government in Caracas and the United States.

Restore the rule of law

Provide a timeline for reforms that can restore the independence of the legislative and judicial branches and ensure the rule of law, a condition needed for ramping up foreign investment as well as democratic governance.
Begin a process for hiring new judges that is fair and independent, so that private investors will trust that their interests are being protected and that Venezuelans can regain confidence in the judiciary.

Allow political freedom

Lift the ban on running in elections from opposition leaders such as María Corina Machado.
Prevent the United Socialist Party of Venezuela (PSUV) from disrupting, disbanding, and controlling opposition political parties.
Create a commission to outline a path toward free and fair elections within eighteen months. The commission should include representatives from the government, the internationally recognized winners of the 2024 presidential election, leadership of the democratic opposition as represented in the Unitary Platform coalition and other opposition parties, and civil society.

Lift media controls

Stop media censorship and allow Venezuelans free access to the internet and all international media, including US broadcasts.

Long-term priority: Build a prosperous, secure, democratic Venezuela

Although there currently exists a unique momentum to rebuild Venezuelan democracy, it will take years of consistent international support for local reforms to create lasting change. Yet, the moment requires urgent action from Washington to lead the country in that direction. Rodríguez might welcome change that includes some reforms and modernization under the ruling PSUV, but she and others who wield power will likely resist a full-scale transition to democracy. The eventual goal must be free and fair elections, the results of which are respected. That is also the best vehicle for investor certainty in the country’s long-term political trajectory.

Address structural economic issues to attract real investment

The Venezuelan government must commit to transparency. Clear and open communication as a policy will prevent the current government from making backdoor deals and will lay the groundwork for creating an attractive investment environment in Venezuela.

It also must put a strong focus on monetary policy reform. Venezuela’s economy is unofficially dollarized, and the International Monetary Fund estimates the inflation rate is 682 percent. Achieving price stability is a crucial step to long-term economic stability.

Venezuela must lay out a plan for its $170 billion debt to be paid back, which would be a positive signal for potential investors. Repaying that debt will be nearly impossible without undertaking debt-restructuring measures with help from multilateral banks, but doing so would indicate the country will remain solvent going forward. The banking sector also needs reforms to make it possible for investors to get money in and out of the country.

The government needs an economic stimulus designed for the benefit of the Venezuelan people. Approximately 73.2 percent of Venezuelan households live below the poverty line; 36.5 percent live in extreme poverty. The government also needs financing plans for social sectors that consider basic infrastructure needs. That includes facilitating the shipment of food and medicine from the United States and elsewhere to begin to alleviate the humanitarian crisis in the country.

The oil sector will need to be rebuilt. A new hydrocarbons framework—recently approved in the current National Assembly—is an important start for that purpose. But there are questions over whether the framework is sufficient to attract needed investment and whether the current National Assembly will be recognized internationally, or if its laws will hold up in international disputes. The US push for investment is important, assuming it puts forward the local conditions and long-term assurance that international corporate commitments will be respected. The Venezuelan people must benefit from these revenues rather than see them stolen by the regime.

Takeaway: Venezuela’s economic situation is worse than dire. The United States must push for transparency and anti-corruption measures from the current government while advancing economic negotiations such as debt restructuring to foster investment.

Reform the security sector

The Venezuelan government must establish a functioning state security system under clear constraints and oversights. The lines between security forces and illegal armed groups in Venezuela are blurry. The repression apparatus used by the regime includes nonstate actors such as pro-government armed paramilitary organizations known as colectivos. The presence of Colombian armed groups including ELN or FARC dissidents, who are involved in illicit activities such as drug trafficking and illegal mining, poses a serious security and stabilization threat. The United States must demand that colectivos stop forcibly disappearing people who dissent.

The United States must work to counter the influence of Russia, Iran, Cuba, and China in Venezuela. Washington should work with Caracas to consolidate and control the five thousand Russian-made man-portable air-defense systems (MANPADS) in Venezuela. The United States needs access and control over weapons factories, including those that manufacture missiles, military drones, and firearms, as a key part of the stability operations plan that the Trump administration has laid out, given the threat these arms pose to the safety of Venezuelans in the country and the region at large.

The United States should continue to build a sustainable readiness force in the region to support stabilization efforts in the country while proposing a detailed plan for the future role of the Venezuelan military.

Colombia’s military should also be enlisted to help in certain operations to root out illegal groups that frequently cross the border with Colombia. Effectively restricting drug and illegal arms flows through the border would help to stifle the violent activity of armed actors in Venezuela.

Takeaway: The United States should consolidate control of Russian and Iranian arms and weapons systems in Venezuela that could be used for spoiler or repression activity. It should also push regional partners to minimize illegal activity and reduce the power of violent actors in Venezuela during this time of rapid change.

Advance institutional reform and elections as a baseline for prosperity

As the United States moves towards reestablishing formal diplomatic relations with Caracas, it will need to define and press for an eventual end state in Venezuela that will serve US interests and those of the Venezuelan people. Although not a short-term strategic priority of the United States, forging a path to democracy is integral to Venezuela’s security and prosperity.

Given that the PSUV will not want to relinquish power, the United States should push party leaders and the current government to see elections as competitive: not as an existential threat to their political survival but as a way for them to compete in a fair exercise of public engagement. This is why there needs to be a clean slate for elections: new National Electoral Council rectors, new judicial authorities, a new legislature, and most importantly, international help in ensuring that eventual elections are credible. Here, the United States should require visible steps from the regime on restoring political rights and security guarantees within the first six months to confirm that this is not just a re-brand of Maduro’s dictatorship.

To advance long-term sustainability, the United States should pressure Venezuela to hold a national contest, conducted by an independent legislative commission made up of different members of Venezuelan society such as judicial experts and academics, to elect new judges to the Supreme Court (Tribunal Supremo de Justicia).

An independent judicial body should publicly codify contract protections and dispute resolution mechanisms. A new, independent judicial system can begin respecting contracts between the government and private sector actors, which is an important precondition for serious capital inflows.

Finally, the United States should press for transitional justice mechanisms in Venezuela. The Venezuelan government is currently facing investigations before the International Criminal Court for crimes against humanity committed in the context of state repression, including mass arbitrary detentions, extrajudicial killings, torture, and other generalized abuses. Any transition in Venezuela must guarantee the right of victims and their families to truth, justice, reparation, and guarantees of non-repetition. This should not be seen as a roadblock to reforms, but rather as an opportunity to make a transition more sustainable.

Takeaway: Institutions in Venezuela need to be reimagined and rebuilt with the end goal of economic recovery and a prosperous democratic civil society in mind. The judiciary needs to enjoy independence from the executive to pass necessary protections for Venezuelans and investors.

Potential roadblocks and recommended actions

Roadblock: Investment comes slower than anticipated.

Action: The United States should allow for the reopening of normal banking channels with specific guardrails, as well as ensure that all business being conducted by the current authorities maintains transparency.

Further, any debt restructuring conversations, which will be daunting in any scenario, should include discussions with bond holders and multilateral institutions. The sanctity of contracts between commercial and governmental actors needs to be respected, and legal reforms need to be fast-tracked to protect said contracts.

Roadblock: Little changes on the ground for the population in Venezuela.

Action: In addition to steps to protect political freedom and disarm violent actors, the United States must continue monitoring the local situation in Venezuela, which would be made easier by reopening the US Embassy. Here, the initial steps have already started with a recent trip by embassy officials. US support to reopen the economy should translate into the population seeing the tangible benefits of changes through improvements in their household income. Finally, the United States should demand guarantees that Venezuelans who want to return to their country, especially members of the opposition, will not face threats or maltreatment and can fairly participate in popular discourse and elections when the time comes.

Conclusion

President Donald Trump has a historic opportunity to bring Venezuela back in line with US security and economic interests in a way that can simultaneously benefit the Venezuelan population. Current US plans are already moving in that direction and creating a legacy in building Venezuela’s long-term future as a potential US ally. Thus, this is a moment to ensure that reforms are made sustainable and that an updated version of the same failed regime does not take root.

About the authors

Jason Marczak is vice president and senior director at the Atlantic Council’s Adrienne Arsht Latin America Center. Marczak has twenty-five years of expertise in regional economics, politics, and development, and established the Council’s body of work on Venezuela in 2017.

Ambassador (ret.) James Story served as both ambassador and chargé d’affaires to Venezuela from 2018 to 2023. A retired career foreign service officer, he is now a nonresident senior fellow at the Atlantic Council’s Adrienne Arsht Latin America Center.

General (ret.) Laura J. Richardson was commander, US Southern Command, from 2021 until November 2024, and is a member of the Atlantic Council Board of Directors and the Adrienne Arsht Latin America Center Advisory Council.

Geoff Ramsey is the senior Latin America threat intelligence analyst at Recorded Future, a threat intelligence platform, and a nonresident senior fellow at the Atlantic Council’s Adrienne Arsht Latin America Center.

We thank Colette Capriles and Carmen Beatriz Fernandez for their insights that contributed to this publication. Special thanks to Ilona Barrero for her help in drafting this memo.

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Climate adaptation: The investment the Global South cannot afford to delay

Sara Lemniei — Tue, 03 Feb 2026 17:13:36 +0000

Heatwaves that overwhelm health systems, polluted air that shortens lives, and floods that disrupt water, electricity, and logistics now represent the central security challenge of our time. These shocks are no longer episodic. They are happening regularly, reshaping risk across emerging economies and becoming a central source of disruption.

As this takes place, governments and investors will need to choose whether to keep absorbing compounding losses or to invest upfront to prevent them. Of these two choices, adaptation offers the fastest and most cost-effective way forward; it reduces physical climate risk before it becomes a fiscal, health, and security crisis.

Yet despite its importance, adaptation remains the most underfinanced form of climate action. Only up to 5 percent of global private-sector climate finance flows to adaptation, and only around 10 percent of disaster losses in low-income countries are insured.

The cost of inaction is rising rapidly. Extreme weather shocks fall more heavily on the Global South, where rapid urbanization, demographic growth, and limited fiscal buffers magnify exposure and deepen system-wide fragility. Sovereign credit profiles deteriorate, borrowing costs rise, and governments are pushed into a cycle of crisis and emergency spending that crowds out long-term strategic investment.

Adaptation, however, stabilizes revenues, protects assets, and reduces volatility before losses materialize. Properly designed, it preserves returns while also strengthening productivity, competitiveness, and access to capital.

Adaptation is frequently advanced through individual projects, but its real impact is realized at the city level. Integrated infrastructure and service design is what embeds resilience over time. By 2050, African cities, for instance, will host nearly 950 million more residents than today, demanding resilient infrastructure. Whether that infrastructure locks in vulnerability or resilience will shape global stability for decades. Urban systems rely on hospitals, water utilities, energy grids, transport networks, and food distribution. When they fail, losses cascade across the economy. Those failures translate quickly into fiscal pressure, forcing governments to spend reactively on relief, reconstruction, and imports, rather than proactive investment in systems that strengthen resilience. When cities adapt, by contrast, benefits compound across sectors.

In the coming decades, the fastest gains will be derived from financing resilient cities and systems at scale, using blended capital and risk-sharing mechanisms to mobilize additional investment in adaptation and resilience.

Well-designed adaptation consistently delivers some of the highest returns in development finance. Every dollar invested in adaptation can generate more than $10.50 in economic benefits through avoided losses, productivity gains, and fiscal stabilization. The health dividend alone makes the case unavoidable. In Bangladesh, sustained investments in arsenic-free water infrastructure resulted in reductions in cardiovascular diseases and cancer, translating into higher worker productivity and lower healthcare costs. Under Brazil’s leadership, the Belém Health Action Plan, adopted in November 2025 at COP30 and launched with an initial three-hundred-million-dollar commitment from the Climate and Health Funders Coalition, provides a roadmap for embedding climate resilience directly into health systems, reframing adaptation as health-system insurance rather than discretionary spending.

The most powerful leverage point for adaptation lies at the intersection of agriculture, water, and cities. Sub-Saharan Africa loses an estimated four billion dollars annually to post-harvest losses, much of it driven by climate-related spoilage and water stress. These losses ripple quickly through urban economies, raising food prices, increasing import dependence, and straining household and public budgets. Kenya’s $250-million Climate-Smart Agriculture program offers a replicable blueprint for financing climate-resilient food systems at scale. Backed by the World Bank, the African Development Bank, and private financiers, it blends concessional and commercial capital to de-risk investments in drought-resistant crops, cold storage, and micro-irrigation. Over six years of implementation, over 771,000 smallholder farmers, 55 percent of whom are women, have benefited, with average yields increasing by 24 percent.

Skeptics argue that adaptation returns are indirect and difficult to observe through conventional measures of financial performance. At the project level, the observation challenge is real. At the system level, however, it is not. Markets price adaptation through aggregate risk exposure across portfolios, balance sheets, and economies, rather than individual projects. The challenge is not the returns from adaptation investment but the mismatch between who pays and who benefits. Adaptation generates economy-wide benefits that do not accrue to a single investor unless financial structures are designed to align incentives and share risk.

The financial architecture to support private investment in climate adaptation is already taking shape. Take the Climate Investment Fund for Pakistan, or CIFPAK. A United Kingdom and International Finance Corporation (IFC) blended adaptation facility launched in 2024, it combines concessional first-loss capital with IFC-managed investment and a separate technical assistance window. By mitigating early-stage development and structuring risks, it builds a pipeline of bankable adaptation transactions and mobilizes development finance institutions and private investors across agriculture, water, infrastructure, and climate-linked financial services.

The most effective urban adaptation measures are already well established. Urban forests, parks, green roofs, cool corridors, building-level cooling, reflective surfaces, lakes, and modern storm-drainage systems reduce heat stress and flood risk while improving air quality. These are not aesthetic upgrades; they function as core infrastructure that reduces risk and protects economic performance. Far from pilot projects, these interventions are now being integrated into citywide systems. Ahmedabad’s Heat Action Plan (India) and Medellín’s green corridors (Colombia) demonstrate how adaptation can deliver durable health, economic, and social returns when embedded at scale.

The binding constraint is execution. What remains missing is deployment architecture: the pipelines, intermediaries, and risk-sharing mechanisms that translate adaptation from need to transaction. Africa’s adaptation finance ecosystem is beginning to close this gap. The Adaptation Finance Window for Africa, launched by the Investment Mobilisation Collaboration Alliance (a global coalition of donor and development partners), has committed forty million euros (nearly $47 million) to de-risking private investment in climate-resilient infrastructure, using catalytic capital.

For investors, adaptation is no longer a question of values but of valuation. Investors with exposure to long-duration infrastructure and real assets have embedded physical climate risk into asset analysis for years. What has changed is breadth. Shorter-horizon capital is now being forced to price risks once assumed to sit safely beyond typical holding periods. When structured well, adaptation protects service continuity and cash flows, delivering more predictable returns by reducing compounding losses.

Three features now determine whether adaptation becomes investable at scale: risk-sharing through guarantees, first-loss tranches, and insurance; standardization through repeatable structures and credible metrics; and local-currency alignment, since adaptation revenues are inherently domestic.

The coming decade will determine whether the Global South builds infrastructure that deepens climate vulnerability or establishes the foundations for resilient systems that unlock prosperity. At its core, this is a capital allocation decision with long-term implications for risk and returns. The Global South represents trillions of dollars in investment across infrastructure, systems, and services. Whether those assets appreciate or deteriorate as climate impacts intensify will depend on whether adaptation is embedded at the point of allocation. Mitigation remains essential, but without adaptation, both resilience and returns will remain fragile.

Sara Lemniei is the chief executive officer of SLK Capital. She has two decades of experience across investment banking, principal investing, and financial and strategic advisory.

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In Iraq, China’s long game unfolds

Sardar Aziz and Mohammed A. Salih — Mon, 26 Jan 2026 20:30:00 +0000

Bottom lines up front

As China seeks new markets abroad and energy security at home, Iraq has become integral to Beijing’s plans in the Middle East.
Demographic and economic trends inside Iraq are pushing the country toward China.
Because Baghdad remains reliant on US protection, it is likely to continue hedging between Beijing and Washington.

When it comes to the beginning of the China-Iraq relationship, there are a number of starting points. Some are framed within the longue durée and civilizational discourse favored by the Chinese and cherished by the Iraqis. For instance, in his March 15, 2023, speech introducing the Global Civilization Initiative, Chinese President Xi Jinping invoked ancient cross-cultural exchange as the foundation of China’s modern outreach. Chinese officials talk about Iraq in similar terms. When Cui Wei, China’s ambassador in Baghdad, visited a local research center, he opened by recalling that “our ancestors—more than two thousand years ago—built the ancient Silk Road for friendly communication with the countries of the world . . . As for Iraq, it is a shining pearl on the Silk Road, which left China and Iraq with good memories.” In this narrative, Abbasid-era trade brought Chinese papermaking, gunpowder, printing, compasses, silk, porcelain, and tea to Iraq and, through Iraq, to the wider Middle East and Europe. In return, astronomy, calendars, medicine, spices, and arts moved eastward into China. This semi-mythical view of the Silk Road allows Beijing to distinguish itself from Western powers and present its presence in Iraq as rooted in deep history rather than modern geopolitics.

Alongside this civilizational rhetoric sits an official diplomatic starting point, and these two stories are mutually enhancing. China recognized the Kingdom of Iraq in 1942, though ties remained limited. A substantive relationship emerged after the 1958 coup led by Abd al-Karim Qasim and the two countries formally established diplomatic relations on August 25, 1958. Beijing viewed Qasim’s coup as part of a broader anti-imperialist realignment and saw Iraq through the lens of Cold War polarization. The Iraqi Communist Party’s strength reinforced this perception. During this period, China’s embassy in Baghdad became a key hub for distributing Maoist literature, part of Beijing’s effort to export revolutionary ideology.

A third foundation of the two countries’ relationship is personal and ideological, as demonstrated through figures such as former Iraqi President Jalal Talabani and, later, Adil Abdul-Mahdi. Talabani visited China in 1955 and met Premier Zhou Enlai, seeking support for the Kurdish national movement in Iraq. China declined, and Talabani later recalled realizing that Beijing’s stance on national questions was incompatible with Kurdish aspirations. Despite this refusal, he remained drawn to Maoist thought. Material links also emerged early: During the Great Leap Forward famine, Iraqi dates became an important ration for Chinese households, a memory now invoked in cultural exchanges pairing Iraqi dates with Chinese tea. These civilizational, diplomatic, personal, and material strands gave China a multilayered story about its presence in Iraq and prepared the ground for the more strategic phase that followed.

The modern relationship: War, weapons, and debt

The modern China-Iraq relationship took shape in post-Mao China, especially during the 1980s. By the onset of the Iran-Iraq War, China had begun prioritizing economic development and external markets—priorities later embodied in the Belt and Road Initiative (BRI). But Beijing’s approach to the two countries and their conflict was never purely economic. Deng Xiaoping saw an opportunity to counter Soviet influence as Moscow appeared to pivot toward Tehran. According to historian Pierre Razoux, China pursued three goals: containing the Soviet Union, expanding markets, and maintaining a balance between the two belligerents.

In practice, Beijing discreetly armed Iraq while avoiding any outcome that might destabilize Iran. Chinese shipments included T-59 and T-69 tanks (copies of the Soviet T-55 and T-62), Type 59 towed field guns (copies of the 130-milimeter M-46), Type 56 assault rifles (copies of the Soviet Kalashnikov), and millions of shells and assorted munitions. Throughout the war, China became Iraq’s third-largest arms supplier, after the Soviet Union and France. This arms trade generated substantial Iraqi debt and Chinese claims became the largest portion of Saddam Hussein’s external war debt, including roughly $8.5 billion in commercial obligations. These debts later provided Beijing with leverage as Iraq reentered the international system after 2003.

For much of the Shia elite, China—not the United States—is the preferred long-term partner.

The 1990–2003 sanctions era further shaped the economic relationship. Iraq’s isolation created openings for Chinese firms willing to operate under sanctions. In 1997, the China National Petroleum Corporation (CNPC) signed a production-sharing agreement (PSA) for the al-Ahdab field in the southern Iraqi city of Kut—an uncommon contract model in Iraq, where service contracts had become the norm after the 1970s nationalization. Baghdad’s weakened negotiating position and China’s opposition to sanctions facilitated the deal. Although the PSA did not fully materialize in the 1990s, it laid the contractual groundwork for Beijing’s return in the post-Hussein era.

Talabani turns to Beijing for debt relief

After 2003, Talabani’s long-standing ties with China became politically consequential. While serving with the US-run Coalition Provisional Authority in 2003, he traveled to Beijing. China reopened its Baghdad embassy in 2004. The decisive moment came in 2007, when Talabani, as Iraq’s president, returned to China to negotiate debt relief. Beijing agreed to cancel all Iraqi sovereign debt and 80 percent of commercial debt—roughly $6.4 billion. This forgiveness cleared the way for reviving pre-2003 energy contracts.

When the Ahdab project was relaunched, its PSA was converted to a service contract aligned with Iraq’s post-nationalization model. Chinese officials cast the project as a flagship for renewed cooperation.

China’s emergence as a major oil partner aligned with the preferences of Iraq’s new Shia-led political class. Reporting from 2008 indicated that Iran encouraged Iraqi authorities to steer contracts away from US oil majors. For many Shia actors, Western oil companies symbolized the risk of external interference—a view shaped partly by the legacy of the 1950s struggle over Iranian oil nationalization. Chinese firms, by contrast, were seen as politically neutral and commercially pragmatic. Their willingness to operate amid insecurity, corruption, and low margins further strengthened their position.

As ties deepened, Iraqi leaders sought broader economic engagement with China. After Talabani’s visit, then Prime Minister Nouri al-Maliki traveled to Beijing in 2011 to solicit Chinese participation in infrastructure and power generation to “help Iraq restore its own industry.” The partial withdrawal of US forces then opened additional space for China. With much of Iraq’s oil revenue consumed by salaries and routine government spending, officials looked for alternative ways to finance major projects. Prominent Iraqi politician Ahmed Chalabi proposed borrowing from China for large-scale infrastructure—a concept that fed into the 2019 “oil-for-infrastructure” framework.

Prime Minister Adil Abdul-Mahdi’s 2019 trip to Beijing marked the high point of this approach. He described China as a partner for rebuilding Iraq’s infrastructure and embraced an explicitly pro-China development narrative. In an op-ed for China Daily, he argued that “a new world is emerging as the old one disintegrates” and cast the BRI as an inclusive path to long-term mutual benefit. The delegation’s message—with its emphasis on speed, efficiency, and technology transfer—captured Baghdad’s hope that China could deliver what Western firms, in Iraqi eyes, had not.

‘Everyday dependence’ leads to lasting ties

These elite choices reflect deeper social and economic shifts. Iraq’s 2024 population census revealed that the country is urbanizing rapidly: More than 70 percent of Iraqis now live in cities. Urban households demand appliances, cars, electronics, and clothing, but face limited purchasing power. Chinese products—cheaper and increasingly familiar—meet these households’ needs. Over time, this has created a form of everyday dependence on Chinese goods that reinforces the broader geopolitical relationship. Affordability has gradually translated into acceptance, and acceptance into trust.

These economic dynamics intersect with a changing political discourse. Recent election cycles in Iraq have seen a sharp decline in the prominence of democratic norms—rule of law, human rights, institutional accountability—in party narratives. As Western states also appear less committed to these values, Iraqi elites increasingly feel less pressure and elevate other priorities. Concepts linked to China’s development model—service provision over rights, infrastructure over institutions, efficiency over process—have gained traction across the political spectrum.

China did not originate these trends, but its model resonates with and, in some cases, strengthens them. Beijing offers investment without political conditions, engagement without democratization requirements, and diplomatic rhetoric emphasizing non-interference in domestic politics—particularly in places such as Iraq. For many Iraqi leaders, this combination is appealing. And for many Iraqi consumers, China’s presence is already embedded in daily economic life.

Together, these forces—historical narratives, wartime ties, debt diplomacy, energy cooperation, and structural shifts in Iraq’s society and political culture—have produced a relationship that is both durable and expanding. While Iraq’s future trajectory will depend on broader regional and global dynamics, China’s position in the country is now anchored in multiple layers of the Iraqi state and society, making it a long-term feature of Iraq’s economic and geopolitical landscape.

Where China is most active in Iraq

China has established an expansive and multisectoral presence in Iraq, spanning energy, telecommunications, consumer markets, and education. Its strategy appears aimed at deepening Iraq’s economic reliance on China across vital sectors, thereby embedding Beijing’s influence within Iraq’s long-term development trajectory. Bilateral trade between the two countries amounted to $54 billion in 2024, and China is the major source of foreign direct investment in Iraq, contributing $34 billion in 2023.

Energy dominance

For decades, China’s interest in Iraq has centered primarily on its vast energy resources. This manifests in purchasing Iraqi oil and developing Iraq’s energy infrastructure—both of which are vital to China’s energy security and geopolitical ambitions. In 2024, China imported slightly more than 1 million barrels per day (bpd) from Iraq, or 10 percent of its total crude imports.

Chinese state-owned firms dominate the oil sector in Iraq, which is the second-largest producer in the Organization of the Petroleum Exporting Countries (OPEC) after Saudi Arabia and home to the world’s fifth-largest reserves. Reports suggest Chinese companies manage about one-third of Iraq’s 145 billion barrels of proven reserves and hold direct shares in roughly 24 billion barrels. They produce two-thirds to three-quarters of Iraq’s output of slightly more than 4 million bpd, with CNPC alone accounting for half of total production.

Initially limited to state firms, Chinese investment has recently expanded to include private energy companies attracted by Baghdad’s favorable contract terms. These firms were licensed in August 2025 to develop several new fields and plan to add 500,000 bpd to Iraq’s production by 2030, as Baghdad targets 6-million-bpd capacity.

While Beijing’s role secures its energy interests, it also deepens Iraq’s tilt toward the East—an orientation encouraged by Shia political factions allied with Iran. These groups promote stronger ties with China (and, to a lesser degree, Russia) as a means of reducing dependence on Washington and circumventing US pressure.

Mindful of the optics of deepening ties with China, Prime Minister Mohammed Shia al-Sudani sought to reengage US energy firms. During his April 2024 visit to the United States, he met oil executives in Houston and urged them to renew investment. The effort appeared to bear some fruit. In October 2025, Exxon Mobil signed an agreement to re-enter the Iraqi market and operate the Majnoon field in Basra, after its full exit from Iraq in January 2024 and subsequently handing over of the West Qurna 1 field to PetroChina.

Telecommunications and digital infrastructure

China’s involvement in Iraq’s telecom sector predates Hussein’s fall. Chinese company Zhongxing Telecom Co. first entered Iraq in 1999, when the country remained under international sanctions. Around the same time, Huawei began clandestinely building a fiber-optic network for Iraq’s military, which was later bombed during a 2001 US-UK air raid—an episode that led to Washington’s view of Huawei as a national security threat.

In 2003, following the overthrow of the Baath regime by the United States and its allies, Huawei returned to Iraq’s emerging telecom market via Asiacell, the country’s leading carrier. In 2011, Robert C. Fonow, a US State Department adviser to Iraq’s Telecommunication Ministry, told the Washington Times that Huawei effectively “owned” Iraq’s telecom sector, alleging the firm had received more than six hundred contracts worth billions of dollars—some indirectly financed by US reconstruction funds. 

Today, Chinese technology firms remain central to Iraq’s digital expansion. In June 2025, Asiacell and China Mobile International (CMI) signed a memorandum of understanding (MoU) to expand enterprise-level digital services, billed as accelerating Iraq’s digital transformation through CMI’s global expertise. Huawei also partnered with Iraq’s Communication and Media Commission, Iraq’s top regulatory body in the field, to train personnel in cybersecurity. Iraqi officials have publicly encouraged deeper Chinese investment in telecommunications, signaling a sustained partnership in digital infrastructure.

Consumer markets and renewable energy

China’s commercial reach extends to Iraq’s consumer markets—from electronics to vehicles to solar energy. In the first half of 2025, Iraq imported eighteen thousand Chinese cars worth $639 million, a 30-percent increase over the same period in the previous year. The Kurdistan region accounted for the largest share, as consumers favored affordable yet feature-rich Chinese vehicles. For example, a 2025 MG GT sedan sells for about $8,850, compared with around $20,000 for comparable Asian or Western models. Similarly, a BYD hybrid sport utility vehicle (SUV) retails for $24,300, well below competitors’ SUVs. Local dealers report that “buyers who once paid more for American cars from Dubai now prefer Chinese cars with leather interiors, large screens, and panoramic roofs at a fraction of the cost.”

Chinese solar panels have also surged. According to the Washington-based Attaqa Energy Research Group, Iraq ranked third in 2025 among Arab-majority states for Chinese solar imports. In the year’s first half, Iraq imported 0.9 gigawatts of solar panels—a nearly 600-percent increase in terms of solar generation capacity from 2024—driven by state-backed projects to install solar systems in homes, schools, and public buildings.

Education, media, and cultural outreach

Alongside its economic footprint, China has ramped up soft-power efforts to win Iraqi hearts and minds. Keen to counter critical media coverage of China, Chinese diplomats at times engage with Iraqi media—particularly to push back against criticism on issues such as the Uyghur crisis in Xinjiang.

Chinese universities are offering around eighty scholarships to Iraqi students for the 2025–2026 academic year. The Chinese consulate in Erbil has backed the 2019 establishment of a Chinese language program at Salahaddin University in Erbil—one of only two such programs in the Middle East. It also helped create a China Studies Center at Sulaimaniyah University, which publishes a Kurdish-language magazine introducing China and supports translation of Chinese books.

While Washington’s retreat from democratization and aid has eroded its image, China’s cultural outreach, development model, and messaging resonate with many Iraqis. 

China’s exchange programs regularly bring Iraqi civil servants and professionals to Chinese institutions for technical training. The Chinese consulate in Erbil now plans to establish the Great Wall organization to strengthen bilateral relations by bringing together Iraqi Kurds who have visited China through various Beijing-sponsored exchange programs. Beijing has further expanded scientific cooperation by signing an agreement with Iraq in 2025 to develop a “peaceful nuclear technology program,” including construction of Iraq’s first nuclear training reactor for academic use in nuclear physics and radiological sciences. The initiative, led by Minister of Higher Education Na’im al-Abboudi—a senior member of the Iran-backed Asa’ib Ahl al-Haq movement—has drawn scrutiny in Washington for its potential geopolitical implications.

Beijing has a distinct approach to Kurdistan

China’s relationship with the Kurdistan Region of Iraq (KRI) differs in tone and texture from its engagement with federal Iraq, yet both align with Beijing’s broader strategy. Energy remains the core of China-Iraq relations, and China’s activities in the KRI ultimately reinforce that foundation. However, the China-Kurdistan relationship appears more diverse, shaped by the autonomous region’s social openness and China’s preference for a low-risk, apolitical presence.

Historically, the relationship has two main strands. The first dates to Talabani’s 1955 visit to Beijing and his fascination with Maoism, which shaped aspects of his political worldview and indirectly influenced the early identity of his party, the Patriotic Union of Kurdistan (PUK). After 2003, the PUK became essential for rebuilding China-Iraq ties, and it is no coincidence that every Iraqi ambassador to China since 2003 has been from the PUK, reflecting both personal networks and political continuity.

Another key moment in the relationship was China’s opening of its consulate in Erbil in 2014. At the ceremony, then Kurdistan Regional Government (KRG) Prime Minister Nechirvan Barzani described it as “the first step toward building a new phase in bilateral relations,” signaling opportunities in politics, culture, infrastructure, and commerce. As the KRG’s former foreign relations chief, Falah Mustafa, put it, China’s permanent seat on the UN Security Council gives its presence in Erbil symbolic and practical weight. Yet Beijing has remained cautious in its political engagement with Kurdish authorities, consistent with its 1991 abstention on UN Resolution 688 condemning Hussein’s repression of the Kurds.

Despite this reticence, China has built a wide-ranging network of relationships. The Chinese consulate in Erbil regularly invites Kurdish political parties, universities, media outlets, and government ministries to short study programs in China. This resembles earlier US public diplomacy programs but is more ideologically neutral. Beijing makes a point of engaging all political currents, including leftist, nationalist, and Islamist parties. As a former KRG adviser noted in an interview with one of the authors, “During a trip to China, I met a member of the Kurdistan Communist Party and a cadre of an Islamic party attending the same course.” Kurdish officials appear increasingly attentive to China’s rise and its willingness to support development in Iraq and Kurdistan. This was reflected in comments by Sulaimaniyah Governor Haval Abubakr, who recently described China as “the America of the East.”

China’s expanding activity in the KRI also intersects with the US-KRG relationship. As the United States has constructed a massive new consulate complex in Erbil, intended as a physical symbol of long-term commitment, China has also signaled interest in building a new consulate of its own. However, while the KRI has deep diplomatic and security ties with the United States, its relationship with China remains overwhelmingly concentrated in trade and cultural domains. Indeed, this is a deliberate choice on Beijing’s part. By avoiding security and identity questions, China cultivates what might be described as a “decaf” relationship—active and useful, yet stripped of political commitments.

Kurdistan’s openness to the world enables this strategy. Travel is highly valued socially, and China’s invitations arrive at times when economic hardship—such as salary delays by Baghdad—limits mobility. “I managed to have a trip in a time of salary crises,” a Sulaymaniyah lecturer interviewed for this report noted after joining a Chinese study program. This openness has provided fertile ground for Beijing’s soft-power outreach.

China’s public diplomacy is more developed in the KRI than in the rest of Iraq. It promotes familiarity with Chinese institutions, culture, and political narratives through sustained engagement. This has shifted public perceptions and increased interest among Kurdish students and professionals. As noted earlier, Beijing has supported institutions such as China in Kurdish, the China Studies Center in Sulaimaniyah, and the Chinese Department at Salahaddin University, with plans for additional language programs. Events like Chinese Film Week and commemorations of the “80th Anniversary of the Victory of the Chinese People’s War of Resistance Against Japanese Aggression” give China cultural visibility and institutional depth. Collectively, these centers make cultural programming and exchanges smoother and more consistent.

Over the past two decades, China’s expanding presence has begun to shape Iraq’s economic future, regional role, and relations with the United States.

This network also supports China’s commercial aims. The long-standing Asiacell-Huawei partnership is illustrative. Asiacell, headquartered in Sulaymaniyah, is Iraq’s largest telecom company, and its relationship with Huawei began on the eve of the 2003 US invasion. In February 2003—anticipating conflict—Huawei scouted opportunities in Kurdistan. When Washington issued its ultimatum to Hussein in March, Huawei moved Asiacell staff to Shenzhen for emergency training. In 2023, the two firms celebrated the twentieth anniversary of their “precious partnership,” outlining plans to integrate artificial intelligence into Iraq’s telecom services. Today, Huawei is the primary equipment provider to all major Iraqi telecom operators, a position rooted partly in its early foothold in the KRI.

China’s presence also shapes Kurdistan’s sociopolitical landscape. Chinese goods—from household items to solar panels to electric vehicles—dominate local markets. As a Sulaymaniyah trader interviewed for this paper explained, “You cannot produce anything in Kurdistan, as the Chinese make it cheaper, even if it’s a pillow cover.” This economic dependency affects local production and, over time, influences political imagination. Concepts associated with China’s governance model—especially centralized party control and the importance of family connections—mirror existing patterns and appeal of China in Kurdistan and federal Iraq.

It is important to note that when it comes to strategic economic sectors, the KRG is not linked to China in the same way the federal government and the areas under its control are. For example, while the federal government’s energy sector is dominated by Chinese firms, there is only one Chinese-owned company—Addax Petroleum, owned by Sinopec—operating in the Kurdistan region’s oil sector.

How this growing closeness affects US policy 

As China prioritizes securing new markets abroad and ensuring energy security at home, Iraq has become integral to Beijing’s geoeconomic ambitions and economic statecraft in the Middle East region. Over the past two decades, China’s expanding presence has begun to shape Iraq’s economic future, regional role, and relations with the United States. Baghdad now faces the delicate task of balancing ties with both powers to avoid alienating either side. There is an economic and geographical logic driving Iraq’s relationship with China. China is the world’s largest energy importer, and Iraq—one of the world’s top oil producers—naturally falls within Beijing’s orbit of interest. Iraq’s infrastructure gaps and development needs also make Chinese capital and expertise attractive, if not indispensable, while Chinese consumer goods remain affordable for most Iraqis.

However, the broader implications of this relationship cannot be understood solely through economics. China’s increasing footprint unfolds against the backdrop of intensifying US-China rivalry and the global drift toward multipolarity. Iraq is gradually emerging as a site of subtle competition between these two powers—particularly in areas such as infrastructure (especially energy), digital networks, and potential land-based transit corridors. Yet, given the deeply interconnected nature of today’s global economy and Iraq’s heavy reliance on external actors for technology, investment, consumer products, and security, it is unrealistic to expect Iraq to de-link from either China or the United States.

Beyond economic logic, Iraq’s deepening engagement with China reflects political calculations and rationale at the domestic, regional, and global levels. Globally, China’s ascent since the mid-2010s has offered states like Iraq an alternative pole through which to diversify partnerships and reduce dependence on the West. Engagement with Beijing thus forms part of Baghdad’s broader hedging strategy—maintaining ties with multiple global actors to avoid overreliance on any single one.

Domestically, this orientation intensified as Shia parties consolidated unprecedented control of the Iraqi state, particularly after the war against the Islamic State of Iraq and al-Sham (ISIS) and the weakening of Kurdish autonomy and political influence in Iraqi politics after the unsuccessful Kurdish independence bid in 2017. Many among Iraq’s new Iran-backed power brokers view China as a politically neutral strategic partner—one that provides investment without demanding reforms or pressing governance conditions. At the elite level, China appears to have the upper hand in the soft-power contest with Washington concerning the appeal of the two countries and their approaches to Iraq. While Washington’s retreat from democratization and aid has eroded its image, China’s cultural outreach, development model, and messaging resonate with many Iraqis. 

The Iran factor

Regionally, openness toward China has grown since the early 2010s, amid the rise of the Iran-led Shia axis. Many dominant Iraqi Shia parties maintain deep ties with Tehran, and their affinity for China aligns with Iran’s own pursuit of a closer relationship with Beijing. Aware of the risks of being perceived as leaning too heavily toward China—and also Iran, particularly in the aftermath of the October 7, 2023, conflict between Israel and Gaza and the gradual weakening of the Iranian-led axis—Baghdad has recently sought to rebalance its approach by inviting more US investment in its energy sector.

Iraq’s recent deals with US energy companies such as ExxonMobil, Chevron, and others reflect the recognition among the dominant Shia political class that excessive dependence on China risks political backlash and economic vulnerability, particularly as Washington intensifies efforts to contain Beijing’s global influence. This dynamic highlights the limits of hedging for resource-rich countries like Iraq that lack the structural leverage to shape regional outcomes or reduce dependence on the United States.

It remains unclear whether Iraq’s renewed outreach to US companies signals a genuine attempt at balanced relations or a tactical effort to ease US pressure determined to squeeze Iraq as part of its maximum pressure campaign against Iran. What is clear is that China’s expanding economic role in Iraq is a growing concern for Washington. Greater Chinese market share means shrinking space for US businesses and, more broadly, a potent erosion of US influence that is more than symbolic. Given that the post-2003 Iraqi order was created through US intervention—and later saved from ISIS’s existential threat through a massive US-led coalition—China’s growing role in Iraq reflects a deeper transformation in the landscape of external influence shaping the country.

Beijing’s digital infrastructure deals, including telecommunications and cybersecurity, could create new vulnerabilities for US-Iraq security cooperation not unlike Huawei’s engagement with Iraq under Hussein. The use of Chinese companies in strategic sectors—ports, refineries, and data networks—risks limiting the space for US and Western governments and companies’ engagement with Iraq. Crucially, Iraq’s ambitious Development Road Project (DRP) connecting the Gulf to Turkey and Europe could also intersect with China’s BRI, particularly its sea route portion, and diversify Beijing’s options for trade with the Middle East and from there to Europe. Despite a cool initial reception, Beijing now appears open to supporting the Iraqi DRP, perhaps recognizing its value in shortening overland trade routes with Europe. This all fits into China’s geoeconomic strategy, expanding trade, increasing access to critical energy resources, and creating new markets for Chinese companies.

However, this is not the entire story. Iraq appears to follow a compartmentalized approach to relations with both the United States and China, whereby Baghdad has cultivated deeper ties with China in trade, energy, and telecommunications while remaining heavily dependent on the United States in finance, security, and diplomacy. Revenue from Iraq’s oil exports flows into the Federal Reserve Bank of New York, from which the Central Bank of Iraq withdraws regularly. Iraq’s monetary and financial systems thus remain deeply tethered to the US financial system and Washington’s oversight. Any disruption in this relationship—such as sanctions or delayed clearances—could trigger liquidity crises in Iraq’s fragile economy.

Iraq’s security dependence on Washington also remains quite firm for now. The Iraqi security forces rely on US intelligence, equipment, and training for operations against ISIS and for broader defense needs. Advanced systems such as F-16s and Abrams tanks further anchor this relationship. Iraq sits at the intersection of three core US priorities: countering Iranian influence, stabilizing global energy markets, and—after the transformations set off by October 7, 2023—rebuilding a regional order friendly to Washington. As part of this broader regional reality security links remain important for both sides, particularly as Iraq’s Shia ruling class feel threatened by the developments over the past couple of years.

Diplomatic asymmetry is even deeper: Iraqi prime ministers routinely seek White House invitations as symbols of legitimacy and international recognition. Since 2003, Iraqi leaders at the presidential, prime-ministerial, and foreign-ministerial levels have visited Beijing on numerous occasions, yet the only senior Chinese official of comparable rank to visit Iraq during that period was Foreign Minister Wang Yi in February 2014. Iraq invests in the relationship far more than China does.

This produces a paradox: Iraq remains reliant on US protection but is increasingly integrated into China’s commercial ecosystem. Unless the United States expands its economic engagement, its influence will continue to erode. For much of the Shia elite, China—not the United States—is the preferred long-term partner. Yet Iraq cannot function without engagement with both in some form. Historically, Iraqi attempts to shift too far toward one camp produced destabilization, including coups during the Cold War. The country’s social, economic, and security needs, along with its geopolitical position, require a diversified and compartmentalized approach to major global powers—though not one that entails equal reliance across all sectors.

Energy is a key arena. China is a major importer of Iraqi oil while increasingly serving as Iraq’s primary supplier of solar panels and renewable technologies. At the same time, China’s domestic energy consumption is shifting. The International Energy Agency (IEA) notes that China’s use of gasoline, jet fuel, and diesel—totaling 8.1 million bpd—declined slightly in 2024 and stood 2.5 percent below 2021 levels. As global oil demand plateaus and buyers gain greater leverage, Iraq has become increasingly anxious not to lose China as a primary customer.

Demographic and economic trends inside Iraq are particularly important as they further push the country toward China. Rapid urbanization, high birth rates, and low incomes make Iraqi households dependent on inexpensive imported goods. China is often the only viable supplier. As Iraqi society and consumption patterns evolve, so will its economic and political tilt toward Beijing. By contrast, the United States has lost most of its non-military leverage—aside from sanctions and coercive tools—partly due to years of inconsistent engagement. Moreover, the nature of Iraq’s rentier economy, and its governance model built on patron-client relations and the informal patronage networks that sustain it, requires the rapid development of oil resources as the main pillar supporting this system. For the reasons outlined above, Chinese firms represent a more reliable option for Iraq to ensure the continued expansion of its oil sector and the conversion of those revenues into political power.

Against this backdrop, Iraq’s trajectory suggests an ongoing use of hedging as its primary policy, albeit an uneasy one. Hedging is a strategic behavior through which a state avoids clearly aligning vis-à-vis two powerful actors, maintaining instead an in-between, ambiguous, flexible position. Over the past couple of years, the Shia Coordination Framework-led government under Sudani has noticeably embraced this posture. Yet Iraq’s hedging exercise remains constrained by internal and external pressures, particularly Iran’s influence. Tehran’s networks—militias, political allies, and economic ties—limit Baghdad’s freedom of maneuver. Other constraints include anti-normalization legislation in the Iraqi Parliament targeting Israel, which prevents Iraq from joining the Abraham Accords and expanding ties with US allies. The outcome of recent Iraqi parliamentary elections will likely reinforce this dynamic. Although Sudani’s coalition performed strongly, Iran-aligned militias and parties performed far better, ensuring that hedging will continue—but in a narrow and contested space at least for the foreseeable future.

About the authors

Sardar Aziz, PhD, is a researcher, columnist, and adviser, and a nonresidential affiliate at the IRIS center at the American University of Iraq, Sulaimani. He is a former senior adviser to the Kurdistan Parliament in Iraq. He has worked extensively on China and Iraq.

Mohammed A. Salih is a nonresident senior fellow in the Foreign Policy Research Institute’s National Security Program and a researcher and journalist based in the United States. He holds a PhD from the University of Pennsylvania and has written extensively for more than two decades on Iraq, Kurdish, and regional affairs.

Explore the program

The Iraq Initiative is driving policy-oriented programs and analysis that advance Iraq’s stability and sovereignty, regional integration, and democratic and economic development. It also aims to promote a strengthened US-Iraq partnership.

Lisa Basquel: The transatlantic energy fault line at Davos 2026

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Davos underscored how leaders are navigating global energy crossroads

Lisa Basquel, Elina Carpen, Amy Drake, Alexis Harmon — Mon, 26 Jan 2026 16:21:04 +0000

Under the theme “A Spirit of Dialogue,” the 2026 World Economic Forum (WEF) annual meeting once again brought world leaders, CEOs, policymakers and civil society representatives to Davos, Switzerland, to confront some of the most pressing challenges facing the global order.

At the heart of this dialogue was the global energy agenda. Delegates from around the world debated how to reconcile energy security, market stability, climate objectives, and economic competitiveness—all while navigating intensifying geopolitical pressures, divergent national strategies, and the risks and opportunities posed by new technologies.

What is the path forward for global energy security? Our experts weigh in with key takeaways from the energy conversations at Davos.

Click to jump to an expert analysis:

Amy Drake: Under an energy security imperative, global leaders find common ground in nuclear energy expansion

Elina Carpen: Carney positions Canada as a reliable, middle power partner with vast energy resources to offer

Alexis Harmon: At Davos, global leaders treated critical mineral cooperation as economic realism

The transatlantic energy fault line at Davos 2026

Against the backdrop of US-EU tensions over Greenland and trade, Davos 2026 revealed that the transatlantic energy divide is as much about trust as it is about climate targets or fuel choices. Energy policy emerged as a proxy for deeper disagreements over how each side strengthens economic competitiveness, safeguards strategic autonomy, and asserts their authority in an increasingly fractured global order.

From Washington’s perspective, energy was framed as a source of economic strength and geopolitical influence. US officials emphasized market scale, energy abundance, and affordability. US President Donald Trump pointed to surging oil and gas production and a renewed embrace of nuclear power as evidence of America’s energy dominance, while criticizing Biden-era climate policies as the “Green New Scam.” He singled out wind power as inefficient and expensive, reflecting a broader concern that Europe’s reliance on renewables had weakened its competitiveness. US Energy Secretary Chris Wright echoed these concerns, arguing that global investment in renewables is underdelivering on growth and affordability, calling for a doubling of global oil production and warning that European environmental regulations risk discouraging US exports and limiting market access for American producers.

Europe, by contrast, spoke the language of strategic autonomy. European Commission President Ursula von der Leyen was explicit that geopolitical shocks should be used to build “a new form of European independence.” Her emphasis on energy security, nuclear power, and homegrown renewables was not just about resilience and climate objectives, but about limiting exposure to external volatility. Her reference to ending “manipulation” in energy markets was a pointed signal: autonomy is no longer aspirational—it is a direct response to Europe’s diminishing trust in transatlantic energy cooperation.

What emerged most clearly from Davos’ energy debates was that this divide is no longer about hydrocarbons versus renewables. The United States sees energy as leverage; Europe sees it as sovereignty. Energy was just one thread in Davos’ crowded agenda, but it laid bare a deeper recalibration in the transatlantic relationship, with Europe preparing for a future less anchored in US leadership.

—Lisa Basquel is a program assistant with the Atlantic Council Global Energy Center.

Under an energy security imperative, global leaders find common ground in nuclear energy expansion

Set against shifting geopolitical tensions and diverging geoeconomic priorities, this year’s WEF annual meeting concluded with a unifying consensus among several world leaders: nuclear energy will play a crucial role in bolstering a diverse and resilient global energy system.

In his address last Wednesday, Trump praised nuclear energy’s safety and affordability, reiterating the administration’s staunch support of nuclear energy and its role in expanding America’s energy dominance agenda. Trump’s sentiments build on significant actions taken by the administration over the last year to reinvigorate the US nuclear energy industry, including four executive orders to build out the US nuclear fuel supply chain, enhance nuclear reactor testing, streamline reactor licensing, and enable the use of advanced nuclear technologies to support national security objectives.

Trump’s address marks the latest step in the administration’s strategy to reinvigorate US competitiveness in the nuclear export market while establishing energy independence. Earlier this month, the US Department of Energy announced a $2.7 billion investment to strengthen domestic uranium enrichment, another significant step toward meeting anticipated demand from new nuclear projects and shifting away from US reliance on imported Russian uranium.

Support for deploying nuclear reactors to secure energy independence was echoed by leaders from across Europe as the region urgently seeks to establish affordable, resilient energy systems. Price volatility and supply shocks continued to play a central role in energy discussions and were key drivers in remarks by von der Leyen, who highlighted nuclear energy’s role in lowering prices and cutting dependencies. Sweden’s energy minister Ebba Busch emphasized Sweden’s plans to orchestrate a “nuclear renaissance” to meet the country’s need for reliable, dispatchable energy, while Romania’s Minister of Energy Bogdan Ivan cited economic competitiveness as a driving factor behind Romania’s planned nuclear energy expansion.

In addition to government figures, international business leaders shared commonalities in their projections of the future nuclear energy landscape, attributing the success of prospective projects to “coalitions of the willing.” Progress in deploying nuclear reactors to strengthen nations’ energy independence will likely occur through regional and bilateral alliances, such as the EU nuclear alliance, Nordic-Baltic cooperation, renewed Japanese investment, and civil nuclear cooperation between the United States and Canada.

While the promises and pitfalls of artificial intelligence (AI) were at the center of this year’s WEF agenda, AI’s need for reliable, 24/7 power dominated energy conversations. Meta is the latest of several tech companies that have signed historic partnerships with US nuclear reactor developers to meet data centers’ exponential energy demand. Last March, major tech companies joined a pledge to support the goal of at least tripling global nuclear capacity by 2050. As the global race for AI leadership intensifies, industry leaders acknowledged a key convergence in nuclear technology’s potential to provide secure, baseload power and to establish AI competitiveness.

This year, Davos hosted its first panel focused on nuclear energy in Africa, exemplifying the global momentum surrounding the sector and its potential to meet rising electrification demands. Leaders from countries considering new nuclear energy projects, such as Paraguay and India, expressed intentions to pursue domestic civil nuclear programs, displaying a shared recognition of nuclear energy’s role in catalyzing sustained economic growth and competitiveness in emerging markets.

The conversations at Davos reveal a growing consensus and a clear market signal—nuclear energy has emerged as an imperative across national energy agendas as nations’ shared visions materialized on the global stage. The successful deployment of nuclear energy technologies at scale rests on dedicated policies, investments, and cooperation to ensure a secure and sustainable energy system.

—Amy Drake is an assistant director with the Atlantic Council Global Energy Center.

Carney positions Canada as a reliable, middle power partner with vast energy resources to offer

Amid a series of remarks from global leaders at Davos 2026, Canadian Prime Minister Mark Carney’s address captured international attention. Carney’s speech, “Principled and pragmatic: Canada’s path,” outlined a new course forward for Canada and other middle power countries, pointing to energy as a critical enabler for strengthening emerging bilateral and multilateral partnerships.

Carney’s address offered a striking assessment of the current rules-based international order, positing that the conventional group of great power countries have taken advantage of their influence over financial mechanisms and global supply chains to coerce their smaller and more vulnerable counterparts into zero-sum relationships. In response, to other middle power countries, Carney offers collaboration with Canada as an alternative to the current global framework. In line with the theme, “A Spirit of Dialogue,” Carney marketed Canada as a stable partner that is looking to redefine its foreign partnerships and establish a new standard for international cooperation. Carney outlines a new strategy of “variable geometry”—creating different coalitions for distinct issue sets—that aims to reduce the economic and security exposure of middle power countries.

Energy, it appears, will play a key role in Canada’s diversification process. Carney pointed to Canada’s status as a self-proclaimed energy superpower and outlined its ambition to fast track over a billion dollars of domestic investment in critical minerals, AI, and energy development. With vastcritical mineral reserves and energy resources, partnerships with Canada offer a multitude of opportunities for new foreign partners to build on their own domestic energy security initiatives. New agreements already formed with China and Qatar on electric vehicle imports and energy infrastructure projects underscore that Carney’s rhetoric is backed by action.

As we move forward from Davos, Canada’s prospective realignment away from great power allies raises questions about the future of its traditional trade partnerships. This pivot could play a critical role in the upcoming review of the US-Mexico-Canada Agreement and will shape the future of US-Canada trade and energy cooperation.

—Elina Carpen is an associate director with the Atlantic Council Global Energy Center.

At Davos, global leaders treated critical mineral cooperation as economic realism

At Davos 2026, minerals and materials were a common thread underpinning conversations ranging from the expansion of AI to the deployment of additional energy capacity. Overall, discussion clustered around two intertwined themes: scale and cooperation.

First, there was a recognition of the sheer material scale required to build the future energy and digital economy. Conversations around AI, electrification, and clean energy deployment repeatedly circled back to the physical reality underpinning these ambitions. While policy debates often fixate on niche critical minerals, Davos speakers emphasized that the challenge is far broader, encompassing massive, sustained demand for foundational materials like copper. It was clear that leaders increasingly see the energy transition and AI boom not just as technological revolutions, but industrial ones—and that they recognize current mining and processing pipelines are nowhere near aligned with projected demand.

Second, and more unexpectedly, Davos 2026 leaned heavily into cooperation on minerals, reflecting the Forum’s theme, “The Spirit of Dialogue.” Despite familiar rhetoric around strategic competition and US–China tensions, many leaders framed collaboration as pragmatic rather than idealistic. Carney pointed to discussions around a G7 critical minerals buyers’ club to reduce volatility and coordinate demand, while Saudi Minister of Industry and Mineral Resources Bandar Alkhorayef described international collaboration on mineral supply as simply the “rational thing” to do.

Together, these discussions suggest a subtle but important shift from viewing minerals exclusively as a zero-sum geopolitical asset toward seeing them as a shared constraint on global economic growth. With the Trump administration’s inaugural Critical Minerals Ministerial set for February 4, this emphasis on collaboration appears poised to deepen.

—Alexis Harmon is an assistant director with the Atlantic Council Global Energy Center.

About the Authors

Staff

Lisa Basquel

Program Assistant, European Energy Security

Energy & Environment Europe & Eurasia

Staff

Elina Carpen

Associate Director

Global Energy Center Nuclear Energy Policy Initiative

Americas Energy & Environment

Staff

Amy Drake

Assistant Director

Energy & Environment Energy Transitions

Staff

Alexis Harmon

Assistant Director

Critical Minerals Geopolitics & Energy Security

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2026 will be a big year in the Western Balkans. Here’s what to watch.

Amanda Thorpe, Stuart Jones — Fri, 23 Jan 2026 21:07:45 +0000

WASHINGTON—The past year was a dynamic one for transatlantic relations, and the Western Balkans were no exception. In 2025, countries in the region continued to look to the United States, the European Union (EU), and each other for increased economic investment, expanded infrastructure connectivity, and greater regional stability. At the same time, Washington delivered several mixed signals about the scope and durability of its future engagement with Europe, while Brussels remained ambiguous about the timeline for EU accession for several Western Balkan countries.

If the trends evident in 2025 persist into the year ahead, then Western Balkan countries may increasingly need to assume greater agency in shaping their own trajectories. What follows is an overview of key developments in the past year and the issues to watch in the year ahead in this important region.

Bosnia and Herzegovina

For Bosnia and Herzegovina, 2025 was in part about looking to the past, as leaders marked the thirtieth anniversary of the US-brokered Dayton Peace Agreement that ended the Bosnian War. There were several notable commemorations of the anniversary, including in Dayton at the NATO Parliamentary Assembly Spring Session, as well as in Sarajevo and Washington. These events were marked by gratitude but also uncertainty over the country’s future. The agreement was never intended to be Bosnia and Herzegovina’s lasting constitutional framework, but it has served that function for the past three decades.

The past year also raised questions about the future, with the White House and Congress bringing a sense of uncertainty to this region by sending mixed and, at times, conflicting signals. Take, for example, the Western Balkans Democracy and Prosperity Act, which was attached to the Fiscal Year 2026 National Defense Authorization Act and signed into law in December. The act calls for sanctions on those who have “undertaken actions or policies that threaten the peace, security, stability or territorial integrity of any area or state in the Western Balkans.” But just weeks earlier, the US Treasury lifted sanctions on Milorad Dodik, Republika Srpska’s Kremlin-friendly former leader, as well as his associates, even though he has long threatened secession from Bosnia and Herzegovina.

More broadly, the 2025 US National Security Strategy (NSS) cast doubt on the US commitment to Europe going forward. If the United States reduces its engagement and presence in Europe, then Bosnia and Herzegovina, which has relied on international support since the 1990s for its institutional stability and capacity for effective governance, could be affected. Furthermore, the NSS created more than slight anxiety in Europe with the veiled threat of US intervention in domestic European politics.

As it adjusts to any US changes in the year ahead, Bosnia and Herzegovina should also advance its own agenda. Sarajevo should, for example, aim to advance major constitutional reforms and demonstrate its ability to complete major infrastructure projects. One such project that will test Bosnia’s capacity for governance is a proposed US-Bosnia southern interconnector pipeline, which would reduce the country’s dependence on Russian energy by importing gas via Serbia, terminating in Croatia. The pipeline is perhaps the best near-term example of a project that, if properly structured, can strengthen Bosnia’s institutions and take account of ethnic minority concerns but not be beholden to their demands.

Serbia

Serbia has been rocked by student protests since November 2024, when a railway station canopy collapsed in Novi Sad, killing sixteen people in what the protesters view as a preventable tragedy resulting from state corruption. Whether the protesters will be successful in their demand for early elections is uncertain, though President Aleksandar Vučić has publicly alluded to the possibility.

While the EU has long shown greater patience with Vučić than many in Serbia may have hoped, the bloc’s statements in 2025 were increasingly stern regarding Belgrade’s arguably antidemocratic handling of the protests. Expect this European concern to continue in 2026 should Vučić fail to meaningfully address these protests and their underlying causes. However, Washington’s perspective toward Belgrade may diverge from that of Brussels, as the Trump administration in September 2025 committed to a new US-Serbia strategic dialogue, which signals a willingness to find common ground and work together.

Another key issue to watch in 2026 is Serbia’s move to force Russian state oil company Gazprom to divest from the Naftna Industrja Srbje (NIS) refinery in Pančevo after it became the target of US energy sanctions on Russia in October 2025. Removing Gazprom’s control from NIS is critical for Serbia’s energy and security agenda. Failure to divest would allow Russia to continue its effective control of Serbian energy and keep Serbia in US and European crosshairs when it comes to energy sanctions. Washington gave Serbia until March 24 to find an alternate owner; Hungary’s MOL Group on January 19 reached a provisional agreement to buy Gazprom Neft’s majority stake.

Albania

Albania will likely continue to make headlines in 2026 as one of the frontrunners for EU accession alongside Montenegro, and hopes are high in Tirana that it could finish negotiations by 2027. Albania is also preparing to host the 2027 NATO Summit.

However, corruption scandals among Albania’s governing elite threaten to stall the country’s accession progress. Last year, Tirana Mayor Erion Veliaj was detained on charges of corruption and money laundering, and separately corruption charges against former Deputy Prime Minister Belinda Balluku led to her temporary removal from office. Further, the National Agency for Information Society (AKSHI), the government’s main digital and information technology body, is under investigation for allegedly rigging public tenders.

These developments underscore Albania’s corruption challenge and the deepening contest between the country’s anti-corruption institutions and its entrenched political and economic interests. While Prime Minister Edi Rama’s negotiations with the EU have been effective, these recent scandals will put his government under more pressure from Brussels and could potentially slow the country’s accession timeline.

Kosovo

Prime Minister Albin Kurti has presided over an increasingly calcified caretaker government and worsening relations with Washington. In September 2025, the United States suspended the US-Kosovo strategic dialogue, the key platform for US engagement with Pristina. According to the Trump administration, it suspended the dialogue for two reasons: First, Kurti’s government failed to make measurable progress toward creating an Association of Serb Municipalities in northern Kosovo, one of the terms of the 2023 EU-brokered Ohrid Agreement between Pristina and Belgrade. Second, Kurti has proved unable to form a governing coalition after his party’s electoral victory last February.

In the aftermath of snap parliamentary elections this past December, Kurti’s Vetevendosje party will still need the support of coalition partners to form a government, but his increased share of seats in the new parliament will make this easier than after the parliamentary election in February 2025. The upcoming presidential election in March of this year will be another opportunity to help end the political paralysis in Pristina. The incumbent president, Vjosa Osmani, who is known for her positive efforts to align and cooperate with the international community, is running for reelection.

Montenegro

In 2025, Montenegro drew closer to Europe, expanded economic development, and strengthened its security and defense posture. It closed multiple EU accession chapters, welcomed a European Investment Bank office, and contributed to NATO and European efforts to push back on Russian aggression in Ukraine.

Among Western Balkan countries, Montenegro is widely seen as the frontrunner for the next EU accession. While the European Commission’s reports on the Western Balkans in 2025 highlighted more challenges than cause for praise, Montenegro continues to advance structural reforms, increase investment opportunities, and modernize its military capabilities. The next EU Enlargement Package, expected in late 2026, will be another opportunity for Brussels to assess Podgorica’s progress.

Looking ahead, Montenegro will likely continue to project a European and regional leadership role. In June, it will host the EU-Western Balkans Summit, which focuses on EU enlargement and accession. And throughout 2026 Montenegro will chair the meetings and events for the Berlin Process, the German-led initiative advancing economic integration in the Western Balkans. Beginning in November, it will also chair the Committee of Ministers of the Council of Europe, an influential post enabling Montenegro to set the Council of Europe agenda, promote initiatives, and provide leadership on sensitive political issues.

North Macedonia

North Macedonia made incremental, if limited, progress toward EU accession in 2025. According to the 2025 Enlargement Package report, North Macedonia made some gains in rule of law, public administration reform, and the functions of democratic institutions. However, Skopje continues to hold an understandably pessimistic view of the EU accession process as driven more by political leverage than technical sufficiency.

In 2019, the country implemented the Prespa Agreement, changing its official name to the “Republic of North Macedonia” in exchange for Greece dropping its threat to veto Skopje’s accession. But North Macedonia is still bound by a 2022 agreement levied by the French adding additional requirements to overcome Bulgarian concerns by amending its constitution to recognize the Bulgarian minority in the country.

The results of the municipal runoff elections in late 2025, including in Skopje, solidified the political momentum behind Prime Minister Hristijan Mickoski. Given this momentum, Skopje is unlikely to make the unpopular changes to its constitution in the year ahead. While the political instability in Bulgarian does not help, as snap parliamentary elections will be held in early 2026 for the eighth time in five years, there is little prospect of significant changes or willingness to move on this issue in North Macedonia.

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Wang Yi’s MENA tour was long on messaging, short on outcomes

Jonathan Fulton — Thu, 22 Jan 2026 12:17:45 +0000

Chinese Foreign Minister Wang Yi was in the Middle East recently, visiting the United Arab Emirates (UAE), Saudi Arabia, and Jordan from December 12 to 16. The trip was long on messaging and short on outcomes, as Wang worked to position China as a defender of free trade and a reliable partner for his hosts.

An unusual stop in Jordan

Of the three countries on Wang’s itinerary, Jordan stands out as unusual. Chinese leaders frequently engage with countries in the Gulf, but Jordan isn’t a typical destination for Beijing’s officials. While in Amman, he met with King Abdullah II, Crown Prince Hussein, and Deputy Prime Minister and Foreign Minister Ayman Safadi.

At the bilateral level, the message was that China wants to enhance the strategic partnership signed during the king’s 2015 visit to Beijing. This elevated partnership would focus on increased economic and investment cooperation and deeper political trust. As Wang conveyed to Safadi, “China will remain Jordan’s most reliable strategic partner in its development and revitalization process.”

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This is an odd description of the China-Jordan relationship, which is not especially strategic. There has been little in the way of political or security cooperation between the two; Jordan is deeply tethered to the United States, limiting opportunities for China to make serious inroads. The economic side of the relationship has also been modest. Data from the American Enterprise Institute’s China Global Investment Tracker shows relatively insignificant engagement, with $1.96 billion in investments over the past twenty years and $5.54 billion in construction contracts for Chinese companies in Jordan since 2005. Trade has also been muted. Data from 2023 shows China exported $5.44 billion to Jordan, while Jordan exported $986 million to China.

Given the limited political and economic relations at the bilateral level, the likely reason for the Amman stop in Wang’s Middle East trip was to discuss diplomatic efforts on the Palestine issue. Beijing has been making efforts to be a more significant actor on the Israel-Palestine conflict, and with no influence with the Israelis, working with the Palestinians is China’s only access point. In July 2024, Beijing hosted a delegation of fourteen Palestinian political groups, releasing the Beijing Declaration in which these factions pledged to end their divisions and form an interim national unity government. Since then, Chinese diplomacy has been active but not particularly effective, although to their credit, they continue to advocate for Palestine, regularly voicing support in the United Nations and offering Beijing as a potential mediator.

In Wang’s talks with the king and crown prince, the focus was on the humanitarian crisis in Gaza, “the need for cooperation between China and the Jordan Hashemite Charity Organization,” the cease-fire in Gaza, and the urgency of stopping attacks on West Bank Palestinians.

The week before Wang’s trip, the third round of China-Saudi-Iran trilateral talks were held in Tehran, and discussions significantly focused on regional security issues—including on Israel-Palestine. Clearly, Chinese diplomats are working to enhance their profile on the issue.

With the China-Arab States Summit scheduled for June 2026, regional analysts should expect more coordination between China and the Arab League on Palestine. And Wang’s visit to Jordan might indicate King Abdullah’s presence at the summit. If so, it would be his first trip to China since 2015, when the strategic partnership was announced.

Engagements with the Gulf

The Saudi visit was not at all surprising given the depth of relations between Beijing and Riyadh. Chinese capital has been flowing into the kingdom at a higher rate in recent years, with Saudi media noting a 29 percent gain in the stock of Chinese investment in Saudi Arabia from 2023 to 2024. Trade continues to surge, with China ranking as Saudi Arabia’s top trade partner.

During the visit, Wang met with Crown Prince Mohammed bin Salman and Foreign Minister Faisal bin Farhan. The foreign ministers jointly held the fifth High-Level Joint Committee (HLJC) meeting, a mechanism developed after Chinese President Xi Jinping’s 2016 state visit, which resulted in the China-Saudi comprehensive strategic partnership agreement. Since then, the HLJC has been used to chart the course for bilateral cooperation, with regular senior meetings that coordinate trade, investment, contracting, and diplomatic efforts.

Wang emphasized the increasing depth of the partnership while meeting with the Saudi crown prince, telling him that “China is ready to be the most trustworthy and reliable partner in Saudi Arabia’s national revitalization process.”

Contrasting the United States on trade

That Wang focused on trustworthiness and reliability in both Amman and Riyadh was clearly carefully chosen messaging. In his meeting with Gulf Cooperation Council (GCC) Secretary-General Jasem al-Budaiwi, Wang tried to position China’s reliability as a reason to jump back into talks for the long-negotiated China-GCC free trade agreement. Wang noted that “the talks have lasted for more than twenty years, and conditions for all aspects are basically mature, it is time to make a final decision.” Claiming that free trade is “under attack,” he described a China-GCC free trade agreement (FTA) as “a strong signal to the world about defending multilateralism.” All of this served as a not-particularly-subtle means of comparing China as a defender of trade in the face of US tariffs.

The FTA was also a focus in Wang’s talks with UAE Foreign Minister Sheikh Abdullah bin Zayed. Wang expressed hope that the UAE could play a role in moving the FTA towards a conclusion, while his counterpart responded that he’s willing to play a positive role in the matter.

Despite Wang’s positioning of Beijing as a reliable trade partner, the China-GCC FTA talks have been stalled for nearly a decade. During Xi’s 2016 visit to Riyadh, he said he wanted a deal done within a year. Four rounds of talks that year didn’t get the FTA finished, and the GCC rupture from 2017 to 2021 put negotiations on hiatus. Since then, every meeting between senior Chinese and Gulf officials has included Chinese statements about the need to conclude the agreement as soon as possible.

It’s worth pointing out that since 2023, the GCC initiated six anti-dumping investigations against China, while Saudi Arabia has launched four of its own and Oman recently launched one as well, citing the need to “safeguard the local market from price distortions caused by imported products sold at unfair prices that do not reflect actual production costs.” UAE Minister of Foreign Trade Thani al-Zayoudi said at the World Economic Forum in October that “we are seeing huge dumping coming from China to our local markets,” and “we must make sure we are protecting our industries.”

As Gulf countries look to develop local manufacturing, free trade with China isn’t an easy sell. Yes, China is a global trading superpower, but it is very much a one-sided trader, pursuing a mercantilist growth model that floods other countries’ markets while decreasing its own imports. Unfettered Chinese imports look more like a threat than an opportunity for Gulf countries at this stage in their development.

In any case, Wang’s visit did highlight the many areas of cooperation between China, the Saudis, and Emiratis. Talks included cooperation on oil and natural gas, renewable energy, technology, research and science, education, tourism, and security. China may not have reached the status of most reliable and trustworthy, but it is clearly signaling its ambition to be a more serious partner.

Jonathan Fulton is a nonresident senior fellow for the Atlantic Council’s Middle East programs and the Scowcroft Middle East Security Initiative. He also serves as an associate professor of political science at Zayed University in Abu Dhabi.

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Why US markets are betting on Saudi Arabia

Khalid Azim — Wed, 21 Jan 2026 19:54:43 +0000

While the world watched events unfold in Venezuela during the first week of January, Saudi Arabia quietly returned to the US debt capital markets, raising $11.5 billion of senior unsecured debt across four tranches.

Shortly thereafter, Saudi Arabia’s minister of finance approved the kingdom’s 2026 borrowing plan, projecting total financing needs of $57.9 billion. The proceeds are intended to fund a projected fiscal deficit of $44 billion, equivalent to 3.3 percent of Saudi Arabia’s gross domestic product (GDP).

This financing was highly successful, but as detailed in this report, the markets do not price Saudi Arabia as AA credit. In fact, Saudi Arabia trades at a discount to single A-rated sovereign debt, suggesting that the kingdom has work to do to build confidence in the country’s ambitious economic transformation plans, while showing the marketplace that this nation has the ability to generate accretive value generating returns.

Notably, while the Saudi Ministry of Finance constructed the 2026 budget on assumptions of slowing aggregate global demand for crude oil, the revenue outlook embedded in the projections implies a more constructive view on oil prices. As detailed in the table below, oil revenue, captured within “Other Revenue,” is budgeted at 64 percent of total revenue in 2026, unchanged from 2025. This suggests that hydrocarbons remain the dominant fiscal pillar, even as diversification accelerates.

By contrast, Goldman Sachs, in a December 2025 report titled “Saudi Arabia: FY2026 Budget Targets Significant Consolidation,” takes a more skeptical view of the kingdom’s fiscal outlook, driven largely by oil revenue assumptions. Goldman estimates a budget deficit of 6 percent of GDP, compared with the government’s projection of 3.3 percent, implying that Saudi Arabia may ultimately need to borrow additional capital to finance its growth ambitions.

Saudi Arabia’s widening fiscal deficit, alongside a growing current account deficit, reflects an economy firmly in investment-led growth mode. This is simply a function of a government that is spending more on expenditures than revenues, the definition of an expansionary fiscal policy. In addition, a widening current account deficit is by definition an economy investing more than it has in savings. Taken together, this showcases the government’s commitment to funding growth. Sustaining this trajectory will require continued access to both domestic and external financing markets. During the first week of January, the kingdom demonstrated precisely that access by issuing $11.5 billion of senior unsecured bonds, drawing reported demand in excess of $20 billion from global fixed-income investors, particularly for longer-duration tranches.

The transaction underscored Saudi Arabia’s strong market standing, supported by moderate debt levels, manageable debt-service ratios, and substantial foreign reserve buffers. In addition, Saudi Aramco’s partial public listing has created an additional channel through which the state can access and monetize future oil cash flows, enhancing fiscal flexibility alongside sovereign borrowing. Assuming borrowing remains aligned with economic growth and fiscal discipline, access to capital markets should remain durable.

The diversification of the Saudi economy over the past decade has been significant. Non-oil GDP has risen from approximately 56 percent of total GDP in 2016 to roughly 65 percent in 2026, according to data compiled by the Saudi General Authority for Statistics and International Monetary Fund estimates. Nonetheless, oil revenues remain the primary fiscal driver, and any assessment of Saudi Arabia’s budget outlook is incomplete without considering global energy market dynamics.

In its Global Energy Perspective 2025, McKinsey & Company notes that while fossil fuels are likely to retain a meaningful share of the global energy mix beyond 2050, demand is expected to plateau between 2030 and 2035.

Neal Shear, founder of Morgan Stanley’s commodities platform and former global head of sales and trading, observes that “it is hard to accurately predict peak global demand for energy.”

“However, it is much easier to come to a consensus that the secular trend line for fossil fuel demand is downward over the next decade,” he told me.

Shear further argues that today’s crude oil market is increasingly demand-driven rather than supply-driven, rendering global supply dynamics closer to a zero-sum game. Incremental barrels from countries such as Venezuela may displace production elsewhere, rather than expand overall consumption. Over time, absent commensurate supply discipline, a downward-shifting demand curve implies secular downward pressure on prices.

The year 2026 marks the tenth anniversary of Vision 2030, Saudi Arabia’s ambitious economic transformation strategy. The program’s core objective of diversification away from hydrocarbons into sectors such as petrochemicals, tourism and hospitality, mining, healthcare, manufacturing, retail, construction, and finance has materially reshaped the kingdom’s economic landscape over the last decade.

Looking ahead, policymakers could further strengthen market confidence in two key areas. First, financial markets and more broadly investors would welcome greater fiscal transparency, particularly a clearer breakdown of oil-related revenue assumptions and the treatment of Saudi Aramco dividends within the budget framework. As it stands, the Saudi budget does not delineate this dividend in full, so it is not readily transparent to investors how much of the budget is being driven by oil revenues. Second, as investment scales, there should be a stronger emphasis on capital efficiency and risk-adjusted returns. Transparency around outcomes, including those that underperform, would likely enhance, rather than diminish, investor confidence.

The chart below shows that Saudi sovereign bonds trade at wider spreads than those of AA-rated peers, consistent with the kingdom’s split credit ratings. More notable, however, is that spreads also exceed those of single-A sovereign benchmarks, suggesting that markets continue to apply a degree of caution beyond what headline ratings alone would imply. Part of this reflects technical factors, including index inclusion, but it also points to a broader question of confidence as Saudi Arabia advances its Vision 2030 agenda. As the scale of public investment rises, sustained fiscal transparency, clearer articulation of oil-revenue assumptions, and demonstrable capital efficiency will be critical in translating economic transformation into tighter sovereign risk premiums.

Source: Vaneck, JPM Indices (Saudi Arabia Sovereign Spread JPGCSASS Index, EMBIGD A Spread JPSSGDCA Index, EMBIGD AA Spread JPSSGDAA Index)

Markets do not demand perfection; they value clarity, discipline, and resilience. Saudi Arabia’s long-term strategy is coherent, ambitious, and increasingly credible. If executed with continued transparency and fiscal prudence, it has the potential not only to transform the kingdom but to reshape the broader region. The US debt capital markets, for now, appear to agree.

Khalid Azim is the director of the MENA Futures Lab at the Atlantic Council’s Rafik Hariri Center for the Middle East.

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The US is reengaging with Libya—and it’s the right call

Rose Keravuori, Maureen Farrell — Thu, 15 Jan 2026 15:20:31 +0000

Fourteen years after the 2011 uprising and NATO-led military intervention that toppled Muammar Gaddafi, Libya remains divided. While the internationally recognized Government of National Unity (GNU) rules the northwest, the Libyan National Army (LNA), led by military leader Khalifa Haftar, controls most of eastern Libya—with both factions backed by competing foreign militaries.

For years, the situation on the ground seemed frozen. Yet two recent developments mark a shift: Oil majors are returning to the country, and the United States is stepping up its military engagement. The visits by the top leadership from US Africa Command (AFRICOM) in October and December last year and the announcement that Libya will join Exercise Flintlock—AFRICOM’s largest annual special operations exercise historically focused on West Africa—signal that the US administration now views Libya’s trajectory as inseparable from broader regional stability.

Against this backdrop, the United States has a narrow—but real—opportunity to reset conditions in Libya by combining carefully calibrated security engagement with strategic investment. Taking this opportunity is urgent, especially as Russia and other foreign powers seek to cement their influence over the southern Mediterranean’s political future.

Libya’s geostrategic significance for energy, Europe, and the Sahel

Libya straddles Europe and Africa. While its coastline faces Italy, its southern expanse feeds directly into the Sahel, where al-Qaeda-aligned groups such as Jama’a Nusrat ul-Islam wa al-Muslimin and Islamic State (IS) affiliates operate. What happens in Libya affects US and European energy security, regional counterterrorism efforts, and global migration flows. Moreover, the country produces between 1.2 and 1.4 million barrels of oil per day and aims to reach two million by 2030. With Western sanctions tightening on Russian energy, Europe increasingly views Libyan crude oil as a pressure-valve alternative.

In November, Shell, Chevron, Eni, TotalEnergies, and Repsol* were all pre-qualified to participate in Tripoli’s first exploration auction in eighteen years. However, instability in southern Libya continues to amplify extremist mobility and arms flows from the Sahel, directly threatening these investments. That risk is further compounded by the expansion of Russia’s Africa Corps—the successor to the paramilitary Wagner Group—in the east and south. Meanwhile, the Central Mediterranean migration route remains a sensitive domestic political issue for Italy. Rome’s Mattei Plan is explicitly built around stabilizing Libya’s energy production and migration management.

Navigating fragmentation and proxy competition to unlock investment

Progress in Libya’s hydrocarbons sector remains contingent on a minimum threshold of stability and predictability in governance, which is still fractured between the Tripoli-based GNU—backed by Turkey and Qatar—and Haftar’s LNA in the east, supported by Russia (via the Africa Corps), Egypt, and the United Arab Emirates.

The signing of a 2019 maritime boundary treaty with the GNU has given Turkey de facto veto power over Libya’s western security sector and offshore zones. Meanwhile, Russia has entrenched itself in eastern Haftar-controlled areas since 2023. Instead of relying on the Wagner Group, however, Moscow has transitioned to formal involvement via the Ministry of Defense. Russia now controls airbases, logistics hubs, and key desert routes into the Sahel, with personnel positioned near critical oil fields and terminals—the same assets the Tripoli government is attempting to license to Western firms.

The result is that Libya has become the Mediterranean’s most active proxy chessboard, with foreign powers positioning themselves to capture future revenues from hydrocarbons and reconstruction. Absent a credible US counterweight, decisions on energy access, migration management, and political transition will be made in Moscow or elsewhere—but not in Washington or Brussels.

A new window for US reengagement

Two developments suggest a modest but meaningful upward trend in US reengagement. First, building on the US Navy ship visit to Libya in April (the first in fifty years), AFRICOM’s deputy commander visited GNU-controlled Tripoli and LNA-held Sirte in October. Inviting Libya to Exercise Flintlock was deliberate signaling: The US government seeks to pull Libya into a broader Western security network—rather than cede the field to other countries with stronger influence, such as Russia. This trajectory continued in early December, when Prime Minister Abdul Hamid Dbeibah met AFRICOM’s commander to expand cooperation on training, equipment, and force professionalization. The GNU’s public request for deeper US support in professionalizing Libya’s security forces marks a notable shift after years of strategic hedging between Washington, Ankara, and Doha.

Second, there has been a surge of activity around Libya’s energy sector. Since 2023, oil output has stabilized, front lines have frozen, and neither the LNA nor the GNU has achieved decisive military or political dominance. This stalemate has created political space for external influence. Energy-sector momentum has been reinforced by high-level diplomatic traffic in both directions. The US special envoy for Africa and Arab Affairs, Massad Boulos, traveled to Tripoli and Benghazi in July, followed by a GNU delegation visit to Washington in August. That trip signaled the GNU’s intent to re-anchor Libya with Western stakeholders and request US assistance in pushing Russia out of eastern military bases to restore unified territorial control.

That momentum was further reinforced by a joint statement on November 26 from the United States, major European partners, Gulf states, Turkey, Egypt, and the United Kingdom. The statement backed a renewed mandate for the United Nations Support Mission in Libya (UNSMIL), endorsed a political roadmap by UNSMIL head Hanna Tetteh, and explicitly called for deeper east-west military and economic coordination—a rare moment of alignment among Libya’s external powerbrokers. For the US administration, this sent the strategic signal that Libya’s unification is now within reach. The window of opportunity, however, is closing fast—and another conflict cycle, election breakdown, or foreign miscalculation could shut it indefinitely.

The energy-security nexus: Why investment alone will fail

The return of oil majors represents the most consequential shift in Libya in a decade. But investment without security is unlikely to endure. In March last year, Libya launched its first licensing round for oil exploration in eighteen years, signaling a bid to attract Western technology, capital, and expertise. Shell, BP*, TotalEnergies, and Eni have reopened channels with the National Oil Corporation (NOC)—and ExxonMobil* signed a memorandum of understanding in August for offshore exploration in the Sirte Basin.

Yet these developments do not change the fact that some of Libya’s most valuable reserves remain under Russian influence. Western firms cannot scale operations without predictable access, enforceable contracts, and baseline security guarantees.

An intentional presence to protect investment

To consolidate recent political and economic gains—and protect sizable Western energy investments—the United States should deliberately expand its diplomatic, military, and economic presence in Libya, in close coordination with allies.

The March 2024 announcement that the United States will reopen an embassy in Libya is a critical step toward sustained engagement across military and economic channels. It will also enable closer coordination with key partners—including Italy, Egypt, Turkey, and the UN—whose objectives overlap with US interests.

As the multi-year process to open the embassy inches forward, AFRICOM and its components should pursue near-term, high-impact initiatives. US special operations forces should help build and professionalize vetted Libyan special forces units across both western and eastern factions, units that would pursue shared security interests, no matter the progress toward an eventually possible unification. Additionally, maritime partnerships should be expanded rapidly to strengthen Libyan Navy and Coast Guard capabilities, particularly in interdiction, offshore asset protection, and port security. At the same time, the United States could leverage its convening power to establish a technical deconfliction cell in Sirte, allowing GNU and LNA representatives to coordinate security around oil infrastructure and prevent escalation. Such mechanisms could also support counterterrorism cooperation, including targeting IS remnants and blocking spillover from the Sahel.

Layered US engagement can unlock stability

However, military engagement alone will not be sustainable without economic development. Given the complex legacy of US involvement—from the economically devastating sanctions of the 1980s to the 2011 NATO intervention and the overthrow of the Muammar Gaddafi regime—the United States must work through partners to advance both economic and counterterrorism objectives. The US International Development Finance Corporation and the Export-Import Bank could prioritize export credits for pipelines, gas processing, and power generation, explicitly linking financing to transparency and anti-corruption benchmarks.

US and partner foreign assistance could also support long-overdue reforms at the NOC, including modern contracting practices, environmental standards, and shared revenue frameworks. These efforts should extend beyond governments: Western energy companies involved in Libya should participate in coordinated infrastructure planning, rather than simply launching isolated investments.

Layering diplomatic, military, and economic tools would allow the United States to establish a modest but coherent posture capable of unlocking outsized stabilization effects—and preventing any country that works against US interests from having dominance over Libya’s future. For the United States, Libya offers a proving ground for a new model of engagement—one built on security assistance that enables Western investment instead of substituting for it. AFRICOM’s renewed presence and the surge of Western energy interest create a rare opportunity to reintegrate Libya into a Western orbit. If the United States seeks stability in the Mediterranean, resilience in the Sahel, and credible alternatives to Russian energy, now is the time to make coordinated security and economic investments in Libya.

Rose Lopez Keravuori is a nonresident senior fellow at the Atlantic Council’s Africa Center, an associate director at Strategia Worldwide, and chair of the board of advisors of GCR Group. She previously served as the director of intelligence at the US Africa Command.

Maureen Farrell is a nonresident senior fellow at the Atlantic Council’s Scowcroft Center for Strategy and Security and vice president for global partnerships at Valar, a Nairobi-based strategic advisory and risk firm. She previously served as the deputy assistant secretary of defense for African affairs and director for African affairs at the US National Security Council.

Note: Several companies mentioned in this article—Shell, BP, Chevron, Eni, TotalEnergies, Repsol, and ExxonMobil—are donors to the Atlantic Council but not to this article series.

Senior Fellow, Global Energy Center

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Greenland’s critical minerals require patient statecraft

Reed Blakemore, Alexis Harmon — Tue, 13 Jan 2026 21:01:29 +0000

WASHINGTON—Greenland is a land of stark contrasts. Larger than Mexico and Saudi Arabia but home to only 56,000 people, this autonomous Danish territory has an economy traditionally built on fishing and substantial subsidies from Denmark. Yet beneath its ice and rocky coasts lies mineral wealth that has attracted growing international attention—including from US President Donald Trump. Greenland has firmly rejected notions of being “for sale,” and European allies have responded with alarm at US overtures about seizing the territory. Regardless of the rhetoric, the United States has compelling opportunities for commercial and diplomatic partnerships with Greenland.

As a mineral frontier, Greenland offers clear advantages: Its geological endowment is significant and comparatively unexplored, and it presents relatively low above-ground investment risk as a stable democracy aligned with Western institutions. However, these advantages come with major caveats. With fewer than one hundred miles of road on the entire island and significant local resistance to mining, Greenland lacks both the basic infrastructure and social license needed for large-scale mining operations. As a result, the path from exploration to production is likely longer, riskier, and more expensive than in more developed mining jurisdictions.

Yet, as US Secretary of State Marco Rubio prepares to meet with Danish officials in the coming days, these challenges inform how the United States can most effectively engage: through collaboration rather than confrontation.

What critical mineral reserves does Greenland have?

Greenland’s mineral wealth presents a geographical puzzle. The country’s ice-free area, which is nearly double the size of the United Kingdom, represents less than 20 percent of the island’s total surface. Vast areas of the interior remain unexplored beneath ice that can exceed a mile in thickness.

Nonetheless, Greenland possesses an impressive array of critical minerals, from traditional commodities such as copper, lead, and zinc that have been mined on a small scale in ice-free coastal areas since 1780, to modern critical minerals essential for energy and defense technologies.

Greenland’s most geopolitically significant resources include:

Rare earth elements (REEs): Greenland is estimated to hold approximately 36 million tonnes of rare earths, though only 1.5 million tons are currently considered proven, economically viable reserves. Greenland is generally ranked around eighth globally in reserves, placing it among the most significant undeveloped REE holders; with further exploration and feasibility studies, it may be proven to contain the world’s second-largest reserves after China.
Uranium: Greenland has one of the largest uranium deposits in the world, which is notably co-located with major REE deposits. However, Greenland reinstated a ban on uranium mining in 2021 following sustained local opposition. This prohibition has had direct implications for projects where uranium is present alongside other minerals.
Other strategic minerals: Greenland holds known deposits of copper (essential for electrical infrastructure), graphite (key to battery production), gallium, tungsten, zinc, gold, silver, and iron ore. It also holds various specialty metals with high-tech and defense applications, including platinum, molybdenum, tantalum, and vanadium. While many of these resources are geologically promising, few have progressed beyond early exploration.

To date, exploration activity has focused primarily on coastal and southern Greenland, where logistics are more feasible. The latter half of the 2010s saw an explosion of exploration permits in this region; by early 2020, exploration permits had been granted across almost the majority of southern Greenland. Despite this explosion of interest, there are only two active mines on the entire island, Nalanuq (a gold mine) and White Mountain (an anorthosite mine). To date, no rare earth, uranium, or other high-profile critical mineral projects have entered commercial production.

Though further exploration and feasibility studies may foster additional interest, the sites currently receiving the most attention include:

The Kvanefjeld project on Greenland’s southern tip, one of the world’s most significant deposits of both rare earths and uranium.
The Tanbreez mine in the same fjord network, which contains substantial deposits of eudialyte ore rich in rare earth elements (in particular heavy rare earths) and gallium.

What are the main obstacles to developing Greenland’s mineral resources?

Greenland’s mineral deposits are globally significant, particularly for rare earth elements. However, unlike established mining regions in Australia, Canada, or even emerging sources in Africa and South America, Greenland has minimal production infrastructure and no large-scale operating critical mineral mines.

From a supply perspective, Greenland’s reserves are largely theoretical. Though it represents a substantial reserve in a politically stable, Western-aligned jurisdiction, bringing that potential online faces several notable challenges:

Infrastructure deficits: Outside of Greenland’s few small cities, roads and railroads simply do not exist. Transport depends almost entirely on ships and aircraft, greatly increasing costs and complexity. This infrastructure gap extends the typical decade-long timeline from discovery to production and dramatically increases capital requirements. While mining projects can spur infrastructure development, the initial infrastructure investment represents a significant barrier to entry—especially since it is generally too cold in Greenland to construct durable roads from concrete and asphalt. This poses a significant challenge to project economics. Transportation of minerals can sometimes be even more expensive than the mining process itself, and Greenland’s remoteness, limited economies of scale, and harsh Arctic conditions make it one of the world’s most expensive mining jurisdictions.

Social and political opposition: Though the government has periodically promoted mining as a tool for economic development, mining remains politically contentious. All land in Greenland is publicly owned and administered, making closed, privately controlled mining sites culturally unfamiliar and politically sensitive. Local opposition reflects deeper concerns about environmental impacts, changes to traditional ways of life, and the terms under which mining would proceed. Most significantly, in 2021, Greenland’s parliament passed legislation prohibiting uranium exploration and limiting uranium content in mined resources, effectively halting rare earths development at the Kvanefjeld project given the presence of uranium.

Geopolitical complications: Recent US rhetoric about acquiring or annexing Greenland has naturally generated diplomatic friction and intensified local sensitivities around sovereignty, complicating social license for mining. At the same time, broader US-China competition has played out in Greenland’s mining sector. In one notable example, US officials reportedly successfully lobbied the Tanbreez mine CEO to sell to American bidders for less than Chinese-linked competitors. The Kvanefjeld project is owned by Australian company Energy Transition Minerals (formerly Greenland Minerals Limited)—but China’s Shenghe Resources is its second-largest shareholder, raising concerns in Washington, which sees the mining sector as a backdoor for Chinese encroachment in the Arctic. Though Shenghe only holds a 6.5 percent stake, a nonbinding 2018 MOU reflects the intent to have Shenghe “acquire all rare earth output produced at the Project,” positioning it as the primary prospective offtaker and downstream processing partner.*

What are viable paths for US engagement?

Greenland’s strategic value lies in its role as a long-term diversification partner in a concentrated global market, rather than an opportunity for immediate production. While annexation rhetoric has drawn attention to Greenland’s resources, a unilateral US approach would limit their potential value. More effective alternatives include:

Strategic partnerships with Greenland and Denmark: Rather than pursuing ownership, American companies and the US government could support mining development through direct investment, financing mechanisms, and technical assistance—tools well suited to institutions such as the US Development Finance Corporation and Export-Import Bank. Coordination with European partners could amplify these efforts, as seen in the Lobito Corridor, where European capital helped bridge infrastructure gaps. Diplomatically bundled investment could help de-risk projects that might otherwise fail to attract private capital, an approach far less viable under a confrontational strategy.

Competing effectively with Chinese investment: The Tanbreez case demonstrates that US diplomatic engagement can influence ownership and investment outcomes, but effective competition requires more than lobbying against Chinese involvement. It demands credible alternatives such as competitive financing, technical expertise, market access, and partnership structures that align with project needs—all of which are more successful in concert with a wide pool of partners. One complementary step could be the development of an investment screening mechanism in Greenland, akin to a Committee on Foreign Investment in the United States–style review, to assess national security and strategic risks associated with foreign capital. Such a framework would strengthen Greenland’s own security and governance while providing greater assurance to US and allied markets that upstream assets are not vulnerable to strategic capture. However, even with successful mining development, rare earth ores from Greenland would likely still be processed in China absent expanded allied processing capacity, underscoring the need for parallel, collaborative investment in downstream infrastructure.

Supporting responsible development: Projects that lack local legitimacy are unlikely to succeed. Emphasizing environmental safeguards, indigenous rights, and meaningful benefit-sharing is both ethically and commercially essential. Greenlanders have consistently expressed a much stronger interest in independence than in joining the United States. An overly aggressive US approach would likely further complicate social license for mining.

Greenland’s mineral wealth will take a decade or more to translate into meaningful supply. Its greatest value lies not in rapid extraction but in long-term diversification within a trusted political framework. For the United States and its allies, the challenge is clear: securing access to critical minerals and strategic space without undermining the very alliances and norms that underpin long-term stability. Patient, partnership-based engagement that respects Greenland’s autonomy and international law will not generate immediate headlines, but it offers the only credible path through a period in which intensifying competition over critical resources threaten to upend the established geopolitical order.

Note: This article was updated on January 29 to more accurately reflect Shenghe Resources’s role in mining operations in Greenland.

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Rare earth mining could solve, not worsen, Central Asia’s water troubles

Andrew D’Anieri — Mon, 12 Jan 2026 16:40:27 +0000

Central Asia is facing a paradox: Vast energy and mineral reserves promise economic growth, yet climate change and water shortages constrain the region’s ability to realize that potential.

Led by Kazakhstan and Uzbekistan, the five Central Asian states—which also include Kyrgyzstan, Tajikistan, and Turkmenistan—are eager to develop their wealth of critical minerals and rare earths. But without careful management, this push risks further straining already dwindling water reserves, particularly as temperatures in the region rise twice as fast as the global average.

Undoubtedly, new mining projects will initially add more pressure to Central Asia’s stressed water systems. However, with smart policies, states in the region can capture a net “water dividend”: By reinvesting mining revenues in water-saving infrastructure and technologies, they can ensure that the water conserved or newly secured ultimately exceeds the amount consumed by mining itself.

Resource wealth meets climate pressure

To avoid further exacerbating water shortages, the Central Asian states will need to navigate two public policy challenges. First, they must attract high-quality foreign investment in mining partnerships, ensuring firms from all countries can compete on a level playing field. Second, they must use mining revenues to modernize aging infrastructure, experiment with cutting-edge precipitation enhancement technologies, and fund a long-term strategy for regional water security cooperation.

Central Asia’s critical minerals and rare earths have drawn major commercial and geopolitical interest from the United States, China, Russia, and the European Union. Companies and governments alike view access to these resources—key to the production of complex electronics, renewable power sources, high-grade defense systems, and more—as essential to competing economically and militarily in the decades ahead. Kazakhstan and Uzbekistan, in particular, are rich in rare earths as well as critical minerals such as uranium, copper, and tungsten.

At the same time, the region appears to be careening toward a water crisis. Central Asia uses approximately 127 billion cubic meters of water per year. Of that, 100 billion cubic meters flow into the region’s highly inefficient agricultural sector, which loses half of this water supply before it even reaches the fields.

As many as twenty-two million of the roughly eighty million people living in Central Asia already lack secure access to safe water—and the region’s total population may increase to 110 million by 2050, intensifying demographic pressure on scarce water resources. Rising temperatures are rapidly melting the glaciers in Kyrgyzstan and Tajikistan that provide much of the fresh water for downstream countries such as Uzbekistan and Turkmenistan. Meanwhile, water levels in the Caspian Sea are projected to drop by up to 60 feet by 2100, exposing dry land roughly the size of Portugal.

Critical minerals could power the region’s growth

Mining operations are notoriously capital-intensive to launch and water-intensive to run, but the industry can still become a net revenue and resource boon to Central Asia. Western firms have begun investing in new critical mineral projects across the region. These firms have proven much more eager to do so when they are backed by their governments. In November, US-Australian firm Cove Capital agreed to a $1.1 billion deal with Kazakhstan’s state mining company to develop the Upper Kairakty and North Katpar tungsten deposits in central Kazakhstan—among the largest known tungsten deposits in the world. Cove Capital’s feasibility studies suggest the project could produce eighty billion dollars’ worth of the resource over the mine’s lifespan.

Crucially, the project is set to be backed by $900 million in financing from the US Export-Import Bank (EXIM), making it the most high-profile example to date of concrete Western government and private-sector engagement in Central Asian critical minerals development.

Water intensity varies widely across metals mining depending on ore grade, depth, dispersion, recycling rate, and management, but tungsten and other rare earth elements may be among the more water-efficient metals to extract. Almonty Industries’ Sangdong tungsten mine in South Korea—a much smaller operation in terms of annual output—uses roughly 500,000 cubic meters of fresh water per year, a drop in the proverbial bucket compared to Central Asia’s agricultural water consumption. Cove Capital believes ore grades at Upper Kairakty and North Katpar may exceed those at Sangdong, potentially further reducing water requirements for tungsten processing.

If early exploration proves accurate, Kazakhstan could hold the third-largest rare earth reserves globally. The Kazakh government has signaled that it aims not only to mine rare earths but also to move up the minerals value chain. Studies estimate that developing rare earth processing capacity alone could add up to 7.1 percent of gross domestic product (GDP), on top of revenues from raw mineral production. Such investments could ultimately make mining more valuable than Kazakhstan’s oil and gas sector, which currently accounts for about 16 percent of GDP, compared to roughly 12 percent (around thirty billion dollars) from mining today. This additional revenue would be especially valuable for a country whose real GDP growth is expected to slow beginning in 2026.

Uzbekistan has also signed agreements with the US government to partner on mining investments with significant potential, particularly in tungsten and other rare earths. While the country’s mineral wealth has not been surveyed as extensively as Kazakhstan’s, Tashkent is investing billions of dollars in exploration it believes could unlock as much as three trillion dollars in total economic value. Achieving this ambitious target will depend on maximizing transparency during exploration and reducing investor risk through continued rule-of-law reforms—turning memoranda of understanding into bankable projects.

Turning mining revenues into modern water infrastructure

Both Kazakhstan and Uzbekistan should therefore pass favorable subsoil and export-tax legislation to attract investment. Astana and Tashkent should also work with EXIM and the US Development Finance Corporation to support investments in processing capacity tied to projects involving US investors. Given China’s dominance in critical mineral and rare earth processing, the US government has a strategic interest in facilitating regional processing capabilities alongside US mining investments.

Kyrgyzstan and Tajikistan also possess economically viable mineral resources, but uncertain regulatory environments and Chinese dominance in their mining sectors make large-scale Western investment unlikely in the medium term. Among the five Central Asian states, Turkmenistan may stand to gain the most from a water dividend—and could leverage its substantial natural gas revenues to fund smarter water conservation practices.

Most importantly, governments must reinvest new revenue streams in technologies that directly mitigate water insecurity.

First, agricultural irrigation infrastructure across the region is largely outdated and inefficient and should be replaced by modern systems to reduce water loss to seepage and evaporation. Efficiently collecting mining revenues and procuring water-saving technologies will require greater governmental agility and technical capacity.

Second, Central Asian states should explore increasingly efficient cloud-seeding technologies, pioneered in the United States and the Gulf, as a means of increasing precipitation in agricultural zones—particularly in steppe and mountain valley regions. Early studies suggest that localized cloud-seeding programs can increase precipitation by up to 15 percent per year. While some have raised questions about cloud seeding’s environmental impact, communities and local governments that employ cloud seeding have empirically found negligible risks.

Third, a region-wide water security strategy, backed by interstate conservation and infrastructure projects, is essential for long-term stability. For decades, competition over water and strained neighborly relations created a vicious cycle of mistrust and tension in Central Asia. That dynamic can be gradually reversed through people-to-people engagement and shared infrastructure projects designed to conserve and distribute water more effectively in service of regional welfare and stability—rather than narrow domestic interests.

Modernizing irrigation infrastructure is expensive but can be made affordable by diverting a modest share of future mining revenues. Experts estimate that Kazakhstan will spend $515 million on irrigation upgrades between 2026 and 2030. The proposed Cove Capital tungsten mine alone could eventually generate around $125 million in annual tax revenue, assuming production and price targets are met over its fifty-year lifespan. Cloud seeding in the west of the United States has repeatedly proven more cost-effective than water metering and other indirect conservation measures, and costs could fall further as companies such as California-based Rainmaker deploy drones to seed clouds more precisely.

Central Asia should leverage its vast mineral wealth to secure a net water dividend and reduce risks to regional security and stability. Trusted partnerships, high-quality investment, good governance, private-sector dynamism, and creative diplomacy will all be crucial to addressing the region’s escalating climate and water challenges. By maximizing shared benefits from mineral development, Central Asian states can transform mining revenues into long-term water security.

Andrew D’Anieri is associate director of the Atlantic Council’s Eurasia Center. Find him on X at @andrew_danieri.

The post Rare earth mining could solve, not worsen, Central Asia’s water troubles appeared first on Atlantic Council.

How Venezuela’s future will help determine US diesel and trucking costs

Joseph Webster — Mon, 12 Jan 2026 16:38:47 +0000

The US intervention in Venezuela to arrest President Nicolás Maduro has sown uncertainty in energy markets. As the United States navigates this uncertainty, it’s worth applying the tripartite framework that Imdat Oner of Florida International University provided for the post-Maduro political era in Venezuela. With outcomes framed as “the good, the bad, and the ugly,” Oner’s political scenarios are useful for structuring thinking about Venezuela’s oil future—and its resulting implications for US diesel and trucking markets.

In the good scenario, Delcy Rodríguez, the new leader of the Chavismo regime, serves as a transitional figure on Venezuela’s path to democracy, capitalism, the rule of law—and prosperity largely financed from the country’s substantial oil reserves. In this scenario, Secretary of State Marco Rubio’s apparent plan of stabilization, recovery, and transition succeeds. In tandem, Venezuelan oil production and exports would rise sharply. Still, most analysts hold that oil production challenges will persist even in this best-case scenario.

In the ugly variant, the Chavismo regime largely stays in power but undertakes policies meant to bolster oil production, in line with Washington’s preferences. Markets seem to view this modified status quo as most likely: crude oil prices have modestly fallen while share prices for pure-downstream players like Valero—which could process more heavy crude volumes—have risen. Indeed, if the raid quickly leads to political stability and other supportive conditions, Venezuelan oil production could rise. Still, a renaissance for Venezuelan oil and gas will be difficult to achieve. Even if Washington maintains a single-minded focus on oil extraction, political risks and uncertainty will remain acute, likely ensuring that US companies will remain deeply reluctant to commit huge amounts of capital for “decadal projects.”

Alternatively, in a bad scenario, the raid could trigger significant convulsion in Venezuelan politics and foreshadow a longer and larger military intervention, which would likely send Venezuela’s crude oil production sharply lower. In this case, the loss of Venezuelan crude oil—which is highly suitable for middle distillates like diesel—could reverberate throughout global and US energy and food prices. The data suggest that, in the United States, the trucking sector and rural areas are disproportionately exposed to diesel markets and will face affordability pressures if a large-scale military intervention doesn’t go well. While the Trump administration’s seizure of 30 million to 50 million barrels of Venezuelan oil (equivalent to about one to two months of Venezuela’s crude oil exports) will provide some buffer against short-term disruptions, long-duration outages could prove damaging.

As we’ve written previously, Venezuela is less influential in global crude oil markets than it used to be due to declining production, but it nevertheless retains a somewhat more important role in diesel markets. That’s because Venezuela (and Colombia, where the conflict could escalate horizontally) exports heavier crude oil grades that are highly suitable for diesel, while US Gulf Coast complex refineries are configured to process these grades.

The diesel “crack spread”—the difference in price between crude and diesel—indicates that while crude oil prices currently account for 41 percent of diesel prices, other factors also matter, like suitable crude grade availability. The energy consultancy RBN finds that diesel crack spreads are rising to their highest level since early 2024. Internationally, the International Energy Agency reports that global middle distillate markets are already facing price pressure on limited supplies. Accordingly, persistent disruptions to Venezuelan (and potentially Colombian) oil could hold significant impacts for US diesel and trucking markets.

Who will feel the pinch

Given the potential for a diesel price uptick and its effects on the affordability crisis, it’s worth examining how the fuel is consumed. In the United States, diesel consumption is overwhelmingly tilted to transportation, which accounted for over 75 percent of US middle distillate consumption in 2023, by volume.

Sources: Energy Information Administration, Author’s Calculations.

Accordingly, the more than 3.5 million professional truck drivers would be disproportionately impacted if diesel prices rise. Unsurprisingly, this market and workforce skew away from metropolitan areas, as about 48 percent of truck vehicle miles traveled occur in rural areas.

But rural areas wouldn’t be the only places affected. A jump in diesel prices would also be felt across much of the United States. State-level distillate fuel oil consumption correlates with population and energy consumption. Texas is the largest distillate fuel oil consumer in absolute terms, followed by California, New York, Pennsylvania, and Florida.

Viewed through the lens of per capita consumption, or distillate intensity, Wyoming’s was the highest at about 983 gallons (assuming that every barrel of distillate holds about 42 gallons). Other distillate-intensive states include North Dakota, Alaska, Nebraska, and New Mexico. While these states do not directly import crude oil from Venezuela (or Colombia), they will nevertheless be impacted if shortages propagate through diesel markets.

Some of the most distillate-intensive states are surprising. Some reasons for their elevated diesel consumption include their geographic scale, coupled with large rural areas and large industrial sectors. Other reasons relate to fuel economy: diesel consumption, especially on trucks, can rise due to winter weather, high cross-winds, or hilly terrain.

Accordingly, if distillate prices rise due to major, sustained outages in Latin America arising from the US intervention in Venezuela, diesel-reliant states, trucking markets, and rural areas will face disproportionate costs. The initial raid against Maduro was an undeniable tactical success, but the economic costs and strategic tradeoffs of a long-duration and large-scale military intervention in Latin America could prove high.

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

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The Venezuela-Iran connection and what Maduro’s capture means for Tehran, explained

Joze Pelayo, Kirsten Fontenrose — Mon, 12 Jan 2026 13:14:20 +0000

As critics of Washington’s capture and criminal indictment of Venezuelan head of state Nicolás Maduro made connections to other US regime-change operations in the Middle East, US Secretary of State Marco Rubio told CBS’s Face the Nation: “The whole foreign policy apparatus thinks everything is Libya, everything is Iraq, everything is Afghanistan. This is not the Middle East. And our mission here is very different. This is the Western Hemisphere.”

He also emphasized that Venezuela can “no longer cozy up to Hezbollah and Iran in our own hemisphere.”

There are clear implications of the Maduro arrest with respect to US-Iran policy and President Donald Trump’s calculus on strategic action against Washington’s adversaries. The US president has indicated he is weighing “very strong” options on Iran as demonstrations there escalated and the death toll rose sharply over the weekend, according to rights groups.

And as Rubio indicated, the operation could also have a more immediate impact on Tehran’s interests and operations abroad—with Venezuela serving as a foothold for Iran and its proxies in the Western Hemisphere.

Our experts break down Iran’s ties to Venezuela and the impact Maduro’s capture could have on Tehran’s interests both in and outside of Iran’s own borders.

Iran-Venezuela relations: From oil to resistance axis

Venezuela-Iran relations have strengthened in recent years: Both countries are oil producers, both have struggled under a robust Western sanctions regime, and as Tehran upgraded its relationship with Caracas, its proxies, such as Hezbollah, have established themselves inside Venezuela’s borders—creating a strategic foothold in the Western Hemisphere.

Both countries are founding members of the Organization of the Petroleum Exporting Countries (OPEC) and had an official relationship before the 1979 revolution in Iran that saw the overthrow of the shah. As the Iranian revolution unfolded and the Islamic Republic came to power in Tehran, Venezuela was one of the first countries to recognize the new Iranian government.

This relationship intensified, however, when Maduro’s predecessor, the late Venezuelan leader Hugo Chavez, became president in 1999.

Hugo Chavez welcomes Iran’s President Mahmoud Ahmadinejad at Miraflores Palace in Caracas on June 22, 2012. Photo by Jorge Silva via REUTERS.

Between 2001 and Chavez’s death from cancer in 2013, Chavez and his Iranian counterparts engaged in dozens of diplomatic visits, and “the two countries signed an estimated three hundred agreements of varying importance and value, ranging from working on low-income housing developments to cement plants and car factories,” according to analysis from the Center for Strategic and International Studies (CSIS).

Under Chavez, Tehran’s development projects in Venezuela “boosted Chavez’s image and advanced his anti-imperialist agenda throughout the region.” And through Venezuela, Tehran leveraged the partnership to bolster its posture in South America, including in Bolivia and Nicaragua.

By the tail-end of Chavez’s rule in 2012, Iran’s investments and loans in Venezuela were valued at $15 billion, according to CSIS.

Beyond oil and diplomatic agreements, gold smuggling has also shaped the relationship model between Tehran and Caracas. Venezuela holds the largest gold reserves in Latin America (just counting Central Bank reserves, and without including geological gold resources, which would place the country in the fifth place for gold reserves worldwide). Additionally, reports indicate that gold has been smuggled to Iran for years as a mode of payment for Iranian assistance to revive Venezuela’s oil sector.

A base for Hezbollah and the IRGC

Joze Pelayo, associate director for strategic initiatives and policy at the Atlantic Council’s Scowcroft Middle East Security Initiative, explains

Against this backdrop, Iranian-backed Hezbollah and its affiliates have used Venezuela as a strategic hub in the Western Hemisphere. The country has served as a sanctuary for Hezbollah to evade sanctions, a center for operations and money laundering, and a base for its transnational criminal and drug trafficking network.

Hezbollah has flourished in key locations in Venezuela—establishing itself within business networks such as Margarita Island and the Paraguaná Peninsula, both with coastal access and a significant Lebanese diaspora community.

Iran also used the gold market in Venezuela to finance Hezbollah’s operations.

In 2022, a seizure order signed by former Israeli Defense Minister Gallant and published by the National Bureau for Counter Terror Financing in the Ministry of Defense exposed a smuggling ring involving gold being transported on sanctioned Iranian flights with proceeds directed to Hezbollah.

In addition to all these exchanges, Iran’s Quds Force (the external arm of Iran’s Islamic Revolutionary Guard Corps responsible for asymmetric warfare, cover operations, and intelligence) maintains a robust presence in Venezuela to support Maduro in times of crisis, according to a report from December 2025.

The hierarchical structure in Venezuela is headed by Ahmad Asadzadeh Goljahi, who oversees operations and heads the “Department 11000,” a Quds Force subunit linked to international terrorist plots, and “Department 840,” involved in overseas assassinations. It is then no surprise that the Iranians attempting to abduct US journalist Masih Alinejad from her home in New York were supposed to make a stop in Venezuela before taking her to Iran.

Maduro’s capture and the potential realignment of Venezuela with the United States represent a major setback for the Quds Force operations and financing. Such a shift could significantly disrupt the group’s transnational criminal and drug-trafficking networks, oil-smuggling scheme, and other illicit activities tied to Hezbollah and the Islamic Republic of Iran.

One potential silver lining: Under US custody and influence, Maduro (and possibly Acting President Delcy Rodriguez) could provide critical intelligence as witnesses and cooperators, assisting to expose the extent of these networks, how to properly root out these toxic elements from the country, and key figures the United States could go after next.

A US signal to Tehran

Kirsten Fontenrose, nonresident senior fellow at the Scowcroft Middle East Security Initiative, explains

A photograph which US President Donald Trump posted on his Truth Social account shows what he describes as Venezuelan President “Nicolas Maduro on board the USS Iwo Jima” amphibious assault ship. Photo by @realDonaldTrump via REUTERS.

The Maduro case is strategically relevant less as a template than as a signal. It suggests a US willingness to act decisively against leaders already criminalized and sanctioned, rather than allowing standoffs to persist on the assumption that the risk of escalation alone will deter action.

The Trump administration framed Maduro’s capture as a law-enforcement arrest rather than a military campaign. The United States did not invoke humanitarian intervention, collective self-defense, or congressional authorization for interstate hostilities. Instead, it relied on longstanding criminal indictments and sanctions authorities. Maduro has been under US indictment since March 26, 2020, for narcotics trafficking and narco-terrorism, and he has been subject to comprehensive Treasury sanctions well before the January 2026 operation. The legal basis for such extraterritorial law-enforcement action rests on domestic authorities rather than the law of armed conflict—a distinction that is controversial but not unprecedented in US practice.

For Tehran, the relevance is not the legal argument itself but the political signal embedded in its use. Iranian strategic planning has long assumed that US concern about escalation—particularly actions that could be interpreted as leadership targeting—would impose practical limits on Washington’s behavior. The Maduro episode complicates that assumption. It also reinforces a second point: US leverage does not depend exclusively on military operations. In this case, years of sanctions enforcement, financial pressure, indictments, and diplomatic isolation preceded the arrest, demonstrating that decisive outcomes can be pursued through non-military instruments even in high-risk contexts.

That sequencing intersects with current thinking about the timing of pressure on Iran. Analysis by Rapidan Energy Group Chief Executive Officer Scott Modell published in late 2025 argues that early 2026 presents unusually favorable market conditions for intensified pressure on Iranian oil exports. The analysis points to soft global demand growth, rising non-OPEC supply, spare capacity among OPEC+ producers, and subdued price expectations, suggesting that concerns about oil-price spikes—often a key political constraint on US action—would be less binding in the first quarter of 2026. If that assessment holds, market considerations would be unlikely to restrain US policymakers contemplating additional economic pressure on Iran during this period.

Trump’s public statements following the Venezuela operation reinforce this interpretation. He framed the action in terms of accountability and deterrence, not regime change or nation-building. His emphasis on speed and decisiveness is consistent with earlier US decisions favoring limited, time-bound uses of force—particularly in counterterrorism and retaliatory contexts—over extended military campaigns.

This posture aligns with the policy orientation of figures shaping the administration’s approach. Homeland Security Advisor Stephen Miller has emphasized coercive clarity; Special Envoy to the Middle East Steve Witkoff has advocated transactional diplomacy backed by leverage; Vice President JD Vance has expressed skepticism toward open-ended military commitments. Reporting also suggests a US Central Intelligence Agency leadership preference for intelligence-driven, more aggressive collection and disruption posture.

Recent US actions elsewhere provide additional context. Strikes against Iran-aligned militias in Iraq following attacks on US personnel in 2024, and counter-ISIS airstrikes conducted with host-nation consent in Nigeria in December 2025, illustrate a preference for responding quickly to defined threats without prolonged warning or phased escalation. These cases do not establish a doctrine, but they reinforce the impression of a US approach that favors early, bounded action over incremental response. In this context, Operation Absolute Resolve is meaningful because it unsettles a core assumption within Tehran—that leadership insulation and escalation risk reliably constrain US action.

The core implication for Iran, then, is strategic rather than operational. The Maduro seizure suggests that the United States is prepared to act decisively against leaders who are already criminally indicted, comprehensively sanctioned, and politically isolated, and that it may do so during periods of internal strain rather than waiting for those pressures to resolve.

None of this implies imminent leadership targeting in Iran. But it does suggest that Washington is reassessing assumptions about timing, leverage, and leadership vulnerability.

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What it takes to revive Venezuela’s oil and gas industry

David L. Goldwyn, Andrea Clabough — Thu, 08 Jan 2026 14:16:16 +0000

Within hours of the astonishing US intervention in Caracas this past weekend that captured Venezuelan strongman Nicolás Maduro, the Trump administration framed it as, among other things, a boon to its US “energy dominance” agenda. Citing Venezuela’s vast hydrocarbon resources—arguably the largest oil reserves in the world—President Donald Trump repeatedly promised that the next phase for Venezuela will involve US energy companies helping to restore the country’s failing oil and gas production, benefiting global oil markets with expanded supply.

But the pathway from promises to meaningful production increases is likely to be a fraught one. The Trump administration seems to recognize this, as indicated by the administration seizing two oil tankers and quickly announcing an opaque arrangement wherein the United States will acquire thirty-to-fifty million barrels of already available Venezuelan crude oil. These fast wins might help justify the expenditure of US resources to continue its naval blockade and pursue further intervention, as the administration has hinted. But these moves do not fundamentally change the dynamics above or below the ground that have wrecked the Venezuelan industry. Nor do they alter the long path to a major recovery.

Indeed, a Venezuelan oil and gas production renaissance would require, among other factors, meaningful renewed interest and investment from US and international oil companies (IOCs). This will be difficult. As the Venezuelan people look ahead to a murky future and an uncertain US-led transition, leveraging their valuable energy resources to secure the country’s democratic future may prove easier said than done.

How an industry fell apart

Decades ago, Venezuela’s oil and gas industry was a powerhouse that promised to drive the country forward. The country boasts 17 percent of global oil reserves, with an estimated 303 billion barrels of producible crude oil. In 2000, Venezuelan oil production reached a peak of 3.2 million barrels per day, enabled by joint ventures and effective partnerships between the national oil company Petróleos de Venezuela, SA, or PDVSA, and a host of IOCs.

In the early 2000s, however, the Chávez administration oversaw a nationalization of the Venezuelan oil sector that dramatically changed the terms of engagement for foreign companies. The nationalization resulted in asset seizures, international arbitration, and marked investment decline in Venezuela’s oil-producing regions by most Western companies. Following Chávez’s administration, Maduro and his officials then faced a punishing and ever-accelerating slate of US sanctions. Beginning in 2017, the first Trump administration targeted Venezuela’s oil and gas sector as the primary engine for the Maduro regime’s deepening authoritarianism.

Today, Venezuela’s oil and gas industry is in disarray. Production fluctuates below one million barrels per day, while the wider industry reels from years of underinvestment, neglect, lack of maintenance, and limited access to the engineering and technological prowess of Western IOCs. Improving this situation will require a sea change both for the Venezuelan oil and gas industry and its governing institutions; the former cannot proceed without the latter. By extension, the next steps taken by the country’s remnant Maduro-era leadership, the Trump administration, and the Venezuelan democratic opposition movement are of paramount importance to the future of the country’s energy industry.

A stable, secure transition

The ideal first step in returning Venezuela’s industry to its former heights would be enabling a democratic transition, leading to a government that would then pass new legislation, revamp supervisory institutions, and operate in accordance with the rule of law. As of now, however, it is unclear that such a transition is the goal of either the Trump administration or Venezuela’s remaining powerbrokers.

This concern is not a matter of idealism but rather of hard business realities. For any major corporation to engage in a foreign industry, especially in the oil and gas sector, that corporation must know who it is negotiating with. Contract designs and terms can vary considerably, but they must be developed by reliable partners who each understand the other’s roles and responsibilities. After all, a major factor that presaged the decline of Western companies’ engagement with Venezuela (and jump into arbitration proceedings) was Caracas’s reneging on contracts governing how the Venezuelan oil and gas assets were managed in terms of investment and eventual profits. Under the framework in place today, PDVSA has a majority stake in joint ventures. But in its bankrupt condition, it would be impossible for it to meet its capital commitment for nearly any project.

At this stage, it remains unclear who is actually in control of Venezuela and for how long. The Trump administration has indicated, for example, that the United States will remain in control of Venezuelan oil and gas assets for the foreseeable future, perhaps adjusting US licensing and sanctions policy to legitimize US-controlled sales of oil stored in tankers. It’s unclear how willing the Venezuelan regime will be to tolerate this. Moreover, US control is necessarily a short-term strategy. Selling off Venezuela oil stored in tankers and depositing those funds into blocked accounts controlled by the US government will avoid forcing PDVSA to shut in existing production, ensure useful supply to US Gulf Coast refiners, and provide the US government with a significant supply of funds it can manage. But volumes of floating storage are finite, and the Rodríguez government will not remain in power if it seems to be agreeing to sell off the government’s primary source of funds for the sole benefit of the United States or American creditors.

In addition to legal considerations, the physical risk and security outlook is crucial for any industry that requires intensive on-site, day-to-day operations. These operations must be managed by crews of skilled laborers, geologists, and engineers, to say nothing of the initial construction teams and costly repairs that will be necessary throughout Venezuela’s oil and gas regions. The Trump administration has yet to detail its plan for Venezuela’s transition process apart from the acceptance of Delcy Rodríguez, Maduro’s former vice president, as the acting president. But even as Trump praised Rodríguez on Saturday, he also warned her that a failure to cooperate with a US-led transition could result in another action from US forces.

Meanwhile, the democratic Venezuelan opposition, led by María Corina Machado, has found its role and potential future influence downplayed, with Trump saying that her movement lacks sufficient legitimacy among the Venezuelan people to be a realistic alternative. Yet another factor is the vast, complex networks of substate and illicit organizations—including violent militias and their overlords—that operate freely throughout Venezuela, have their own assets to protect, and will assuredly have opinions on who should run the country. These same stakeholders—and their foreign allies, who include geostrategic adversaries of the United States—may likewise take a dim view of the acting president’s apparent complicity in passing Venezuelan crude oil along to the United States if there are not immediate, tangible benefits for doing so outside of the remnant regime’s top brass.

Any rational business leadership would think carefully before committing itself to new investment under these conditions. For a genuine oil sector renaissance to commence, the Venezuelan government must prove that it possesses stability, legitimacy, and resilience. US promises that a conciliatory administration in Caracas (for now) can ensure these conditions will be met with justified skepticism.

Attracting private investment

Regulatory and financial certainty are essential factors for major international oil businesses when making significant investment decisions. This is especially true when oil and gas prices are already soft, at around sixty dollars per barrel, and most outlooks predict a global oversupply throughout the coming year. In other words, for Venezuelan oil and gas investment to make fiscal sense, IOCs will require a return on investment in a reasonable timeframe. Moreover, such businesses will need reasons to believe that long-term engagement (possibly thirty years or longer) in the country will ultimately be profitable based on global oil and gas market outlooks for the next decade or more.

The United States removing or making major adjustments to existing sanctions on Venezuela will be crucial to expanding oil production over the short run, as well as attracting new large scale private investment to the country. At present, both the Venezuelan government and its oil and gas sector (principally PDVSA) face a punishing tranche of US sanctions that have cut them off from money, credit access, partnerships, and technology essential to running the country’s oil and gas industry. As of now, any transactions between Venezuelan entities and any foreign company are subject to US restrictions, US Treasury sanctions designations, and lost access to the US financial system. This state of affairs makes the immediate reentrance of US or other Western companies impossible.

Ideally, IOCs would like to see a scenario where most sanctions are lifted or significantly eased, along with reassurance that a reversal would not occur anytime soon. In addition, they are looking for a revamped Venezuelan regulatory framework for its energy sector, including changes to regulations governing operations, trading and exports, terms for joint ventures, asset ownership, and legal rights. Lastly, the Trump administration has hinted at measures that would enable the repayment of companies that previously exited the country in compensation for their prior losses.

Oil facilities are seen at Venezuela’s western Maracaibo lake on November 5, 2007. (REUTERS/Isaac Urrutia)

A revamped licensing process that allows existing investors to expand their operations could potentially lift production by 300,000 barrels a day over the course of a year, industry experts have suggested. Allowing smaller companies to invest in production sharing, including through productive participation contracts, could likewise incentivize participation. These adjustments could enable another 200,000 to 300,000 barrels a day in new production over the course of the next twelve to eighteen months, the industry experts estimate. Funds from that production could go into a blocked account, which would realistically need to be dedicated to humanitarian benefits in Venezuela, with perhaps a share reserved for repayment of US creditors.

For now, the Trump administration has not signaled that a major softening of the existing sanctions slate is imminent and the oil blockade remains in place. The Rodríguez leadership likewise has not signaled that a reshaping of its oil and gas regulatory framework is incoming at the behest of the United States or anyone else. Instead, the administration’s new plan for selling up to fifty million barrels of Venezuelan crude oil suggests that its focus is on growing near-term, low-hanging fruit production opportunities to prevent the industry from total collapse and shut-in of its existing production.

A positive financial and investment signal might encourage buy-in and engagement from IOCs and smaller companies. One means of doing so would be creating a new escrow account, under US control but presumably with some percentage of profits reverting back to the Venezuelan government. Such a fund could serve as the deposit site for new oil and gas profits over the near-term, ahead of a full lifting of sanctions and/or successful national elections in the future. This account could be enacted through adjustments to the existing sanctions slate, and it could provide a vehicle for early seed funds to be fed into any new Venezuelan governing institutions as a revamped regulatory design is developed. Optimistically, this fund could also serve as a test run for a new sovereign wealth fund, which could help prevent a reversion to the illegitimate use of Venezuela’s resource wealth that had been a hallmark of the Maduro regime.

For now, the Trump administration is hoping that it can deliver a strong enough signal to private oil and gas companies that there can be some compensation and long-term gains to reengagement with Venezuela, if only to enable immediate, easy repairs and infrastructure salvaging. The attractiveness of that offer, and its long-term durability and legality, are yet to be seen.

However, much more political and regulatory change will be necessary to revive the Venezuelan energy industry. Such changes will be far more difficult to achieve than handshake deals to split revenues for a handful of oil sales; moreover, these modest steps forward are far from sufficient to address the depth of the political challenges ahead. Lifting production in the neighborhood of half-a-million barrels per day might preserve what is left of Venezuelan production capacity, but it will not be enough to keep Maduro’s remnant leadership stable or meet the population’s profound humanitarian and economic needs. As a result, the entrenched challenges of migration, drug and other illicit trafficking, intensified substate violence, and perhaps de facto Balkanization of the country by various strongmen (and their domestic or foreign backers) remain palpable risks. The Trump administration, focused on resource management in Venezuela, has so far shown little interest in resolving these issues. But they will not go away, and they could derail the administration’s vision for a more stable energy industry and country.

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Kroenig on DW News on US oil tanker seizures in the Caribbean

Atlantic Council — Wed, 07 Jan 2026 17:00:00 +0000

Original Source

On January 7, Atlantic Council vice president and Scowcroft Center senior director Matthew Kroenig was interviewed on DW News about the US seizure of a Russian flagged oil tanker carrying Venezuelan oil. He contends that the move signaled US resolve in quarantining the Venezuelan regime and adopting a firmer approach toward Russia in the Western hemisphere.

It is impressive that [President Trump] is enforcing this quarantine against Venezuela and not letting these Russian and Venezuelan tricks of trying to reflag stand in his way.

Matthew Kroenig

Staff

Matthew Kroenig

Scowcroft Center for Strategy and Security

China Defense Policy

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Caroline Costello in the China in Africa Podcast

Caroline Costello — Mon, 05 Jan 2026 17:04:58 +0000

On December 19th, 2025, Global China Hub Assistant Director Caroline Costello appeared on the China in Africa Podcast to discuss China’s outsized role in West Africa’s illegal resource trade.

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Caroline Costello in Foreign Policy

Caroline Costello — Mon, 05 Jan 2026 17:04:37 +0000

On September 9th, 2025, Global China Hub Assistant Director Caroline Costello published an op-ed in Foreign Policy about China’s role in fueling illegal logging in Africa.

Jason Marczak: The US needs to remain committed to a democratic transition

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Venezuelan oil was the enabler, not the prize

Landon Derentz — Sun, 04 Jan 2026 21:24:40 +0000

Based on how prominently Venezuela’s vast oil reserves featured in President Donald Trump’s Saturday press conference about the military strike that captured Nicolás Maduro, oil does appear to have played an important role in shaping the administration’s will to advance the audacious mission. Yet it would be misguided to claim that gaining access to supplies of heavy crude oil was the impetus for the operation.

Venezuelan oil supply is unlikely to move global energy markets meaningfully in the near term. For now, the country remains under an oil embargo imposed by the Trump administration. Even under optimistic assumptions, it will take years to rehabilitate the country’s energy sector and achieve a sizable increase in oil exports. Saturday’s operation didn’t hinge on nuanced assessments of crude grades or the US refining sector’s appetite for heavy supply. Energy was the enabler of a much bolder manifestation of Trump’s foreign policy as laid out in the administration’s recently released National Security Strategy.

The United States is now practicing an enhanced version of the two-hundred-year-old Monroe Doctrine. What Trump described Saturday as the “Donroe” doctrine seeks a Western Hemisphere free from hostile external influence and aligned with US political and economic interests. This makes political realignment in Latin America relevant to the president’s vision for the region. Trump also is likely keen on aligning his removal of Maduro and approach to Venezuela with US domestic interests. That includes not saddling American taxpayers with the price tag of another conflict, as well as stemming the recent high levels of migration to the United States from Venezuela. It also includes reducing the violence caused by cartels trafficking illegal narcotics and making whole US companies whose assets Venezuela expropriated under Maduro’s predecessor Hugo Chávez. Here, oil is the enabler that may help pay for the execution of the policy, not the ultimate prize.

In his address from Florida on Saturday, Trump correctly sized up the state of Venezuela’s oil economy: For a country with the largest oil reserves in the world, production is a “total bust” and the full potential of those assets has not been realized. Under Maduro’s rule, production declined from around 2.5 million barrels per day to less than one million barrels a day. If there is an orderly transition of power in Venezuela, then US companies will benefit from the political transformation.

At the same time, the United States is the world’s number one oil and gas producer. It is energy secure. This explains why Trump emphasized that revitalizing Venezuela’s oil patch will make the people of Venezuela—not the United States—“rich, independent, and safe.” Consider the example of neighboring Guyana, where the public is benefiting from oil extraction by US companies. Ensuring Venezuela stands strong alongside the United States will help achieve the president’s domestic policy goals and lessen the influence of Russia, China, and Iran in the Western Hemisphere, all while avoiding economic costs to the American public.

The policy that the Trump administration pursued on Saturday offers insight into the president’s decision-making and the impulses driving his administration. For those countries at odds with the United States, it’s a clear signal that Trump will take decisive action when US interests can be advanced without burdening the American public.

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What to watch in a post-Maduro Venezuela

Atlantic Council — Sat, 03 Jan 2026 21:38:06 +0000

JUST IN

Nicolás Maduro is out. But who’s in? Early on Saturday morning, the US military removed the Venezuelan strongman from power, transporting him to New York to face narcoterrorism charges. President Donald Trump said the United States will now “run” Venezuela and that Maduro’s former vice president, Delcy Rodríguez, has assumed the presidency for now. What does it all mean for the United States, the Venezuelan people, and the country’s oil? Our experts have the preliminary answers.

TODAY’S EXPERT REACTION BROUGHT TO YOU BY

Jason Marczak (@jmarczak): Vice president and senior director at the Atlantic Council’s Adrienne Arsht Latin America Center
Iria Puyosa (@NSC): Senior research fellow at the Atlantic Council’s Democracy+Tech Initiative and a native of Venezuela
Alexander B. Gray (@AlexGrayForOK): Nonresident senior fellow with the GeoStrategy Initiative at the Atlantic Council’s Scowcroft Center for Strategy and Security, and former deputy assistant to the president and chief of staff of the White House National Security Council
David Goldwyn (@Dlgoldwyn): Chairman of the Atlantic Council Global Energy Center’s Energy Advisory Group and former US State Department special envoy and coordinator for international energy affairs

Changing the regime

“This is the most consequential moment in recent Venezuelan history—and for the broader Latin American region,” Jason tells us. “This operation goes beyond a simple extradition: It is a regime-change effort.”
For now, Rodríguez—who was very much a part of the Maduro regime—is in power, though she “does not appear to have the backing of all factions within the ruling party,” Iria notes.
“Rodríguez cannot guarantee the stability required for” the Venezuelan economic revival that Trump is calling for, Iria adds. “Chavismo no longer enjoys the widespread popular support it had two decades ago.”
Jason points out that Rodríguez is constitutionally obligated to call new elections within thirty days, but even that step would in effect come from the same regime that stole an election rightfully won by the opposition in 2024. Trump called for a “safe and judicious transition,” but Jason notes that “many entrenched actors are likely to resist meaningful change,” even though “real change is fundamental to US interests and to the Venezuelan people.”

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The Trump Corollary

Trump’s 2025 National Security Strategy outlined a “Trump Corollary” to the Monroe Doctrine, with a focus on securing the Western Hemisphere. This operation tells us the Trump Corollary “is officially in effect,” Alex says. “Washington has demonstrated a long-overdue commitment to hemispheric security.”
And US adversaries are watching. The operation “will be seen in Beijing and Moscow as an unambiguous sign of the Trump administration’s commitment to a security order compatible with American interests,” Alex explains.
The operation, Alex adds, “creates a once-in-a-generation opportunity for Washington to translate its security preferences into strategic reality” by “ensuring extra-hemispheric powers like China and Russia are excluded from meaningful influence in Caracas.”
Trump also sent a message to other leaders in the region. “Trump mentioned Colombia and Cuba as countries whose leaders should now know the consequences of not cooperating with the United States,” Jason points out.

Oil outcomes

Trump spoke of bringing back US oil companies that were booted out by Venezuela’s 1976 nationalization of the oil industry. But “few US companies are likely to return to the country until there is a reliable legal and fiscal regime and stable security situation,” David tells us. “Companies that have existing operations are much more likely to revive and expand them if the environment is secure.”
The United States has plenty of policy options at its disposal, David says. For example, the administration “could allow oil currently on tankers to be exported, expand licensing, and permit Venezuela to sell oil at market prices, all for the purpose of maximizing national revenue.”
But, David adds, “until there is clarity on sanctions and licensing and more information on who is actually managing the central bank and ministry of finance, the prospects for Venezuelan oil production and exports will remain uncertain.”

The post What to watch in a post-Maduro Venezuela appeared first on Atlantic Council.

Experts react: The US just captured Maduro. What’s next for Venezuela and the region?

Atlantic Council experts — Sat, 03 Jan 2026 20:19:54 +0000

“We are reasserting American power.” That’s what US President Donald Trump said Saturday, hours after the US military launched a strike and raid on Venezuela that resulted in the capture of strongman Nicolás Maduro. The Venezuelan leader and his wife were moved to the USS Iwo Jima en route to New York, where Maduro has been indicted on multiple charges, including narcoterrorism. The US operation comes after months of pressure on the Venezuelan regime to halt drug trafficking and move the country toward democracy. “We are going to run the country until such time as we can do a safe, proper, and judicious transition,” Trump said.

So, what’s next for Maduro, Venezuelans, and US efforts in the region? Below, Atlantic Council experts share their insights.

Click to jump to an expert analysis:

Matthew Kroenig: A win for regional security, the Venezuelan people, and the US military

Alexander B. Gray: This operation sends a signal to Beijing and Moscow

David Goldwyn: Opening up Venezuela’s energy industry will come down to the details

Celeste Kmiotek: The US strikes most likely fall afoul of international law

Iria Puyosa: Delcy Rodríguez cannot guarantee the stability Trump wants

Geoff Ramsey: The mission is not accomplished until Venezuelans get free and fair elections

Nizar El Fakih: Multilateralism failed Venezuela. But it failed long before today.

Tressa Guenov: Success will require years-long US diplomatic and economic efforts in Venezuela

Kirsten Fontenrose: Watching Venezuela from Tehran

Thomas S. Warrick: Maduro’s ouster will cause shock waves in the Middle East

Alex Plitsas: Three scenarios for what could come next

The US needs to remain committed to a democratic transition

Many Venezuelans are hopeful that today marks the beginning of a new era. The removal of Nicolás Maduro from power is a reality that Venezuelans in the country and the nearly eight million forced to flee under his regime have long sought.

Here are three key takeaways from the operation:

First, this is the most consequential moment in recent Venezuelan history—and for the broader Latin American region. Trump’s Saturday announcement made it clear that this operation goes beyond a simple extradition: It is a regime-change effort. Maduro is now en route to New York City to face criminal charges, but the United States intends to “run the country” until “a safe and judicious transition” takes place. That means Delcy Rodríguez, Maduro’s vice president, cannot simply take power and continue his policies. In assuming the presidency, she is constitutionally obligated to hold elections within thirty days. But remember, there was a prior election in July 2024 which opposition leader Edmundo González won, according to released vote tallies.

Second, the US military operation is the start—not the end—of a new level of direct US engagement in Venezuela. Trump confirmed that a team has been designated to run Venezuela, with key figures such as Secretary of State Marco Rubio engaging with Rodríguez. While US forces are expected to provide security around critical infrastructure, broader public security and the protection of citizens remain pressing challenges in a country plagued by gangs, paramilitary groups, guerrillas, and transnational cartels. Hundreds of political prisoners still remain locked up, with their fate of top importance.

Third, today’s actions are the first concrete deliverables of Trump’s new National Security Strategy with its heavy emphasis on the Western Hemisphere. And the president has made it clear that future US operations in the region are fair game as well. Trump mentioned Colombia and Cuba as countries whose leaders should now know the consequences of not cooperating with the United States.

Fourth, the United States now bears responsibility for the eventual outcome in Venezuela. The challenge will be ensuring a “safe and judicious transition” in a country where many entrenched actors are likely to resist meaningful change, but where real change is fundamental to US interests and to the Venezuelan people.

Some commentators are arguing that the strike is illegal under international law. I am not a legal expert, but it’s worth noting that even though heads of state do enjoy immunity from prosecution under international law, few world leaders recognize Maduro as a legitimate head of state. Since 2019, the Organization of American States, the premier multilateral body for the hemisphere, has refused to recognize Maduro as president following that year’s stolen elections.

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

A win for regional security, the Venezuelan people, and the US military

There are five winners of the successful US operation to remove Maduro from power in Venezuela:

US, regional, and global security. The world is better off without an anti-American dictator who traffics narcotics, prompts irregular migration flows, and provides a foothold to the “axis of aggressors” (China, Russia, and Iran) in the Western Hemisphere.
The Venezuelan people. They now have the opportunity for a better government and a freer and more prosperous future.
US military power. This shows that the US military is still the finest fighting force in the world and may help Washington find its confidence and get over its Iraq-Afghanistan hangover.
Special operations forces. They have been eager to show higher-level officials in Washington that they are still relevant after the war on terror—and indeed even more so now.
Trump’s foreign policy. This is a dramatic foreign policy victory, among the top three of the first year in Trump’s second term, alongside degrading Iran’s nuclear program and increasing NATO defense spending.

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

This operation sends a signal to Beijing and Moscow

The “Trump Corollary” to the Monroe Doctrine, as outlined in the 2025 National Security Strategy, is officially in effect. Just days after the Chinese People’s Liberation Army was reported to be war-gaming combat operations in the Western Hemisphere, and a new official Chinese strategy for Latin America refused to recognize the region as of special significance to US security, Washington has demonstrated a long-overdue commitment to hemispheric security.

The Trump administration’s removal of Maduro from power in Venezuela is not simply a message to antagonistic regimes in the hemisphere, like Cuba and Nicaragua; it is a global reestablishment of deterrence that will be seen in Beijing and Moscow as an unambiguous sign of the Trump administration’s commitment to a security order compatible with American interests.

Going forward, the administration has a unique opportunity to build upon the success of its pressure campaign against Maduro to reestablish overwhelming US strategic predominance in the hemisphere, including by tacitly shaping a post-Maduro settlement that ensures extra-hemispheric powers like China and Russia are excluded from meaningful influence in Caracas. The success of this operation creates a once-in-a-generation opportunity for Washington to translate its security preferences into strategic reality.

—Alexander B. Gray is a nonresident senior fellow with the GeoStrategy Initiative at the Atlantic Council’s Scowcroft Center for Strategy and Security. Gray most recently served as deputy assistant to the president and chief of staff of the White House National Security Council.

US President Donald Trump speaks from Palm Beach, Florida, following a US strike on Venezuela on January 3, 2026. (REUTERS/Jonathan Ernst)

Opening up Venezuela’s energy industry will come down to the details

From an energy perspective the key questions will be who governs the country, the timeline and nature of a transitional government, the security situation in the country at large and in the oil production sites and ports, and if the US government modulates the sanctions regime and the blockade to financially support a potential transitional government. At this writing, Trump has declared that the United States will run the country until the situation is stabilized, and he declined to endorse González. Trump also asserted that US oil companies would return to Venezuela.

It remains to be seen whether there will be resistance from loyalists of the regime and remaining members of Cuban intelligence. Few US companies are likely to return to the country until there is a reliable legal and fiscal regime and stable security situation. Companies that have existing operations are much more likely to revive and expand them if the environment is secure.

It is highly uncertain how the US administration will approach exports and management of those revenues. It could allow oil currently on tankers to be exported, expand licensing, and permit Venezuela to sell oil at market prices, all for the purpose of maximizing national revenue. It is also possible that those revenues would go into a blocked account for the benefit of a new Venezuela government.

But for now, we have no details about how these fiscal and legal arrangements will evolve. Until there is clarity on sanctions and licensing and more information on who is actually managing the central bank and ministry of finance, the prospects for Venezuelan oil production and exports will remain uncertain.

—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.

The US strikes most likely fall afoul of international law

Maduro oversaw a brutal regime engaged in violent human rights violations against Venezuelan citizens. Regardless of this, the US strikes on Venezuela were illegal under international law.

The United Nations (UN) Charter forbids use of force against a state’s “territorial integrity or political independence,” with exceptions permitted for self-defense and Security Council authorizations. Self-defense requires that the force used be necessary and proportional, and that the threat be imminent. None of these conditions appear to have been met. As such, the attacks appear to fall under Article 3(a) of the UN General Assembly’s definition of the crime of aggression. This provision is customary, meaning it is binding and applies regardless of US arguments that the actions are legal under domestic law.

The use of force also marked the onset of an international armed conflict between the United States and Venezuela, triggering the applicability of international humanitarian law. While so far most targets appear to have been military, Trump threatened a second “and much larger” attack “if needed.” Trump’s announcement that the United States will “run” Venezuela and may deploy forces also raises alarms around potential occupation.

Finally, as sitting head of state, international law affords Maduro full personal immunity under domestic courts—including in the United States. Since 2019, the United States and other countries have not recognized Maduro as head of state, in response to widespread election fraud, and he is widely considered an illegitimate ruler. However, as argued by the French Cour de Cassation, this immunity should apply regardless of whether a state recognizes a head of state’s leadership—precisely to prevent politically motivated arrests.

While Maduro must be held accountable for the human rights violations he has inflicted, the United States’ unlawful actions must be condemned. Allowing such precedents to go unchallenged will further undermine respect for international law, state sovereignty, and civilian protections.

—Celeste Kmiotek is a senior staff lawyer for the Strategic Litigation Project at the Atlantic Council.

Delcy Rodríguez cannot guarantee the stability Trump wants

The US decapitation operation against the autocratic regime that ruled Venezuela for over twenty-five years—first led by Hugo Chavez, then by Maduro—marks the beginning of the restoration of democracy in the country. The regime was unable to mount any effective defensive military actions. Its usually strong communication apparatus failed catastrophically during the first twelve hours following the US operation to take Maduro from his residence inside Fuerte Tiuna, the principal military base of the Venezuelan army. The military command-and-control chains were clearly disrupted.

Venezuelans are eager to reclaim their country and restore democracy. There is hope that González—who was rightfully elected president in 2024—will soon take the oath, and many trust that María Corina Machado will successfully lead the transition process, which may take months or even years. The second-in-command figure in the regime, Rodríguez, who was sworn in today to take Maduro’s place, does not appear to have the backing of all factions within the ruling party. Rodríguez cannot guarantee the stability required for the business operations Trump emphasized several times during his remarks on the operation. Chavismo no longer enjoys the widespread popular support it had two decades ago.

The Venezuelan people who have fought nonviolently against a highly repressive regime for over two decades will continue their struggle until freedom and democracy are fully restored.

—Iria Puyosa is a senior research fellow at the Atlantic Council’s Democracy+Tech Initiative. Puyosa was previously an associate professor at the College of Social Sciences at the Central University of Venezuela.

The mission is not accomplished until Venezuelans get free and fair elections

With Rodríguez appearing on state television Saturday afternoon and convening a “National Council in Defense of the Nation” made up of every heavyweight in the ruling party, it seems likely that she is indeed serving as the country’s de facto leader—for now.

While she claimed that Maduro remains “the only president,” called for his release, and said that Venezuela would never be “a colony of any empire,” she also noted that the Supreme Court will be reviewing a national emergency decree signed by Maduro as his last executive act. This points to further announcements to come, in which Rodríguez will almost certainly claim that she is now the country’s interim leader.

Whoever emerges on top of the power struggle in Caracas, it is fundamental that the United States use its considerable leverage to incentivize a roadmap for a transition. It is essential that the Venezuelan people are presented with a credible plan for free and fair elections, the release of political prisoners, and a path toward economic recovery. The United States can help pave this path by offering gradual, phased sanctions relief in exchange for verifiable progress toward democratization.

It is logical for the United States to advance its own energy, migration, and broader geopolitical interests in Venezuela, but US policymakers should not consider their mission accomplished until Venezuelans’ fundamental right to elect their own leaders is restored.

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

Multilateralism failed Venezuela. But it failed long before today.

Many today are emphasizing the importance of multilateralism and warning about its erosion as a result of the unilateral US actions in Venezuela. But the reality is different: Multilateralism in the face of the Venezuelan crisis did not fail today—it failed years ago.

That failure—resounding, stark, and undeniable—is measured in millions of exiles, many now undocumented or living in precarious conditions across dozens of countries, constituting one of the largest forced displacements in the world without a conventional war or internal armed conflict. It is measured in millions of families torn apart by a regime that systematically destroyed its own society: opposition parties dismantled, dissidents disappeared, deaths under custody, widespread torture, the mass closure of independent media, expropriations that crippled the productive economy (years before any international sanction), hyperinflation that impoverished millions of working families, and sustained repression.

Meanwhile, diplomacy and multilateral institutions proved unable to deliver a single effective negotiation process leading to an orderly, peaceful, and negotiated transition—despite years of appeals by millions of Venezuelans who voted, protested, and exhausted every available civic mechanism at enormous personal cost.

And international justice? The International Criminal Court, with an investigation open since 2021, has yet to issue a single indictment—despite extensive documentation of crimes against humanity by the United Nations Fact-Finding Mission on Venezuela, Human Rights Watch, Amnesty International, and hundreds of victims. Their testimonies provided detailed accounts of a sophisticated, systematic, and nationwide apparatus of repression designed to crush dissent that has been operating in the country for several years under this regime.

Looking ahead, a central concern among Venezuelans—both inside and outside the country—is whether stability will follow, and what political order will emerge from the vacuum left by Maduro, particularly given the competing factions within the former regime. What is clear is that Venezuelans expressed their will at the ballot box: In the July 2024 presidential election, the opposition—led by González and Machado—won decisively, a result the Maduro government refused to recognize, further deepening the crisis that culminated in today’s events.

Any sustainable transition will require that this legitimate leadership, with broad and demonstrable support inside Venezuela, be empowered to lead a democratic transition through a credible and legitimate process.

—Nizar El Fakih is a nonresident senior fellow with the Strategic Litigation Project at the Atlantic Council.

Success will require years-long US diplomatic and economic efforts in Venezuela

While it’s far too soon to know Venezuela’s ultimate disposition following today’s operations, we do know that Trump says that the United States will essentially “run” the country for now. Trump has prided himself on touching many conflicts around the world—from those between Rwanda and the Democratic Republic of the Congo and Azerbaijan and Armenia to Gaza and Ukraine—quickly claiming several as resolved. But one thing the administration has yet to prove in nearly all cases, especially Venezuela, is whether it has the sustained attention span for the years-long diplomatic and economic efforts required to bring societies out of chaos and repression.

Even a short-term endeavor of running Venezuela will cost significant US military and taxpayer resources. It will also require real diplomatic finesse to ensure that the United States remains a credible leader in the region, which has now become the centerpiece of US national security strategy. Meanwhile, China will likely continue its lower-key but serious commitment to economic development in Latin America and elsewhere around the world.

Venezuela will be a test of Trump’s strategy for US dominance in the region and whether his collective peace and security efforts—from Caracas to Kyiv—can result in real strategic advantages for the United States. The alternative would be a stack of unfinished US projects that leave real lives affected in the wake.

—Tressa Guenov is the director for programs and operations and a senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. She previously served as the principal deputy assistant secretary of defense for international security affairs in the Office of the Under Secretary of Defense for Policy.

Watching Venezuela from Tehran

From a technical and military standpoint, the US operation in Venezuela signals to Iran that Washington is increasingly confident operating against Russian-derived, layered air-defense architectures without needing to dismantle them through a prolonged, overt suppression of enemy air defenses (or SEAD) campaign. Venezuela’s inventory—anchored by S-300VM, Buk-M2, and point defenses such as Pantsir-S1, supported by Russian and Chinese radars—closely resembles the architecture Iran fields around critical sites. Yet the US operation appears to have achieved its objectives without forcing visible air-defense engagement.

Available reporting suggests the US operation evaded detection and engagement by leaning on standoff effects; persistent intelligence, surveillance, and reconnaissance (ISR); electronic attack; and compressed timelines. Under such conditions, systems like Buk and Pantsir may never generate a usable firing solution, while high-value S-300-class assets become difficult to employ without sustained targets, clear attribution, and political authorization. The issue is not only theoretical capability, but whether layered defenses can meaningfully influence outcomes during brief, tightly sequenced operations.

This reinforces a broader pattern Iran will recognize. Russian air defenses have struggled to impose decisive effects in other theaters—including Syria, where Israeli strikes have repeatedly penetrated layered systems, and Ukraine, where Pantsir, Buk, and S-300 variants have suffered attrition under modern ISR-strike cycles.

Equally relevant is the diplomatic dimension. In Venezuela, as with Iran, US military action coincided with standing diplomatic offers—sanctions relief, normalization steps, and elements of proposed deals—kept on the table before and during the use of force. The combined signal to Tehran is that neither reliance on Russian air defenses nor the slow-rolling of US proposals necessarily alters the pace or structure of US action.

Recent US strikes in Nigeria send a reinforcing signal. There the United States acted without prolonged warning or phased escalation, using remote airstrikes supported by the Nigerian government. These operations underscore a reduced tolerance for drawn-out escalation dynamics and a preference for short-duration, outcome-oriented use of force.

For Iran, the relevance lies not in the specific targets or theaters, but in the demonstrated willingness of the United States to move decisively once thresholds are crossed.

—Kirsten Fontenrose is a nonresident senior fellow at the Scowcroft Middle East Security Initiative in the Atlantic Council’s Middle East Programs. She was previously the senior director for the Gulf at the National Security Council.

Maduro’s ouster will cause shock waves in the Middle East

The success of Trump’s bold operation to remove Maduro will cause global shock waves, including in the Middle East. Saturday’s successful operation puts Trump’s “locked and loaded” message on Friday to Iran’s leaders in a different perspective. However, the Venezuelan operation took months of planning, and there are no signs that the United States has the capability, or the intention, to pull off something similar in Iran.

Still, as a demonstration of Trump’s willingness to back months of rhetoric against Maduro with dramatic—and effective—action, Saturday’s operation should concern Iran’s leaders. Those who know their history—and the Trump administration has some like Sebastian Gorka who do—will remember that in 1956 the United States failed to follow up on its encouragement of Hungarian protesters against Soviet rule. The Trump administration ought to be aware of the dangers of vague rhetoric that cannot be followed up with action. Trump’s words to Iran and the Middle East in the coming weeks need to be made with steely-eyed capability and intention.

—Thomas S. Warrick is a nonresident senior fellow in the Scowcroft Middle East Security Initiative and a former deputy assistant secretary for counterterrorism policy in the US Department of Homeland Security.

Three scenarios for what could come next

The US operation to capture Maduro and transfer him to stand trial in the United States on criminal charges dating back to 2020 marks a decisive inflection point for Venezuela. What follows will hinge less on Washington’s next move than on the calculations of the regime’s remaining power brokers, military commanders, intelligence chiefs, and political enablers who are now confronted with a stark choice: negotiate an orderly exit or risk annihilation alongside a collapsing system.

In the best-case scenario, Maduro’s arrest catalyzes elite defection. Faced with legal exposure, sanctions, and loss of patronage, regime underlings could seek guarantees for safe passage, limited amnesty, or third-country exile in exchange for transferring authority to the legitimately elected opposition. Such a negotiated handover would avert mass violence, stabilize institutions, and open a narrow but viable path toward economic recovery and international reintegration.

Another scenario is that the United States has been working secretly with elements of the Venezuelan government who will take over.

The worst-case scenario is far darker. If regime remnants reject negotiation and fragment, Venezuela could descend into a protracted guerrilla conflict. Armed colectivos, criminalized military units, and narco-linked factions could wage asymmetric warfare, turning parts of the country into contested zones and prolonging civilian suffering long after the regime’s formal collapse.

 —Alex Plitsas is a nonresident senior fellow with the Scowcroft Middle East Security Initiative, the head of the Atlantic Council’s Counterterrorism Project, and a former chief of sensitive activities for special operations and combating terrorism in the Office of the Secretary of Defense.

The post Experts react: The US just captured Maduro. What’s next for Venezuela and the region? appeared first on Atlantic Council.

Prioritizing Canada’s investment in Arctic infrastructure

Jason C. Moyer — Tue, 23 Dec 2025 20:16:33 +0000

Bottom lines up front

Canada’s new budget promises a “generational investment” in infrastructure, with significant funding earmarked for Arctic dual-use infrastructure.
These funds advance multiple goals set by the new government: improving its military presence in the north, accessing untapped critical mineral reserves, and offering new economic opportunities to Arctic communities.
Translating this funding into tangible projects and incorporating Canada’s climate goals into their development will be critical.

The Canadian government is making a “generational investment” in its infrastructure—including pipelines, ports, and roadways. Prime Minister Mark Carney’s first federal budget, unveiled in early November 2025, establishes Canada’s long-term prosperity as a driver for this investment and enables the new government to approach linked global challenges from a place of strength. Canada’s budget process differs from the US budget process, producing a more concrete plan with less room for deviation once the budget is set. The Canadian government budget outlines actual revenue and the government’s expenditure plans. Indeed, infrastructure investments combine two priorities in the current threat landscape: economic ambition and military necessity. To achieve the stated goals of doubling Canadian exports to non-US markets over the next decade and meeting the new defense spending pledge to which NATO allies committed at the Hague summit, Canada’s new budget begins a major effort to have infrastructure catch up to ambition.

Nowhere is this more apparent than in Canada’s Arctic, where infrastructure investment has sorely lagged. Canada’s vast and remote north is a challenging environment for building infrastructure. It is costly to build and to maintain, with prohibitively high initial costs and the “tyranny of distance” often deterring investment. Amid growing international interest in the Arctic, including pressure from the United States, Canada’s north can no longer be ignored, especially as Carney’s new nation-building agenda pushes for investment in infrastructure. Investing in Canada’s northern infrastructure addresses multiple necessities: It bolsters Canada’s military footprint in the Arctic; it contributes to NATO commitments on defense spending, particularly toward the goal of 1.5 percent of gross domestic product (GDP) spent on infrastructure; it strengthens the economic opportunities available to communities in the region; and it improves access to critical minerals.

The Canadian Arctic is facing a profound period of transformation. It is warming nearly four times faster than the rest of the globe, dramatically impacting attempts to build infrastructure in the region. Permafrost thaw, less sea ice, and rising sea levels are all challenges facing Canada’s north. Ultimately, this reality needs to be central to the development of infrastructure projects in the region. Canada seeks to become a “clean energy superpower” by supporting the development of low-emission energy projects such as nuclear reactors and low-carbon liquefied natural gas. The government is pushing for the development of carbon capture and storage technologies, as well as enhanced methane regulations. It is also affirming its commitment to the industrial carbon tax. The new federal budget’s approval by parliament was only possible with support from the Green Party. The environment must remain central to Carney’s plans for economic and infrastructure expansion in order to maintain support for his minority government.

One highlight of the new budget is the Arctic Infrastructure Fund. The government is proposing C$1 billion over four years for Transport Canada to invest in “major transportation projects in the north,” including “airports, seaports, all-season roads, and highways.” These infrastructure investments have both civilian and military uses. The Mackenzie Valley Highway is a prime example of the challenges facing major infrastructure projects in the region. The all-weather highway extension is designed to connect remote communities in the Northwest Territories. While this project’s origins date back to the 1960s, it is still several years from breaking ground. The Mackenzie Valley Highway alone is projected to cost C$1.65 billion, with the majority of the cost covered by the federal government. In this context, C$1 billion over four years—while an admirable start—is simply not enough to make a significant difference. To address infrastructure needs in Canada’s north, and to transform its portion of the Arctic so it is no longer the “soft underbelly” of the North American Arctic, this funding must be only the beginning of the Canadian government’s investments. As Carney’s large-scale projects continue to unfold, the Canadian Arctic will require more resources to meet civil and military infrastructure needs and effectively project power into the north.

In late 2025, the Atlantic Council’s Transatlantic Security Initiative hosted a workshop with government officials, academic experts, and participants from the public and private sectors of Canada, the United States, and Europe. The insights gathered from these conversations helped inform this issue brief, which assesses challenges, recommendations, and opportunities for Canada’s infrastructure in the Arctic.

Recommendations for the Department of National Defence and Canadian Armed Forces

Incorporate sustainability and climate security in Arctic infrastructure planning

Many of the Canadian government’s plans for infrastructure in the Arctic are dual use in nature, with the goal of increasing its military footprint in the region. Increased military or infrastructure presence in Canada’s north will invariably have environmental ramifications. Air- and sea-based military activities can generate excessive noise levels and air pollution, while military exercises can result in soil compaction and the destruction of vegetation. As Canada grows its infrastructure footprint in the north, it will need to include countermeasures to offset this damage—such as creating specific operational zones to protect ecosystems or paying to mitigate harm done to the environment.

Despite these challenges, Canada has extensive resources at its disposal, such as NATO’s new Climate Change and Security Centre of Excellence (CCASCOE), headquartered in Montreal. This center can coordinate best practices, act as a standard-setting body, and provide guidance for allies and partners to operate sustainably in the region. Drawing on lessons from the European Arctic and adapting them for the North American Arctic is one area in which this center of excellence can benefit dual-use infrastructure projects.

Another reason to ensure infrastructure in the Canadian Arctic meets environmental standards is to support Canada’s new Climate Competitiveness Strategy. By linking climate sustainability to economic growth, the Canadian government is building a competitive advantage at a time when other Group of Seven (G7) countries and the European Union are walking back pledges to meet green targets.

Include local communities’ expertise and experiences in infrastructure development

As investments in Canada’s Arctic infrastructure increase, environmental considerations are being taken into account—and the experiences and expertise of those living in Canada’s northernmost regions must also be integrated into planning. Indigenous and local communities are on the forefront of the challenges facing the region, from sinking roads and runways to access to healthcare. Calls to work with Indigenous and First Nation communities are integrated throughout the budget.

Starting in 2025–2026, the government is allocating C$40 million over two years to Indigenous Services Canada through the Strategic Partnerships Initiative “to support Indigenous capacity building and consultation on nation-building projects,” some of which will be in the Canadian Arctic. The Arctic Infrastructure Fund, with its C$1 billion over four years, is specifically tasked with advancing Indigenous economic reconciliation. The budget highlights that “dual-use infrastructure investments in the north will reliably meet both military and local needs, and the government recognizes that Inuit, First Nations, and other communities are best placed to identify community needs.” Spending on infrastructure in Canada’s north has military, economic, and local resilience factors. Ensuring local and Indigenous perspectives are integrated into all stages of infrastructure development—from the planning stages to design, groundbreaking, and finalization of projects—will be key to ensuring the investments successfully meet the needs of both the military and the local community. Investing in roadways, ports, and railways in the Arctic, in close alignment with the local community, will amplify whole-of-society resilience in ways not yet realized.

Recognize critical minerals’ potential as a driver of infrastructure development in the region.

The Canadian government’s decision to increase investment in infrastructure and its northern territories can be partially understood by the global race for rare earth materials heating up. At the G7 meeting in Alberta, the prime minister introduced the Critical Minerals Production Alliance—a Canadian-led initiative that leverages trusted international partnerships to enhance critical mineral supply chains for collective defense and advanced technology.

Canada is one of the top five producers of ten critical minerals, and minerals account for 5 percent of Canada’s nominal GDP. Its northern regions are home to significant deposits of iron ore, gold, diamonds, and rare earth elements. The Mary River Mine on Baffin Island is one of the world’s northernmost reserves of high-grade iron ore, producing millions of tons annually. Similarly, the Hope Bay and Meliadine gold mines contribute substantially to Canada’s mineral output. These resources are critical for economic development and for national security.

Another major priority identified in the new budget is the Port of Churchill Plus. A series of projects will upgrade the Port of Churchill—Canada’s only Arctic-region deepwater port for more than 106,000 miles of coastline—and expand trade corridors with an all-weather road, an upgraded rail line, a new energy corridor, and marine icebreaking capacity. The goal is for the Port of Churchill to become a major four-season and dual-use gateway for the region. Expanded export capacity in the north through Hudson Bay will contribute to increased and diversified trade with Europe and other partners, while more strongly linking Churchill to the rest of Canada.

While this push for access to critical minerals makes sense from an economic perspective, it has several notable roadblocks to overcome. First is the lack of processing and refinement capabilities in Canada, and in the West more broadly. China has exerted a global chokehold over rare earth materials globally, partly due to its technical expertise in the processing stage. Western companies have struggled to compete with China over environmental and regulatory concerns, which leads to the second point: Extraction of critical minerals has an environmental tradeoff. Canada’s economic expansionism and green ambitions will eventually collide—likely in the critical minerals space. In the ever-shifting global market for critical minerals, Canada cannot prioritize short-term economic gain over long-term environmental consequences.

As always, one of the core challenges facing infrastructure projects in Canada’s north lies in sustaining this momentum in the long term. The narrow passage of this budget by parliament demonstrates the challenges of minority government rule. Improving affordability for average Canadians was the main refrain of those who voted against the new budget—a challenge that will not go away in the short term. In the long term, Carney must break the chronic habit of previous governments promising on defense spending without following through. The budget also highlights upcoming sacrifices—C$60 billion in total spending cuts in the next five years—including a 10 percent cut to the public sector (amounting to roughly forty thousand jobs). Although the C$1 billion in funding through the Arctic Infrastructure Fund is a strong step forward, it will need considerably more funding to meet Canada’s ambitions in the region and must be supported by action.

About the author

Jason C. Moyer is a nonresident fellow with the Transatlantic Security Initiative at the Atlantic Council’s Scowcroft Center for Strategy and Security.

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First hundred days: How Kast can accelerate US investment in Chile

Maite Gonzalez Latorre, Jason Marczak — Mon, 22 Dec 2025 21:12:03 +0000

Bottom lines up front

Chile elected José Antonio Kast president December 14, after a campaign centered on economic growth, security, and institutional stability.
Kast’s proposed security measures aim to restore the predictability of long-term investment needs.
To deepen economic ties with the US, in his first hundred days Kast could also expand workforce training and regional programs to ensure access to skilled talent across the country.

New president, new pressures

José Antonio Kast will head to La Moneda in March 2026. Chile’s president-elect won the second round of the election with 58.2 percent of the vote—winning by a margin of more than 16 percentage points. The day after the election, Kast met with outgoing President Gabriel Boric and emphasized afterward that he will advance a “government of national unity on priority issues: security, health, education, and housing.”

Kast will enter office with a slew of economic pressures in his inbox: slow growth, weak investment, stagnant productivity, high inequality, limited social mobility, and regional gaps. The labor market remains segmented, with low female participation and high informality. Along with these economic pressures, security and rising crime rates dominated the electoral campaign and addressing them will be central to Kast’s government plan.

In 2024, Chile’s economy showed signs of stable but uneven recovery, with moderate 2.6-percent gross domestic product (GDP) growth driven largely by mining, easing inflation, and falling poverty, while unemployment and informality remained elevated and investment growth lagged. Looking ahead to 2026, growth is expected to remain steady at 2.6 percent. Alongside a narrowing fiscal deficit and inflation stabilizing, this suggests a macroeconomic environment that is steady but still dependent on restoring investment momentum.

Chileans want to see changes and expect Kast to deliver some economic wins quickly. But the ability to do so goes hand in hand with addressing the increased rates of crime and violence. Kast’s campaign focused on the security of the country with proposals such as his Plan Implacable, which aims to “restore state authority and curb organized crime” through tougher penalties, more federal control over prisons, and stronger security operations, while also reasserting state authority in areas where criminal networks have expanded. This plan might be among the things on which Chileans want Kast to take action first. However, Kast and his administration need to balance what they want and what they can actually get done, especially regarding migration and deportation.

A challenging congress

The first one hundred days of the Kast administration will test the executive’s ability to move legislation that supports faster growth, rebuilds investor confidence that has been weakened by security concerns and political fragmentation, and signals a clearer economic direction.

That said, Kast takes office with a congress that leans right but does not give him full control. Right and far-right parties aligned with Kast hold seventy-six of the 155 seats in the Chamber of Deputies, with his second-round opponent Jeannette Jara’s left and far-left coalition of Unidad por Chile controlling sixty-one. The swing party of Franco Parisi, Partido de la Gente, holds fourteen seats.

Kast will need a simple majority to pass most legislation. But constitutional amendments and reforms of the electoral system would require two-thirds of votes in the congress. Kast’s coalition cannot reach either threshold on its own, and must work with partners to move any major bill forward. This makes the Partido de la Gente especially important. Because no bloc controls a majority, its fourteen deputies are in position to decide whether a proposal advances or fails. Its votes can tilt negotiations, shape the final text of legislation, and determine how governable the next term becomes.

Passing legislation through the lower house will be easier, but major legislation such as Kast’s proposed mass deportations will need broader support. The evenly split senate will require him to work with the traditional right as well as swing actors to move legislation. As such, Kast will be faced with increased pressure to deliver short-term results on crime and economic growth, signaling early whether his administration can translate public demand for order and stability into a more predictable environment for investment, something US investors typically look for before committing capital in Chile.

How Chile’s investment environment has shifted

Since the mid-1980s, Chile has implemented significant reforms that opened its economy and encouraged foreign investment. These included changes in the financial and social markets, such as Law No. 20.848 of 2015 establishing the framework for foreign direct investment (FDI), as well as other tax and labor reforms. However, social unrest in 2019, the COVID-19 pandemic, two failed constitutional reform attempts, and rising crime have affected investor confidence.

The trade relationship between Chile and the United States is one of the deepest and most strategic for our country. Since the Free Trade Agreement came into effect in 2004—which allowed 100 percent of bilateral trade to be duty-free by 2015—trade between the two countries has more than doubled, and Chilean exports to the US have grown steadily. Today, the United States is our second-largest export destination and also the second-largest foreign investor in Chile, reflecting a mutual trust built over time.

The opportunities to deepen this partnership are enormous: sustainable energy, critical minerals, green hydrogen, water and digital infrastructure, and advanced technologies. Chile contributes stability, legal certainty, and strategic resources; the United States brings innovation and capital. Strengthening this cooperation is key to driving investment, productivity, and new opportunities for both countries.

—Susana Jiménez Schuster, president, Confederation of Production and Trade (CPC)

The foundation for investment in Chile lies in democracy, rule of law, and a predictable regulatory environment. The Organisation for Economic Co-operation and Development (OECD) has indicated that Chile’s growth might be reaching a ceiling, making continued reforms—such as streamlining permits, encouraging innovation, digitalizing paperwork, simplifying regulations, and removing bottlenecks—essential for reigniting momentum.

Chile has economic sectors with great potential that meet global demand for a wide range of goods and services, as well as developed markets and a stable institutional framework. Just as our country can offer attractive conditions to foreign investors, we can also provide knowledge and talent in those industries where we have developed a high level of know-how and expertise. Chile’s growth has been founded on strong collaboration, and free trade agreements with various economies around the world.

—Francisco Pérez Mackenna, board member, AmCham Chile

What makes Chile an attractive destination for US investors

Several conditions strengthen opportunities for US investment in Chile. Together they shape a more attractive environment for long-term investment is likely to be a priority for the incoming Kast government.

Chile is a key tech hub in Latin America. This is because of its stable economy, strong startup ecosystem, skilled workforce, advanced digital infrastructure, and government-backed innovation programs. Successful tech projects require a strong and solid workforce. According to CBRE’s Scoring Tech Talent 2025 report, Santiago has the third-highest tech talent pool in Latin America, with more than 143,000 professionals. This positions Chile as an attractive hub for companies to expand. That said, most initiatives are heavily concentrated in Santiago, emphasizing the need for additional training in both the northern and southern regions to ensure successful new project implementation.
US companies benefit from working with reliable local partners, in part because Chile has clear rules for contracts and strong institutions and because local firms usually have long experience navigating permitting, local procurement, cultural nuances, and sector-specific regulations. These conditions create an environment where these partnerships give foreign investors a dependable base of support on the ground.
Investors trust Chile because its infrastructure is strong, and its politics stay steady. In 2024, Chile received $15.3 billion in FDI, one of the highest inflows in recent years. A big share of that comes from reinvesting earnings, which shows that companies already in Chile are confident enough to expand. The government agency InvestChile closed 2024 with a portfolio of $56.2 billion in foreign-backed projects, with US companies investing the largest share at $20.5 billion. Major investments target clean energy: green hydrogen, mining, and infrastructure. These numbers show that foreign investors, especially those from the United States, believe in Chile’s long-term stability and the clarity of its rules. They see a country where projects can start quickly and scale up, thanks to predictable regulations and reliable systems. That confidence in both infrastructure and political stability strengthens the case for more investment.

The U.S. International Development Finance Corporation (DFC)’s mandate prioritizes investments in markets that offer predictability, stability, and clear rules, conditions that have historically made countries like Chile attractive for engagement. The DFC, a US federal agency, was created under the 2018 Better Utilization of Investments Leading to Development (BUILD) Act, which merged the Overseas Private Investment Corporation (OPIC) with USAID’s Development Credit Authority. Its core purpose is to mobilize private capital to advance US development and foreign policy objectives by leveraging financial tools such as loans, equity investments, guarantees, and political risk insurance to support private-sector-led solutions in markets where commercial finance is limited or unavailable.

In December 2025, Congress reauthorized and modernized the DFC through the FY 2026 National Defense Authorization Act (NDAA), extending its authorization through 2031, and significantly expanding its scope and authorities. Under this reauthorization, the DFC’s investment cap (Maximum Contingent Liability) was raised to $205 billion, and the agency gained new tools, including a $5 billion equity revolving fund and increased equity investment authority. The legislation also broadened DFC’s ability to invest in more countries and sectors while placing limits on financing in the wealthiest countries, ensuring that no more than 10 percent of its portfolio may support high-income markets, with specified sector exceptions such as energy, critical minerals, and information and communications technology.

While Chile’s high-income status means that large-scale DFC engagement is still limited compared with developing markets, the agency can support selected projects in strategic areas, including clean energy, critical minerals, infrastructure, and technology, particularly where there is a clear economic or strategic rationale and consistent with the statutory constraints on participation in wealthy countries.

Addressing bottlenecks to further FDI in Chile

Following the presidential election, Chile enters a new political phase with renewed attention on how the next administration will translate campaign promises into policy. Chile continues to take steps to strengthen its investment environment, while facing persistent bottlenecks that shape foreign investor confidence and will influence the country’s economic direction in the months ahead.

Regulatory delays are a major concern and become impediments. Permitting and environmental review processes can take several years. However, the Framework Law on Sectoral Authorizations (Law 21.770)—better known as the Ley de Permisología, which creates the Framework Law on Sectoral Authorizations (LMAS)—was enacted and posted in September 2025. The goal is to update and speed up the permit process to encourage investment. The law creates a single digital portal called SUPER to manage permits simultaneously, introduces simplified procedures for low-risk projects, and establishes administrative silence. Streamlining and updating procedures are expected to drop processing times between 30 percent and 70 percent without lowering regulatory standards. This will also be a step forward for attracting foreign investment.
Policy uncertainty remains a concern for long-term investors. Over the past decade, shifts between governments of the right and left have created questions about the direction of future regulations. Relations between Santiago and Washington are expected to further deepen under a new administration. Kast will need to show that he can meet public expectations for stronger growth and higher investment. Here, it’s critical to balance the demands of [JF1] parties across the political spectrum as this congressional balancing act is what’s needed to advance legislation reassuring to investors. Although Chile has struggled lately to attract FDI, the United States remains its second-largest source, with a strong presence in energy, data centers, and mining.
The economy also plays a major role in the current political moment. Chile has experienced slow growth for several years and unemployment sits at about 9 percent. Investment remains stagnant, with inflation and high living costs shaping daily choices for many Chileans. Voters widely see the current government as falling short in addressing these issues. The national budget was also a central topic of conversation during the election. The legislative commission in charge of reviewing the annual budget recently rejected the proposal for 2026; Kast will now likely express his approach to next year’s spending plan in the short term. That said, his proposal of gradual elimination of property taxes on primary residences, starting with those on homeowners over sixty-five, would reduce government revenue, meaning the 2026 budget will need to account for this shortfall. The administration will need to balance funding public services and implementing the policy in a fiscally responsible way.
Security is another major risk. While Chile remains relatively safe in comparison to select other countries, crime has risen in recent years—including organized crime, drug trafficking, and violence in northern regions and Santiago. Researchers estimate crime costs the country nearly $8 billion annually, discouraging some foreign investment. Kast made public safety a core part of his platform through the previous mentioned Plan Implacable, which includes tougher penalties for organized crime, high-security prisons, expanded self-defense laws, protections for law enforcement and judicial actors, and targeted border security measures with his Plan Escudo Fronterizo.

American investment has been central to the growth of Chile’s strategic industries, while Chile’s stability, talent, and infrastructure have enabled US companies to scale across Latin America. Significant opportunities remain. Chile is the world’s largest copper producer and holds 25 percent of global lithium output, with growing mineral-processing capacity and emerging resources such as rare earths and cobalt. The country is also becoming a regional digital hub, supported by projects like Google’s Humboldt Cable and expanding data-center infrastructure. Upcoming port concessions and the need for energy storage solutions in a rapidly growing clean-energy system offer additional avenues for deeper US investment.

—Beatriz Herrera, investment commissioner for North America, Embassy of Chile

Sectors in Chile with investment potential

Information technology (IT): Chile’s IT sector is expanding rapidly, driven by high internet penetration, widespread mobile connectivity, and growing demand for digital services. Key emerging sectors include fifth-generation (5G) deployment, big-data analytics, and artificial intelligence (AI) integration, supported by initiatives such as Chile Digital 2035 and the National AI Policy. To accelerate growth, Chile can build on existing programs by expanding Chile Digital 2035 and Digital Talent for Chile, increasing investment in digital infrastructure, scaling training and education initiatives, and deepening public-private partnerships to ensure broader access to advanced IT solutions, close the skills gap, and achieve full digitalization of public services.
Critical minerals (copper and lithium): As the world’s largest copper producer, supplying 24 percent of global output, and home to 41 percent of lithium reserves, Chile is a strategic source of materials essential for clean technologies. These include electric vehicles, energy storage, and digital infrastructure. With public policies promoting sustainability and high environmental standards, Chile is positioning itself to attract investment that advances technological innovation, supports the global energy transition, and fosters inclusive economic growth. China currently dominates global demand for Chilean copper and lithium, but Kast could attract more Western-aligned investment by promoting legal certainty, officering incentives, and fostering partnerships with companies that meet high environmental and governmental standards.
Water management and drought mitigation: Chile is increasingly leveraging public-private partnerships to improve water management and climate resilience. Investments focus on both traditional infrastructure, such as dams, and natural solutions including reforestation and wetland restoration. There is demand for technologies that enhance water efficiency, like advanced treatment and recycling systems, data-driven water management tools, and construction waste reduction. Sustainable agricultural practices that conserve water and lower input costs also present promising opportunities. Water management could become a strategic priority for Kast, with the advancement of such projects allowing the administration to deliver visible results, balance regional needs, and contribute to Chile’s robust agriculture sector.
Seismic-resilient infrastructure: Situated on one of the most active fault lines in the world, Chile experiences frequent earthquakes, including several above magnitudes of eight. Critical infrastructure—such as ports, airports, and energy facilities—requires modern seismic design. There is strong demand for engineering and technology services in risk modeling, resilience planning, and early warning systems. Opportunities include digital twins, smart sensors, and integrated solutions to strengthen utilities, transportation networks, and urban development.

How can the new Kast administration help unlock Chile’s economic potential and attract investment?

Visit Washington before the March 11 inauguration. This would reinforce Chile’s shared interests in economic security and investment cooperation, present project pipelines aligned with DFC priorities and clarify Chile’s commitments in areas such as energy transition and trade. Early engagement would allow Chile to secure a proactive position in shaping US investment decisions, demonstrate commitment to close cooperation with the United States, and build political support in the US Congress and executive branch for stronger bilateral financing ties. When in Washington, use the visit to generate broader public interest in the importance of Chile as a strong US partner.
Identify emerging skills and priority growth sectors in Chile and encourage private-sector programs that link education directly to industry needs. Kast can do this by providing tax incentives and speeding up the processing of paperwork for companies involved in workforce training. Scholarships, vocational training, apprenticeships, and partnerships with universities that teach technical skills can help equip students and current workers with the skills required for mining, technology, energy, and other strategic industries.
Maintain continuity in key policies on permitting reforms. This applies to policies such as the Ley de Permisología, which aims to streamline and coordinate environmental and sectoral permitting across government agencies, and they should be expanded to ensure that the ministries and offices involved are actively collaborating with each other. If government entities are not coordinating—for example, in the processing of environment permits—the procedures for key sectors such as mining and technology will continue to be delayed. Demonstrating consistency will reinforce Chile’s reputation as a stable investment destination and encourage both new and reinvested capital.
Avoid over-centralizing these initiatives in Santiago. This can be done by collaborating with regional partners or established private-sector actors to develop and train local workforces. This could include local recruitment, training programs at regional universities, and ongoing partnerships between the government and private sector.

These measures strengthen security in ways that matter for investors by creating clearer rules, steadier institutions, and stronger local trust. When the government improves workforce training and expands formal job opportunities, it reduces pressures that fuel crime in regions tied to mining and energy. Better coordination on permits lowers chances of corruption or operational disruptions because companies face fewer conflicting decisions from different agencies. Together, these steps create a safer and more predictable environment for investors.

Conclusion

Chile remains a trusted and stable partner for the United States. Its democratic values, institutional strength, and openness to trade make it a strategic destination for US investment. But sustaining and expanding this partnership will require continued economic reforms and political engagement between both countries to ease processes for doing business, improve regulatory efficiency, enhance human capital, and foster political stability toward a robust, long-term strategic partnership. As Kast prepares to take office, he has an opportunity to set a foundation to ignite Chile’s economic growth and attract investment. And with the Western Hemisphere as a top priority for Washington, Chile has the potential to be an even more strategic partner to the United States.

The views expressed in this publication are those of the authors alone. Some of the investment opportunities discussed in this issue brief were informed by an October roundtable discussion on US-Chile investment relations, which included the participation of US and Chilean private-sector leaders, public-sector representatives, and multilateral organizations. The roundtable was organized in partnership with AmCham Chile and with the support of MetLife. Neither were involved in the production of this issue brief.

About the authors

Maite Gonzalez Latorre is program assistant at the Adrienne Arsht Latin America Center of the Atlantic Council.

Jason Marczak is vice president and senior director of the Adrienne Arsht Latin America Center of the Atlantic Council

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Don’t solve the power reliability crisis by creating an affordability crisis

Frank Willey — Mon, 22 Dec 2025 17:21:32 +0000

At an October meeting of the North American Electric Reliability Corporation, the authority on grid reliability in the United States and Canada, the agency’s president and CEO declared that the United States is facing “a five-alarm fire” when it comes to providing reliable electricity. This was due, he explained, to an “escalating toxic soup” of causes. This warning of a reliability crisis in the US power grid demonstrates a growing problem: power demand is outpacing the installation of new supply. But some resolutions to this reliability crisis are driving prices and electricity bills higher, creating an energy affordability crisis that is every bit as urgent.

Americans are paying more for their power for several reasons. For instance, power companies are making necessary grid upgrades and replacing aging distribution and transmission infrastructure. They are also responding to wildfire- and storm-related damages. But there is another contributing factor as well: increasing electricity demand driven primarily by new data centers and electrification, the costs of which are often (though do not have to be) passed on to consumers.

For example, a report from the independent market monitor for the PJM Interconnection, the grid operator responsible for the power grid across thirteen states and the District of Columbia, and a follow-up investigation by the Union of Concerned Scientists found that PJM customers are paying an additional $13.6 billion for the July 2025 to July 2026 delivery year for upgrades needed solely to accommodate increasing data center capacity. These additional costs effectively force ordinary ratepayers to subsidize the tech industry’s growing power bills. In November, PJM’s market monitor filed a formal complaint to the Federal Energy Regulatory Commission (FERC), suggesting that PJM should not approve any more new large data center interconnections until procedures improve, citing reliability and affordability concerns.

Too often, US grid planning prioritizes reliability and neglects affordability considerations, which contributes to skyrocketing energy bills. According to an August 2024 report from the consulting firm Brattle Group, more than 90 percent of all US transmission investments are made based on the justification that they are needed for reliability. And since utilities can pass most grid upgrade costs directly to consumers, they lack market incentives to optimize their spending on grid infrastructure absent oversight.

In some cases, this singular focus on reliability is leading utilities to forgo grid investments that can help reduce overall costs and improve the financial sustainability of the power system, oftentimes because they lack regulatory incentives to do so. While reliability remains paramount for maintaining a functioning power grid, affordability objectives and the pursuit of grid-related cost savings must become a central pillar of grid planning alongside reliability and resilience.

The gold standard of grid reliability—and its limitations

Grid reliability is in fact under significant threat in many regions across the United States. Power demand is growing rapidly, and generators are reaching retirement age faster than new ones are being built and connected to the grid. However, cost is often underemphasized in grid planning due to the way regulated utilities are structured. Utilities typically earn a guaranteed return on equity for incurred capital expenditures, known as the rate base, and pass operational costs directly to the consumer through rates approved by state public utility commissions and—if the utility’s service territory or a project crosses state lines—FERC.

Since higher capital spending yields a higher return, this model encouraged utilities to build more infrastructure. But it can also incentivize utilities to build more than necessary or pursue incremental upgrades that add up to higher costs, instead of more affordable holistic grid solutions. Without prudent regulation, utilities can stack up unnecessary capital investments (known as “gold plating”) that are then paid by captive consumers. In other cases, utilities lack regulatory incentives to make improvements to the grid, as is the case for many advanced transmission technologies.

As a result, transmission and distribution costs have increased rapidly, which have caused retail rates and bills to rise at a fast pace. Nationally, the average residential electricity rate has increased more than 30 percent since 2020. Moreover, average electricity rates are projected to grow between 15 and 40 percent by 2030, straining already tight household budgets.

The burden has tended to most acutely impact consumers near data center hubs. Seventy percent of the price node increases across the country—the points throughout the grid where prices are determined—were in locations near significant data center activity, with costs growing by as much as 267 percent. Among the regions affected are “Data Center Alley” in Northern Virginia, Silicon Valley, and, increasingly, the Dallas-Fort Worth metropolitan area.

Thus, plans for system upgrades and grid expansion must incorporate cost-benefit analyses alongside reliability considerations, rather than presuming that any reliability benefit justifies the cost. In other words, utilities should use planning and investment criteria that take into account grid upgrades that avoid high generation or operating costs, especially during times of peak demand or extreme weather.

Improving grid planning

There are several grid planning reform efforts that could lower prices for end users and help ensure that costs are properly distributed among ratepayers, all while increasing the pace and volume of the buildout of energy infrastructure needed to meet US power needs.

Beyond Order 1920

FERC’s Order 1920-B is a landmark FERC order issued in April that requires utilities to conduct long-term, ten-year-horizon planning studies to better predict and procure energy infrastructure needs. However, Order 1920-B does not reform existing utility processes, some of which are outdated. Utilities should complement these long-term efforts by reforming existing processes within their authority that are still driven primarily by reliability.

Designate more national interest transmission corridors

The Department of Energy (DOE) should accelerate the designation of additional national interest electric transmission corridors (NIETCs), land predesignated for transmission infrastructure development aimed at improving project timelines and certainty. If successful, this could vastly improve the prospects of building interstate and interregional transmission lines, which are notoriously difficult to complete.

The DOE currently has three NIETCs heading toward approval, but several regions with valuable opportunities to build high-capacity, interstate transmission infrastructure have been dropped from the initial round of designations due in part to concerns over limits to funding and capacity. The DOE should quickly initiate a second round of designations using the latest research, including a recent report on the tremendous value of interregional transmission lines. New transmission infrastructure is urgently needed, so identifying land on which these projects can be built is essential. The NIETC process has thus far contributed little to the development of additional energy infrastructure but could be crucial to informing national grid planning if its progress is accelerated.

Require cost-benefit-based planning and prudent cost allocation

Utilities and energy commissions must develop new, forward-looking grid planning strategies that incorporate cost-benefit analyses and ensure fair cost allocation of investment expenses.

Experts have recommended several reforms for improving planning outcomes. For example, utilities should co-locate generation sites with large loads to reduce system upgrade costs and the risk of grid congestion. Utilities and transmission developers should install advanced transmission technologies that can expand the capabilities of existing infrastructure at lower cost than building new lines. Meanwhile, policymakers should pass legislation and regulation that allows utilities to recover such investments through their rate base. And they should offer energy efficiency and demand response programs to consumers to lower consumption, which would also lower energy bills.

Consideration of alternatives has long been part of utility decision-making. Incorporating cost-benefit analyses and balancing multiple variables in grid planning is core to securing a reliable and affordable power system.

Develop new rate structures for large-load and “reliability-driven” customers

Utilities should also consider new rate designs for data centers and other large-load customers that are driving the need for new infrastructure. They should also consider rate design for customers with stringent reliability needs, such as hospitals, fire stations, and critical telecommunications facilities. Customers who are less willing to pay to avoid blackouts should be able to opt in to demand response programs, which can curtail power delivery when necessary.

System operators should also consider how market structures may lead to unfair expense allocation due to grid upgrades that are only required for data centers. Proper cost allocation between the primary beneficiaries of network improvements is critical, especially when data centers are outpacing every other demand category.

For instance, some utilities are considering creating a new customer class for data centers—in addition to residential, commercial, and industrial users—with a specialized rate. Other utilities have enacted temporary moratoria on new data center interconnections so that they can reliably serve the existing load while new rules are established for data centers. Calls for moratoria on new data centers are gaining national traction. On the markets side, Southwest Power Pool, which serves areas spanning from Montana to Arkansas, has proposed an accelerated interconnection process for “high-impact large loads.” The DOE has also requested that FERC create a rulemaking for large load interconnection to interstate lines, which could introduce solutions to meet the energy demand challenge of hyperscale data centers nationwide. Independent organizations should analyze these solutions to determine which are effective and replicable in other service territories.

How federal action can shape the grid

There is broad consensus in Congress on the urgency to accelerate construction of new grid infrastructure. To unlock a better US power system, legislators should supplement industry-led efforts by streamlining permitting processes and mandating proactive, cost-benefit-based system planning. In September, a bipartisan caucus released a Permitting Reform Framework, which includes several recommendations that could help control costs.

Public-private partnerships can also accelerate development timelines, increase investor certainty, and decrease the cost of capital. This month, the DOE extended a $1.6 billion loan guarantee to enable the reconductoring of five thousand miles of transmission infrastructure in five states.

These partnerships require consistency in agency decision-making on investments. In July, the DOE canceled a $4.9 billion loan guarantee for the Grain Belt Express line that would have delivered low-cost power from Kansas to Indiana. As the DOE continues to review existing loan guarantee program contracts, a higher threshold should be applied to transmission projects before initiating cancellation.

Consider the costs

While reliability is critical, transmission planners and government entities must also prioritize cost-effectiveness. Failing to do so will risk saddling Americans with high-cost power by stalling the buildout of transmission infrastructure and preventing less expensive generation solutions. Relying solely on old generation will increase costs. A report by the energy consulting firm Grid Strategies published in August estimated that DOE orders to keep coal plants open past their economic life will cost consumers at least $3.1 billion.

Instead, the DOE should focus on facilitating the rapid deployment of new, cost-effective power grid and generation assets. The United States needs an all-of-the-above approach to grid solutions and electricity generation, because when all options are allowed to compete, the result is efficient markets, lower costs, and reliable power. Effective transmission systems enable this competition. By considering available cost savings alongside reliability in grid planning, planners and regulators can ensure a resilient, modern power grid that delivers affordable electricity for all Americans.

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Colombia needs a strong private sector—and renewed government institutions at the helm

José Manuel Restrepo — Fri, 19 Dec 2025 17:10:35 +0000

Bottom lines up front

The foundations of Colombia’s 1991 constitution, including an autonomous central bank and fiscal discipline, have maintained macroeconomic stability despite political volatility.
Corruption and the rise of illicit economies continue to erode governance and public trust, particularly in rural regions.
Restoring fiscal discipline and consolidating territorial control are essential to transforming economic stability into long-term national security.

This is the second chapter in the Freedom and Prosperity Center’s 2026 Atlas, which analyzes the state of freedom and prosperity in ten countries. Drawing on our thirty-year dataset covering political, economic, and legal developments, this year’s Atlas is the evidence-based guide to better policy in 2026.

Evolution of freedom

Between 1995 and 2025, Colombia has gone through five institutional phases. Each phase could be characterized by progress and tension, where advances in democracy, improvements in the rule of law, and economic openness were frequently challenged by fiscal limits, political crises, and persistent inequality and informality.

The rooting period (1991–2002)

A fresh chapter of institutional development arrived in Colombia during the early 1990s. The 1991 constitution emerged from a collective determination to eliminate centralism and violence through establishing a participatory and decentralized state which protected rights for all. Social and cultural rights were integrated into the legal framework along with expanded civic freedoms. In addition, the government in the 1990s initiated structural market reforms which included trade liberalization, financial system modernization, and the establishment of an autonomous central bank to manage inflation and create responsible and prudent macroeconomic policies.

Colombia earned economic policy credibility from these reforms which established fiscal and monetary stability for three decades. Nevertheless, these reforms produced a paradox within the country: The economic liberalization process outpaced the transformation of the country’s productive base. As many authors, such as Juan Carlos Echeverry, have noticed, Colombia opened international trade doors without having first constructed its economic base. The nation developed openness, but industries remained defenseless, and infrastructure remained behind. On the other side, the constitution guaranteed a wide range of rights (related to health, education, justice, and more) which had to be funded and created ongoing fiscal burdens exceeding the state’s financial resources. In the 1990s, Colombia emerged as a nation with promising reforms, but its ambitions outpaced its capabilities. This is the tension in which Colombia has operated for many years.

Security and stabilization (2003–2015)

Between 2003 and 2015, Colombia experienced a phase of security along with stabilization. The country managed to regain territorial authority from insurgent forces while attaining public trust in its institutional structures. The government’s “democratic security” strategy was combined with macroeconomic discipline to create a virtuous cycle of investor return, economic growth, and advancement in the rule of law.

During this time, institutional development advanced significantly in response to various policies. A fiscal rule was established while the central bank kept its independence and debt remained controlled. Changes among political ruling parties in Colombia continued without violence while international observers recognized the country’s democratic progress. However, structural problems remained hidden. The security improvements brought undeniable benefits to Colombia, but fighting insurgent forces led to human rights violations that damaged the country’s legitimacy and ability to govern. Colombia made progress on security but failed to improve equality and strengthen its institutions.

Polarization and the post-peace era (2016–2020)

The third stage in modern Colombian history began with the 2016 Peace Agreement, which put an end to fighting with FARC, the Revolutionary Armed Forces of Colombia, the country’s largest guerrilla force. The peace agreement meant to unite society but instead divided it more deeply. The national plebiscite opposition to the agreement, together with its congressional approval, created an impression that the government had disregarded public opinion.

The government could not maintain the ambitious goals of the peace agreement because it lacked sustainable implementation capacity. The implementation of programs for rural reform and reintegration and financial support for these programs remained insufficient. Progress on truth, justice, and reparation was also uneven. At the same time, non-repetition mechanisms—designed to prevent former combatant or affiliated groups from committing the same crimes and to reduce the likelihood of renewed violence—were only partially carried out. Meanwhile regional territorial conflicts increased as coca production grew (due to the dismantling of aerial coca fumigation), and new criminal organizations appeared. The anticipated “post-conflict” situation was instead a reshuffling of existing threats. By 2020, people in Colombia had grown exhausted and increasingly disappointed that the global celebrations of peace appeared so distant from their actual experiences.

Pandemic and social unrest (2020–2022)

The fourth phase revolves mostly around the COVID-19 pandemic. Although Colombia managed to avoid major economic and social setbacks through its proactive countercyclical economic approach, the pandemic nonetheless revealed structural weaknesses of inequality and informality, which led to multiple indicators falling before they partially recovered in 2021 and 2022. The impact of COVID-19 pushed more people into informal work while increasing poverty and inequality and reducing the number of available jobs. The result was diminished economic freedom. The public protests, in part triggered by illegal support and tax increases announced in the wake of the pandemic, revealed deep societal inequalities and perceptions of corruption and political manipulation. These combined to damage institutional trust, hindering investor confidence and consequently the economy.

Uncertainty and political confrontation (2022–2025)

The fifth phase covers the developments since 2022. The current political environment is marked by a confrontational atmosphere, which disrupted consensus-building efforts and created conditions that decreased investment potential and caused institutional uncertainty that destroyed trust in all government institutions. Since 2022, Colombia has faced fresh difficulties caused by inadequate and debatable policies on energy, public services, education, pensions, health, taxes, and land that drive political polarization and create economic instability. The decline of institutional dialogue has diminished investor trust and created uncertainty about Colombia’s future course while democracy persists. The current state of ideological conflict has displaced the practical economic management approach that used to guide the country’s economic affairs. Colombia now confronts the dual challenge of building trust between government and markets and connecting its citizens with their representative institutions.

The 1991 constitution established institutional structures which form one of Colombia’s most valuable assets. The Acción de Tutela gave citizens legal tools to protect their rights, and decentralization increased local government accountability, capacities, and options. The central bank’s autonomy enabled uninterrupted monetary and exchange rate policy and protected the nation from the populist cycles that ravaged most regions on the continent.

But legal systems cannot ensure freedom by themselves. Governance remains weak due to corruption, excessive regulations, and persistent informalities and social inequalities. Over 55 percent of workers remain outside the formal economy, and millions of firms are microbusinesses with low levels of formality, undermining tax collection and labor protections. Colombia needs to protect its democratic institutions while extending institutional benefits to formalize the excluded population.

Over 55 percent of workers remain outside the formal economy … undermining tax collection and labor protections.

The security situation represents the second vital point in Colombia’s recent timeline. During the 1990s, the Colombian state faced three concurrent threats from drug cartels, guerrilla insurgents, and armed groups that fought for territory; used kidnapping, extortion, and narcotrafficking to fund their operations; and exported large-scale violence to cities. The homicide rate ticked up, and many people were forced to abandon their homes. Business owners lost their local enterprises and had to defend themselves because municipal authority disappeared from vast sections of the country. By 2005, Colombia regained its administrative control and normalized daily activities, which permitted people to travel more freely, reduced transportation expenses, and extended investor horizons. Companies prospered under fiscal discipline and macroeconomic stability, which directed workers toward new regions for economic enterprise.

Over the course of three decades of social and economic development, women gained visibility and access to opportunities in both the public and private sector. Women’s participation in the workforce increased as did leadership diversity and social policies aimed at gender balance. The boost in household earnings together with more stable societies proved that inclusive growth strengthens both economic prosperity and social freedom.

The business environment in Colombia developed according to its political dynamics. Institutional predictability and consistent rules produced the best investment conditions from mid-2010-2020s. The trust in Colombia has been diminished by inconsistent policies and growing polarization since 2022. The business community shows apprehension toward taxation due to its inconsistent design and enforcement.

The country’s most effective reforms happened when governmental authorities joined forces with business leaders and academic experts to craft public policy that integrated regulatory, infrastructure, and labor initiatives to achieve common goals. Economic strategy has lost cohesion because the dialogue that used to inform it has diminished. Because freedom and prosperity depend on a foundation of predictability, the loss of predictability stands as the most critical institutional threat facing Colombia in the short term.

Colombia’s democracy has shown more stability compared to other regional nations, but 2016–18 marked a fundamental change. The nation experienced a rapid deterioration of political rights and a decline in civil liberties during this time frame. The rejection of the peace agreement in the plebiscite triggered political polarization, which worsened after congressional ratification of the plan. This resulted in widespread public concern about the institutional bypassing of political processes. During this period, both cocaine cultivation and illegal mining activities expanded while violence shifted its operational patterns and power dynamics among different actors. The political rights indicator shows further deterioration during the 2020 emergency period, which also witnessed social uprisings, but there was some improvement in 2021–22 once restrictions were lifted.

At present, legal operations are restricted in Colombia because of two fundamental elements. Most labor markets and business activities operate predominantly beyond the formal sector. The rule of law, measured by the legal subindex, experienced a rapid increase in 2014–15, followed by a dramatic decline. Formalization efforts expanded when security conditions improved, and economic activity rose only to retreat once economic performance declined and labor costs increased. Research shows that greater informality reduces enforcement capacity as well as social insurance coverage and tax revenue. Corruption and bureaucratic scandals from 2010 to 2018 reduced judicial public trust, and illegal activities in unregulated territories eroded local government authority.

Inequality, widespread informality, and growing insecurity … had been eroding democratic rights well before the pandemic triggered massive job losses and overwhelmed public services.

Governance quality worsened during these processes even though other sectors showed signs of improvement. While problems existed before the pandemic, COVID-19 made them more apparent. Social unrest spiked sharply in 2019, subsided during COVID-19 lockdowns, and intensified again in 2021. Data reveal that political freedom declined both before and after COVID-19. Yet the underlying causes—rising inequality, widespread informality, and growing insecurity—had been eroding democratic rights well before the pandemic triggered massive job losses and overwhelmed public services. The political situation since 2022 has been more confrontational, hindering consensus-building between government, business, and academic partners and stirring tensions between autonomous institutions and regulatory bodies. The key goal of economic recovery requires the establishment of stable economic directions along with trustworthy dialogue mechanisms that will rebuild private-sector confidence and restore normal market expectations.

Evolution of prosperity

Freedom and prosperity in Colombia have developed concurrently, although their progression has never been perfectly aligned. The 1990s and 2000s market liberalization, alongside expanded rights in the new constitution of 1991 and fiscal and monetary discipline, created the foundation for Colombia’s largest social change in contemporary history. The nation’s average per capita income tripled while poverty dropped by 20 percentage points and life expectancy increased by around ten years. This growth, however, contained a key warning since its uneven distribution meant delayed economic benefits for many Colombians. The clear lesson was that growth without fairness damages society just as severely as economic stagnation.

The inequality trap

Between 2005 and 2016, many observers believed Colombia had entered a positive feedback loop.¹ Economic growth remained healthy while job creation improved, and social programs reduced extreme poverty levels. Market freedom finally found a way to work harmoniously with social policy to benefit society.

People will tolerate slow economic growth, but they will refuse to support a system that fails to reward hard work or equitable treatment.

After 2016, the positive cycle started to break down. Economic growth decreased, and productivity reforms came to a halt while the wealth gap between rural and urban Colombia remained the same. Informal employment increased yet again while people lost hope for their future because inequality returned to its former levels. Then the pandemic struck, revealing structural defects the country had delayed addressing. Education interruptions, female job losses, and strained public finances pushed the country to its limits.

The 2021 protests were triggered by discontent over taxes, but they served to express people’s deeper sense of exclusion. Many Colombians felt that prosperity had become an exclusive privilege rather than a universal promise. The widespread perception damaged people’s trust in democracy and transformed economic inequality into a political moral crisis. People will tolerate slow economic growth, but they will refuse to support a system that fails to reward hard work or equitable treatment.

Colombia achieved indisputable progress through its recognition of Indigenous and Afro-descendant community rights. However, many of these advancements failed to deliver real benefits in practice. From 2010 to 2020, minority inclusion freedom indicators experienced a decline. The absence of governmental security in peripheral regions, combined with ongoing displacement and illegal expansions of mining and drug production, continue to drive social marginalization.

The disconnect between greater formal rights and stagnant living conditions is clearly visible. For many Colombians, equality before the law failed to translate to real equality of opportunities. The main takeaway is that inclusion demands more than official recognition; it requires continuous financing for education, infrastructure, and peacekeeping that creates national investment incentives for all territories.

Since 2018, Colombia has received over two million Venezuelan migrants. Managing this massive influx tested national institutions but also brought new energy, talent, and entrepreneurship to Colombian society. Border communities became overburdened because social services reached their limits. The “Temporary Protection Statute” along with other pragmatic policies transformed what could have been a humanitarian crisis into a demographic boon over time. Formal labor market workers contributed to the economy through tax payments while bringing new and energetic workforce potential. Amid regional tendencies to respond with populist fervor, Colombia demonstrated a distinct approach that blended openness with strategic foresight. Institutional flexibility combined with inclusiveness demonstrated that migration could be a driver of renewal instead of instability.

Colombia has achieved one of its most remarkable successes through environmental policy initiatives. From 2010 through the early 2020s, Colombia transitioned from setting green targets to producing tangible achievements. The economic policy established through CONPES 3934 (2018) and CONPES 4075 (2022) proved that green growth had become an integral economic plan instead of merely aspirational.

The addition of electric vehicle incentives, together with renewable energy auctions in La Guajira and enhanced prosecution of illegal mining, transformed environmental defense into a core competitiveness element. Mercury emissions decreased while wind and solar power capacity expanded, and the nation began perceiving sustainability as an advantage rather than a limitation. Although environmental issues such as deforestation remain, Colombia has advanced to where economic and environmental goals are more in sync.

Human development presents the clearest demonstration of how freedom relates to prosperity. People in Colombia have experienced longer lifespans and enhanced health outcomes over the past three decades. Infant mortality rates dropped dramatically while literacy rates increased, and healthcare access became almost universal. As a result of the 1993 and 2011 reforms, Colombia’s health care systems transformed to become one of Latin America’s most comprehensive.

Education in Colombia remains divided: Urban schools have developed quickly but rural areas continue to lag behind. Digital access and trained teachers remain scarce in many classrooms while educational results show significant differences across regions. The pandemic intensified educational inequalities, emphasizing to policymakers that offering coverage without proper quality or relevance is insufficient. Future development requires better integration between educational systems and productive sectors to create job opportunities which could also lead to social stability.

The path forward

Colombia is approaching a critical point which will define its future direction. Thirty years of institutional advancement delivered stability alongside credibility, yet the country continues to struggle with social inequality, economic informality, and declining public trust. Challenges arose after 2016, when investment diminished, economic growth declined, and political polarization intensified. But the real issue is greater than Colombia’s ability to grow: The crucial challenge is to achieve inclusive growth that transforms freedom into equal prosperity.

The foundation of prosperity rests on establishing stable public finances. After the necessary spending during the pandemic period and the increase in public debt, Colombia started to make a fiscal adjustment which was successfully implemented between 2020 and 2023. However, since then, public debt and the fiscal deficit have risen high enough to make investors nervous. As a result, Colombia needs an effective reform that expands the taxpayer base while making compliance easier; it should also eliminate tax benefits that favor a select few while preserving support for small regional businesses.

The restoration of fiscal rules (which were suspended in 2025) would demonstrate Colombia’s commitment to disciplined governance while enhancing market and public confidence in the country’s fiscal management. Decentralized fiscal authority with proper accountability mechanisms would enable state institutions to connect with citizens more effectively while distributing growth benefits more fairly.

Peacebuilding requires more than negotiation-based approaches while demanding consistent territorial governance. Large rural areas of Colombia still live under alternative and illegal power systems that impose fear instead of upholding legal authority. Road construction alongside internet connectivity and new schools serve as development tools which could also be useful in strengthening citizenship.

Government investments in infrastructure yielded clear advancements across Antioquia, the coffee region, and parts of the Caribbean region in the form of decreased violence, increased job opportunities, and population retention. Security improves only when people have access to opportunities to replace coercive systems. The practical and moral lesson that emerges is that prosperity requires peace, and peace demands governance from a state whose presence is felt where people reside.

Informality blocks the path that unites freedom with a prosperous future. More than 50 percent of Colombian workers lack contracts and protections since they work outside the formal system. The workplace formalization process would be achievable by easing procedures and reducing labor expenses and modernizing ways to connect workers with employers.

Simultaneously, Colombia needs to transition from an extraction-based economy to an innovation-driven economic model. Productivity functions as the link between immediate economic recovery efforts and enduring prosperity. This requires industry-university coordination along with technological implementation support and local business development investment. Subsidies will not reduce inequality nor sustain freedom because productivity growth serves as the fundamental solution.

Colombia’s greatest challenge, however, springs not from fiscal concerns but from the political domain. The current political division has turned policy discussions into entrenched conflicts, making compromise look like weakness. Future development in Colombia depends on institutional pragmatism, which requires leaders to prioritize results over political statements.

Non-negotiables must be to protect the independence of the central bank and to maintain the autonomy of courts and oversight agencies. Dialogue between government, business, and civil society needs to be reestablished through structured channels. Economic freedom depends not only on predictable rules for investors but also on the social contract that allows it to endure. Transparent institutional operations promote both economic and public trust.

Non-negotiables must be to protect the independence of the central bank and to maintain the autonomy of courts and oversight agencies.

The transition toward clean energy creates difficulties while promising new possibilities. Even though oil and gas continue to generate substantial government revenue, Colombia possesses vast renewable energy potential. The appropriate approach involves slow and responsible market transition combined with building new industries based on sustainable agriculture, clean energy, and ecotourism while preserving fiscal stability.

Environmental stewardship could become a competitive advantage when established through consistent regulations and patient investment. Colombia is endowed with geographical diversity, biodiversity, and abundant water resources that would enable green industries to thrive—as long as institutions remain constant, regulations are simplified, and public-private partnerships are strengthened.

Throughout the thirty-year period from 1995 to 2025, Colombia has been trying to balance its aspirations against its limitations. It strengthened its democracy and opened the economy, but it continues to battle persistent problems of inequality, informality, and insecurity. Freedom in the country has never been fixed since each generation must labor to preserve and renew it.

The next chapter depends on Colombia’s ability to tether freedom to present-day opportunities. Achieving fiscal stability together with security systems, educational advancement, and institutional trust is a moral obligation essential for democratic success. Once trust returns to citizens and government bodies, between investors and institutions, and among regions with their central authorities, Colombia will convert its practical liberty to enduring economic prosperity.

The future direction of the nation depends on making decisions between opposing forces, including confrontation versus consensus, populism versus pragmatism, and empty rhetoric versus courageous social and economic reforms. With the right decisions, Colombia can become an example of democratic stability and inclusive development throughout the Americas.

about the author

José Manuel Restrepo is an economist, academic leader, and former public servant with experience in education management and economic policy. He has served as president (rector) in Universidad EIA, Universidad del Rosario, and CESA Business School in Bogotá. He held cabinet roles as Colombia’s minister of commerce, industry and tourism and later as minister of finance and public credit. He holds a master’s degree in economics from the London School of Economics and a Ph.D. in management from the University of Bath.

A strong advocate for innovation, sustainability, and institutional ethics, Restrepo has championed policies such as the Entrepreneurship Law, Green Sovereign Bonds, and the modernization of Free Trade Zones 4.0. His leadership experience extends to academia, government, and business, where he seeks to foster collaboration as a means to turn policy into progress. As a frequent speaker and columnist, he reflects on productivity, education, and governance, emphasizing that economic progress must always serve people.

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2026 Atlas: Freedom and Prosperity Around the World

Against a global backdrop of uncertainty, fragmentation, and shifting priorities, we invited leading economists and scholars to dive deep into the state of freedom and prosperity in ten countries around the world. Drawing on our thirty-year dataset covering political, economic, and legal developments, this year’s Atlas is the evidence-based guide to better policy in 2026.

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2025 Atlas: Freedom and Prosperity Around the World

Twenty leading economists, scholars, and diplomats analyze the state of freedom and prosperity in eighteen countries around the world, looking back not only on a consequential year but across twenty-nine years of data on markets, rights, and the rule of law.

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Twenty leading economists and government officials from eighteen countries contributed to this comprehensive volume, which serves as a roadmap for navigating the complexities of contemporary governance.

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The Freedom and Prosperity Center aims to increase the prosperity of the poor and marginalized in developing countries and to explore the nature of the relationship between freedom and prosperity in both developing and developed nations.

Khalid Azim: Three trends shaping the economic landscape

1 Otaviano Canuto and Diana Quintero, “Colombia: Getting Peace, Getting Growth,” Policy Center for the New South, March 23, 2017, https://www.policycenter.ma/blog/colombia-getting-peace-getting-growth; avid Felipe Perez, “After a Decade of Growth and Political Stability, It’s Time to Invest in Colombia’s Future,” World Finance, accessed [insert access date], https://www.worldfinance.com/wealth-management/after-a-decade-of-growth-and-political-stability-its-time-to-invest-in-colombias-future.

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What Trump’s Venezuela oil blockade means for Maduro and the world

Atlantic Council experts — Thu, 18 Dec 2025 01:34:43 +0000

“Venezuela is completely surrounded.” On Tuesday evening, US President Donald Trump announced that the US military would impose a “total and complete” blockade of all sanctioned oil tankers going into or out of Venezuela. The move is targeted at Venezuelan strongman Nicolás Maduro and his regime, but it could also have wider effects. Below, Atlantic Council experts answer four pressing questions.

1. What does this blockade mean for Venezuela?

This blockade adds significant pressure to Maduro’s regime, as these shadow tankers act as a financial lifeline that Maduro relies on to sustain his corrupt patronage system. Sanctioned vessels operate in a global black market, transporting US-sanctioned oil that has been critical over the years to the ability for Maduro to stay in power.

Since the initial US seizure of the Skipper last week, Venezuelan crude exports have fallen sharply, effectively targeting Maduro’s main source of income. Venezuela relies entirely on tankers to export its oil, and disrupting the illegal trade that runs on these sanctioned tankers weakens Maduro’s grip on power. As of last week, more than thirty of the eighty ships in Venezuelan waters were under US sanctions.

Frankly, with the size of the US fleet amassed in the Caribbean, it was only a matter of time before this blockade began. It will be important to see which of these shadow vessels continue to try to reach Venezuelan shores and which vessels the United States determines it has the authority to seize. These ships are part of a large shadow shipping network designed to evade US sanctions and mask the destination of Venezuelan crude. This illegal trade network delivers oil primarily to China, and to a lesser extent Cuba, employing several tactics to disguise the origin, name, and shipping routes to evade US regulations.

The blockade of these sanctioned vessels provides an additional source of leverage for the United States. By cutting off a significant part of the regime’s income, the United States gains an additional chip to put on the table in discussions on ending Maduro’s dictatorship in Venezuela. This move elevates the Caribbean campaign from a counter-drug operation to one that is also cutting off the financial lifelines to Maduro, who the United States has designated as the leader of the Cartel de los Soles.

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

2. What is the likely impact on oil markets in the region and globally?

Venezuela exported a little over 780,000 barrels a day in October of this year, 100,000 of which came to the United States and the rest directly or indirectly going to China. It is highly uncertain whether all or only a portion of those exports will be impacted by the blockade.

The president referred to a blockade of “sanctioned vessels,” which could potentially exclude Chevron’s 100,000 barrels per day. A respected tanker tracking outfit suggested that only 40 percent of the vessels transporting Venezuelan crude are sanctioned.

The president also made reference in social media to Maduro and his government being labeled a foreign terrorist organization. We do not yet have designations or explanations from the Treasury or State Department. It is possible that any person or entity doing business with the Venezuelan government or its national oil company, Petróleos de Venezuela, S.A. (PDVSA), could therefore be exposed to liability. In this case, nearly all of Venezuela’s exports (oil or otherwise) could be impacted.

So far, the oil market has shrugged its shoulders at the blockade. Brent crude was up 2.5 percent overnight, to sixty dollars a barrel, according to Bloomberg. That is a pretty modest impact. This could be the result of the market having already priced in the impact of higher levels of naval interdiction of Venezuelan oil exports, high levels of spare capacity, or weak winter oil demand. Ordinarily, one million barrels a day of displaced oil translates into about ten dollars on the oil price, so a complete blockade of all of Venezuela’s exports, if not replaced by increased by OPEC spare capacity or commercial reserves, would be in the range of five dollars to eight dollars a barrel. Everything will depend on how the blockade is enforced.

—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.

3. What else could the United States do to put pressure on Maduro?

Venezuela relies on revenue from sanctioned oil exports to prop up the regime and the country’s economy. Venezuela continues to sell its sanctioned oil, predominantly to China, while accepting payment in digital assets, namely stablecoins, to circumvent US sanctions. To increase economic pressure on Venezuela, the administration should consider enforcing existing sanctions on Venezuela’s oil sector, including PDVSA. Sanctions enforcement would include seizing crypto wallets and working with stablecoin issuers to seize or burn digital assets held by sanctioned Venezuelan entities. This would have an immediate impact on Maduro by taking out significant financial assets and it would be much more cost-effective for the United States and its naval forces.

Separately, as the United States increases pressure on Venezuela with a blockade, the administration should consider where the vessels will go next. As we have seen, the sanctioned tankers carrying Venezuelan oil have also carried Iranian oil. If ships cannot dock in Venezuelan ports, then the United States should anticipate where they will go instead and whose cargo they will carry, which could be Iran or Russia. The shadow fleet used by Venezuela, Iran, and Russia is a network, and to affect Venezuela, the United States needs to address the entirety of the fleet and its operators.

—Kimberly Donovan is the director of the Economic Statecraft Initiative within the Atlantic Council’s GeoEconomics Center. She previously served as acting associate director of the Financial Crimes Enforcement Network’s (FinCEN) Intelligence Division, in the US Treasury Department.

4. What does the blockade mean for Russia’s shadow fleet?

The US move against Venezuelan oil exports may matter less for Venezuela itself than for Russia’s shadow fleet, because it signals a shift from symbolic sanctions toward more assertive enforcement against maritime sanctions evasion.

Russia today relies on a sprawling shadow fleet—aging tankers, opaque ownership structures, flag-hopping, ship-to-ship transfers, and weak or fictitious insurance—to keep oil flowing despite Western restrictions. What the Venezuela case demonstrates is that Washington is increasingly willing to treat sanctions evasion not just as a financial violation, but as a maritime security problem.

This matters because Russia’s shadow fleet is not isolated. Many of the same vessels, intermediaries, insurers, and ship-management networks service Russian, Iranian, and Venezuelan crude interchangeably. Pressure applied in one region exposes vulnerabilities across the entire system. Even limited interdictions force tankers to go dark longer, take riskier routes, rely on fewer ports, and accept higher freight and insurance costs—raising the overall cost of Russian oil exports.

For Moscow, the immediate risk is not a sudden collapse in exports but growing friction and uncertainty. Each escalation increases the probability of seizures, port refusals, or secondary sanctions on service providers—factors that reduce the efficiency and scalability of Russia’s energy revenues over time.

There is also a deterrent effect. By demonstrating that shadow fleets are visible, traceable, and vulnerable, the United States raises the strategic risk premium for Russia’s oil trade—even if enforcement remains selective.

This dynamic is being reinforced in Washington on the policy front. A bipartisan group of US senators has introduced the Decreasing Russian Oil Profits (DROP) Act of 2025, which would authorize financial sanctions on foreign buyers of Russian petroleum products and seek to choke off a key source of Kremlin revenue. The proposal includes targeted measures to penalize entities anywhere in the world that continue to purchase Russian oil, with narrow exemptions tied to support for Ukraine, underscoring Congress’s intent to close loopholes in the sanctions regime and further isolate Moscow’s energy exports.

The key takeaway is this: Russia’s shadow fleet survives on the assumption of tolerance and ambiguity. The Venezuela action suggests that assumption is weakening. For a war economy dependent on energy revenues, that shift matters.

—Agnia Grigas, PhD, is a nonresident senior fellow at the Atlantic Council’s Eurasia Center working on energy and geopolitical economy.

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What will 2026 bring for the Middle East and North Africa?

Atlantic Council experts — Tue, 16 Dec 2025 18:03:53 +0000

This year was a seismic one for the Middle East and North Africa. A new Syria emerged after the fall of Bashar al-Assad’s Iran and Russia-backed regime. The Twelve Day War between Israel, Iran, and the United States erupted, threatening critical nuclear negotiations. Iraq completed landmark national elections, as Baghdad continues to build an enduring national stability.

All of this unfolded against the backdrop of a new administration in Washington that has been unafraid to shake up decades of US diplomatic conventions.

As 2025 comes to a close, our senior analysts at the Atlantic Council’s Middle East Programs unpack the most prominent trends and topics they are tracking for the new year.

Click to jump to an expert analysis:

Gissou Nia: Demands for justice—and protests driven by the thirsty

Karim Mezran: North Africa is a rising priority for US policy

Ahmed Fouad Alkhatib: Key questions remain for Palestinians

Victoria J. Taylor: Iraq must maintain unprecedented stability

Daniel B. Shapiro: A political transition in Iran approaches

Nathanael Swanson: Will the Israel-Iran cease-fire hold?

Jonathan Panikoff: A duality of possible trajectories

Three trends shaping the economic landscape

Three major macro trends will shape the Middle East and North Africa in 2026, each carrying profound implications for the region’s economic trajectory.

1. The pressure of lower energy prices
As energy revenues soften, governments across the region will be forced to make more disciplined, risk-adjusted investment decisions. The era of abundant fiscal cushions is shifting toward one that requires sharper prioritization, operational efficiency, and a clearer sense of expected returns. This will test policymakers’ ability to allocate capital effectively and to reduce long-standing subsidies and support for entrenched constituencies. These choices become even more consequential as a growing cohort of young people demand economic opportunity, purpose, and social mobility.

2. Rising debt and the cost of ambition
Fiscal tightening will coincide with an accelerating need for investment. Across the Gulf, governments are committing billions to data centers, artificial intelligence ecosystems, new power generation, and other foundational infrastructure. These projects will increasingly be financed through borrowing, especially as the current account deficit grows. The result will be higher debt levels and rising debt-servicing costs. Countries that clearly articulate their economic value proposition and demonstrate credible reform will have a competitive advantage in the capital markets. Those that do not may face steeper financing costs and slower momentum in their diversification strategies.

3. Vision 2030 ten year anniversary: A regional bellwether
Saudi Arabia’s Vision 2030 has already reshaped the kingdom’s economic and social landscape through diversification, investment in future industries, and the creation of a more open and optimistic society. The plan’s tenth anniversary in 2026 marks a critical milestone, not only for the kingdom but for the region. The next decade will be defined not by the wealth beneath the ground, but by the wealth of human talent above it. How effectively the kingdom transitions from resource-driven growth to human capital-driven growth will influence the MENA region’s competitiveness for a generation.

Khalid Azim is the director of the MENA Futures Lab at the Atlantic Council’s Rafik Hariri Center for the Middle East.

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Economy & Business Middle East

Demands for justice—and protests driven by the thirsty

In 2026, expect to see more widespread protest movements for change across the Middle East and North Africa fueled by climate change and authoritarian mismanagement. Analysis of global protest movements in 2025 focused heavily on the young age of the protesters. While youth demographics have gained relevance as new communication tools have emerged over the last decades (in 2011, it was Twitter organizing the youth in the “Arab Spring”; in 2025, it’s the gaming app Discord organizing Morocco’s “Gen Z” protests), the evergreen undercurrent is frustration with corruption and elites. Resources have become scarcer due to global warming and authoritarian mismanagement, and the globe has become increasingly and overtly transactional as it shuns diplomacy in favor of kinetic means and “might is right” politics. The Middle East and North Africa are profoundly impacted by both these negative trends. With water running out in Tehran and water instability around the Nile Basin and the Tigris and Euphrates River, expect the next wave of regional protests to be driven not just by the youth, but by the thirsty.

Regional victim and survivor-centric demands for justice will also continue to grow in 2026 in countries that are emerging from conflict, experiencing government transitions, or where restive populations wish to usher in a change of rule. There is no clearer example than in Syria, where Assad’s exit one year ago opened the space for a new Syria and where a previously exiled network of Syrian lawyers, researchers, and advocates now work on transitional justice processes from inside their own country. In Iran, where the population is publicly demanding regime change, victims of protest violence, executions, and custodial deaths have organized powerful advocacy groups to demand that international processes deliver justice where domestic courts are unable and unwilling to do the job. And across the region, while many governments have been complicit in the violence in Gaza, the Arab street stands at odds with those governments and instead has demanded—alongside much of the world—that the perpetrators of the violence in Gaza be held to account.

Gissou Nia is the director of the Strategic Litigation Project at the Atlantic Council.

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MENASource

Dec 8, 2025

States shouldn’t waste the chance to establish a Syria Victims Fund

By Kate Springs, Celeste Kmiotek

A centralized fund would better support victims of international law violations in Syria, who face unique challenges.

Democratic Transitions International Norms

North Africa is a rising priority for US policy

North Africa is poised to move closer to the center of US regional policy for 2026. The past year of quiet US engagement, including the work of US President Donald Trump’s Senior Advisor Massad Boulos, is beginning to reduce tensions and open political space. Algeria and Morocco are edging towards some degree of a detente, creating space for practical steps on the Western Sahara file.

Additionally, Libya may see modest but meaningful progress. Headway on an agreement between the divided governments on a unified development funding mechanism may reduce parallel spending and put less pressure on the dinar, as well as release the funds for long-awaited reconstruction and modernization projects. The decision to include Libyan units from both east and west in AFRICOM’s Flintlock 2026 special operations forces exercise suggests an incremental movement on military unification in Libya, an area where US diplomacy with key partners has grown more active.

Egypt will remain an integral partner as Washington tries to deal with situations in Gaza, states located on the Red Sea, and Sudan. At the same time, renewed attention to commercial diplomacy signals a shift toward advancing US business interests across North Africa.

Taken together, these dynamics make the region harder to overlook and suggest that 2026 may be the year North Africa becomes a sustained policy priority in Washington.

Karim Mezran is the director of the North Africa Initiative and resident senior fellow with the Rafik Hariri Center and Middle East Programs at the Atlantic Council.

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MENASource

Oct 3, 2025

US, Italy, and Turkey alignment could push the needle in Libya

By Frank Talbot and Karim Mezran

The US, Italy and Turkey can—through balanced diplomacy—reinforce the economic opportunities presented by institutional unification in Libya.

Italy Libya

Key questions remain for Palestinians

This was a tectonic year of realignments for the Palestinian people, as well as their heavily divided and largely powerless leadership. Next year is likely to be equally important and trend-setting—and four major threads have emerged that could shape its trajectory.

For Palestinians and what’s next for Gaza, the top four trends to look for in 2026 are the following:

The Trump administration’s commitment to the Palestinian issue and its willingness to engage the Palestinian Authority, which remains subject to US sanctions and restrictions. Will elements of a comprehensive peace deal between Palestinians and Israelis, like the one that Trump proposed during his first term, return?
What becomes of the Gaza cease-fire that the United States and international players are hoping to cement into a lasting peace deal that transforms the coastal enclave? The year 2026 is either going to be one in which Hamas is disarmed and fundamentally changed—or it will be one in which the Palestinian terror group continues to dominate Gaza’s affairs and prevent substantive change to revitalize the decimated Strip after two years of devastating warfare.
The prospect of Saudi-Israeli normalization—which could unlock immense potential for the kingdom, the Palestinians, Israel’s regional integration, and a regional anti-Iran coalition—is enormous. The year 2026 will set the tone for whether Saudi Arabia proceeds with integration based on its often-stated requirement for Palestinian statehood, or if this ends up in further stalemate and stagnation.
The fourth critically significant trend to watch is the impact the Gaza war and Israel will have on influencing voters in the upcoming midterm elections. As with the Trump election, this issue increasingly played a role in rallying US voters to the ballot box, including the high-profile race to elect New York City Mayor-Elect Zohran Mamdani. The year 2026 will reveal whether this trend persists or if it is a fad that passes once the Gaza war comes to a more permanent end.

Ultimately, 2026 will either mark the end of the Gaza war and the initiation of reconstruction and hope in the Strip—or it will perpetuate a state of stagnation and stalemate, risking a return to fighting, devastation, and more tragic deaths.

Ahmed Fouad Alkhatib is the director of Realign For Palestine at the Atlantic Council.

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MENASource

Nov 10, 2025

A little-discussed point in Trump’s Gaza plan could be an opportunity to build interfaith understanding

By Peter Mandaville

Peace efforts don’t need more gleaming Abrahamic baubles, they need a genuine commitment to supporting grassroots religious peacebuilding.

Civil Society Freedom and Prosperity

Iraq must maintain unprecedented stability

Amid continued regional turmoil, Iraq ended 2025 in a period of relative stability and security, avoiding being drawn into the Twelve Day War between Israel, Iran, and the United States—and holding successful parliamentary elections. The challenge for Iraqi political leaders in 2026 will not only be to maintain this unprecedented stability, but also to navigate Trump administration pressure to rein in Iran-aligned militias and avoid being pulled into the broader US maximum pressure campaign against Iran. Iraq is also likely to continue its efforts to appeal to the Trump administration through investment, pitching new energy deals to US companies, but it is not yet clear whether these efforts will be successful.

With Iranian influence in the region at an all-time low, Iraqi leaders have an opportunity to forge a more independent foreign policy that prioritizes continued partnership with the United States and differentiates Iraqi from Iranian interests. Core to this effort will be progress toward Iraq’s regional integration and strengthened political and economic ties to the Gulf and other regional partners such as Jordan and Egypt. In the face of Iraqi efforts to challenge the militias and strengthen partnerships with the United States and the Gulf, 2026 may bring attempts by Iran and Iran-aligned militias to act as spoilers who obstruct Iraq’s progress and imperil Iraq’s stability. Iraq’s next prime minister has an opportunity to transform the country.

The next year will be critical in determining whether the Iraqi government can seize the opportunity and whether the United States and other regional partners will support it in doing so.

Victoria J. Taylor is the director of the Iraq Initiative in the Atlantic Council’s Middle East program.

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Dec 10, 2025

Dispatch from Iraq: The biggest challenge awaiting the country’s next prime minister

By Victoria J. Taylor

A recent visit to Iraq following parliamentary elections reveals a growing divide between the political elite and the people.

Elections Iraq

A political transition in Iran approaches

Political transitions are hard to predict, but there is no doubt Iran is approaching one. With a frail, unpopular, eighty-six-year-old Supreme Leader Ayatollah Ali Khamenei nearing his actuarial and conceivably political limits, 2026 could be the year.

Any transition has the potential to unleash dramatic changes in Iran, across the region, and in relations with the United States. The potential positive implications of new Iranian leadership and a change of approach are massive: relief from brutal suppression for the Iranian people, new possibilities in nuclear diplomacy and toward normalization with the United States, broadened detente with Iran’s Arab neighbors, and an end to the arming of violent terrorist proxies across the region that have squandered hundreds of billions of dollars of Iranian resources—driven by an ideological crusade to destroy Israel—while the Iranian people endure manmade water and electricity shortages. The beneficial effects would be felt from Iran to Lebanon to Gaza to Yemen and beyond.

None of this is preordained or automatic. A transition could cement a new generation of the Islamic Republic’s clerical leadership, bring to power an even more hardline Islamic Revolutionary Guard Corps, or devolve into chaos and civil war with massively destabilizing effects. What Washington should engage in through 2026 is transition planning—not in order to cause a regime change, which must be left to the Iranian people, but to be prepared to provide support for the Iranian people, resources and expertise, potential sanctions relief, and coordination with international partners to assist in steering a transition when it comes toward one of the better possible outcomes. The United States has moved smartly in 2025 to support a stable Syrian transition, and while the jury is still out on long-term stability there, there has been significant progress. An even more consequential transition awaits in Iran. Washington must not be caught flat-footed.

Daniel B. Shapiro is a distinguished fellow with the Atlantic Council’s Scowcroft Middle East Security Initiative.

Will the Israel-Iran cease-fire hold?

Following the Twelve Day War in June, Iran retains large quantities of highly enriched uranium and advanced centrifuges, without oversight by the International Atomic Energy Agency. At the same time, while Iran’s missile program and support for nonstate proxies were diminished, Iran is rebuilding its capabilities and still threatens US, Israeli, and regional security.

After initially declaring Iran’s nuclear program obliterated, Trump has also repeatedly called for resumed negotiations and a new nuclear deal with Tehran. Although still nominally implementing the US “maximum pressure” campaign, Trump also made a high-profile gesture by inviting Iranian President Masoud Pezeshkian to the Gaza Peace Summit in October.

For its part, Iran appears to remain in a largely reactionary posture. It is attempting to rebuild its missile and defense capabilities but is not currently enriching uranium or advancing its nuclear program (that we know of). Foreign Minister Abbas Araghchi says Iran is open to talks at the United Nations, but also foolishly rejected the Cairo invitation. Israeli Prime Minister Benjamin Netanyahu has responded by reminding the world of the Iranian missile threat and increasingly targeting Iranian proxies. There is no written cease-fire in place, and continued peace is partially reliant on Trump holding Netanyahu back. As Israeli elections approach, will Trump’s “complete and total ceasefire” hold? Will Iran do something that gives the Israeli’s an excuse or opportunity to re-engage Iran militarily? Or will Iran give negotiations another chance? Either way, 2026 should make for a pivotal year for Iran.

Nathanael Swanson is a resident senior fellow and director of the Iran Strategy Project at the Atlantic Council’s Scowcroft Middle East Security Initiative.

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Nov 17, 2025

As elections loom, can Netanyahu balance Trump, Mohammed bin Salman, and his political future?

By Daniel B. Shapiro

The Israeli prime minister’s preferred path to survive a treacherous election will be to show Israeli voters that he is advancing their country’s regional integration and staying within the US president’s embrace.

Israel Middle East

A duality of possible trajectories

2026 is a year of potential opportunity—and potential peril—for the Middle East.

Gulf states are determined to advance their political, economic, and security autonomy. Syria and Lebanon could either emerge as models of forward movement from instability or revert to sectarian strife and conflict. Pockets of normalcy could continue to advance in Iraq as exists today in parts of Baghdad and other cities, or it could descend back into political stasis and conflict. Israel could find itself more secure in the region by continuing to undertake kinetic strikes, or it could choose the path of less violence by completing meaningful security and cease-fire agreements with its neighbors. Choose the wrong option, however, and Israel could find itself more vulnerable to threats on its borders, not less. Palestinians could find space to grieve and begin to rebuild after two years of devastation—or face continued violence from West Bank settlers and a renewed war in Gaza, as well as some intra-Palestinian conflict. Jordan and Egypt will continue to muddle through their economic challenges and associated domestic social and political pressures, or this will be the year that they face collapse, and the world will look back and say the warning signs were there, we just missed them.

Most of the region has an opportunity at this moment in which it can seize and advance its desire for greater autonomy, global influence, and further integration. The Middle East can envision a calmer, more prosperous region driven by technological opportunity across sectors, including by leveraging artificial intelligence and US-exported advanced chips, while taking advantage of the economic integration pathways that are being developed, such as IMEC.

But the duality of possible trajectories laid out above reflects that in the Middle East, more often than not, positive opportunities are interrupted by internal or exogenous factors that regional capitals have to manage in a manner they did not expect. How the region grapples with the enduring and emerging risks of 2026 will determine whether it can prosper as a whole or whether only some will thrive while many continue to struggle. But if those regional countries that are advancing economically, politically, socially, and in their security only look inwards and do not seek to stabilize their neighbors facing social and physical insecurity, they will risk the latter impeding their development, as well. And then 2026 will once again be a year of missed regional opportunities instead of progress.

Jonathan Panikoff is the director of the Scowcroft Middle East Security Initiative at the Atlantic Council’s Middle East programs.

The post What will 2026 bring for the Middle East and North Africa? appeared first on Atlantic Council.

Bayoumi in Just Security on solar geoengineering

dfitzsimmons — Tue, 02 Dec 2025 14:00:00 +0000

Original Source

On December 2, Imran Bayoumi, associate director of the GeoStrategy Initiative, published an article for “Just Security” titled “As Solar Geoengineering Enters its Startup Phase, Governments Must Address Emerging Security Risks” cowritten with Scott M. Moore. The article breaks down potential security risks associated with solar geoengineering and argues governments must act now to regulate the nascent industry.

Now is the time to effectively regulate this new industry — one that just might have a decisive impact on the world’s ability to combat climate change. Without regulation, the dangers of SRM become magnified and the security risks more unchecked.

Imran Bayoumi

Staff

Imran Bayoumi

Associate Director

GeoStrategy Initiative Scowcroft Center for Strategy and Security

The post Bayoumi in Just Security on solar geoengineering appeared first on Atlantic Council.

How a Venezuela shock could raise global oil and food prices

Joseph Webster, David L. Goldwyn — Wed, 26 Nov 2025 12:00:00 +0000

Tensions between Washington and Caracas are high and could boil over. Thousands of US military personnel and about a dozen warships, including the USS Gerald Ford aircraft carrier and an amphibious ready group, are deployed around Venezuela, while the Maduro regime has launched a “massive mobilization” of military personnel and equipment.

Hopes are high that this moment could present momentum for the long-awaited democratic transition in Venezuela, and US policy should continue to press hard for it. Still, while Washington should continue to ratchet up pressure on the Maduro regime, a military intervention would hold first- and second-order risks to global energy and food markets.

Strikes limited to counternarcotics targets are unlikely to affect energy production or food markets. But any action attacking the regime itself or damaging single points of failure in the energy system, such as ports, is another matter altogether. Some proponents of military intervention in Venezuela are hopeful that any intervention would be relatively small and contained; skeptics, conversely, warn that air strikes could unleash unpredictable forces and lead to “difficult choices about whether and how to escalate.” With President Donald Trump reportedly seeking to speak directly with Venezuelan strongman Nicolás Maduro, a diplomatic solution may also emerge. We leave it to others to assess the dynamics and pathways of a coercive campaign. Still, if a small-scale intervention becomes a large one, several consequences are likely.

Even with high US domestic oil production, spare production capacity in the Gulf, and a well-stocked US Strategic Petroleum Reserve buffering crude markets, the loss of Venezuela’s heavy-sour barrels would tighten already-strained diesel markets. More dangerously, a conflict could spill over into regional oil or ammonia infrastructure—especially Trinidad and Tobago’s Point Lisas complex—likely resulting in an increase in fertilizer and food prices, which could potentially set off another bout of global inflation.

Global oil markets and Venezuela

Although it is still a significant player, Venezuela is at present not as important in oil markets as it was in pre-Hugo Chávez times. Venezuela exports stand at 800,000 barrels per day (bpd), or a little under 1 percent of total world oil consumption (although exports briefly exceeded one million bpd in September). Most export volumes head to China, directly or indirectly, while US imports have fallen below 100,000 bpd in recent months.

In the event of a US military intervention, Venezuelan production and exports would almost certainly plummet. Furthermore, US military strikes on Venezuelan territory could cause the regime to retaliate, especially if the United States attacked Venezuelan military installations or leadership offices. Venezuelan retaliation could take several forms, including sabotaging production to handicap a potential successor regime, attacking neighbors that seem to be supporting US military action, and fomenting internal political instability that makes continued operation unsafe.

Venezuela’s history shows how quickly production can drop even absent a military intervention. In 2002–2003, a Venezuelan oil workers’ strike, led by opposition to then President Hugo Chávez, reduced Venezuelan oil exports from three million barrels per day to less than 200,000 barrels per day.

At the same time, high US domestic crude and natural gas liquids (NGL) production, significant spare production capacity in Gulf states, and continued expectations for an oil market glut will put a ceiling on global oil prices—even if Venezuelan production outages occur in the short term. Additionally, the US Strategic Petroleum Reserve is well stocked.

But the longer-term picture is much more mixed. Venezuelan production would likely require several years to recover from any large-scale US military intervention. Though imperfect, comparative experiences point to the challenge of bringing postwar oil production back online. During the US invasion of Iraq, for instance, Iraqi liquids production fell to zero for several months after the invasion; annual production did not return to pre-war levels until 2011. Libya’s experience, too, suggests a disorderly political transition can severely hamper oil production. Since Libyan leader Muammar al-Qaddafi’s overthrow in 2011, Libyan liquids production has never returned to prior levels: 2024 annual production stood at 1,188 kbpd, down 32 percent from 2010 levels.

The incompetency of the Chávez and Maduro regimes leaves open the possibility that a post-Chavismo Venezuela could eventually see higher production. Indeed, the Venezuelan opposition has released a thoughtful and credible plan for bolstering oil and mining production, including by pursuing best practices. However, rebounding production will depend on several factors. For example, capital and labor will need to return to Venezuela. State-owned Petróleos de Venezuela, SA, which is debt-laden and has deferred maintenance on key pieces of field infrastructure, will need to be overhauled. And many of Venezuela’s reservoirs, which have suffered from poor production practices, will need to be restored.

Long-term Venezuelan outages would therefore likely lift oil prices, especially diesel. This is because Venezuela’s heavy-sour crude oil grades are highly suitable for producing diesel, which is a key input into virtually every industry. Recently, the International Energy Agency has warned that middle distillate markets—including diesel—are already tight. Accordingly, if Venezuela production is removed from the market, then diesel prices could shift higher, which is likely to increase global inflation.

Indeed, if US policymakers undertake military intervention in Venezuela, then they should both anticipate higher inflation via diesel markets and prepare for a post-intervention environment wherein Venezuela’s oil production takes time, and requires support, to fully rebound.

Horizontal escalation risks

A US military intervention in Venezuela might have wider regional impacts should the Maduro regime, faced with an existential threat, escalate a conflict horizontally to other countries or regions via semi-deniable proxies.

Horizontal escalation would expand the aperture of commodity-related risks. For instance, energy infrastructure in Colombia, especially pipelines, could be one such target, given links between Caracas and the ELN, a US-designated foreign terrorist organization. The ELN operates extensively in the Venezuela–Colombia borderlands, where the Caño Limón-Coveñas pipeline has been regularly attacked since it opened in 1986, including as recently as July of this year. An attack by ELN on a Colombian pipeline—either implicitly or explicitly supported by Caracas—would offer Maduro an opportunity to increase the costs of a conflict in an asymmetric or deniable manner, as even short-lived outages in Colombia would compound Venezuela’s supply losses and harm US refinery economics.

Maduro seems unlikely to approve an attack on Colombian infrastructure, for now, given his need for a diplomatic lifeline with Colombian President Gustavo Petro, a fellow leftist. But his calculus could shift after Colombia’s upcoming legislative and presidential elections in early 2026. If leftist candidate Iván Cepeda prevails, Maduro will likely still seek to preserve ties with Bogotá, but after the election he is less likely to worry that escalation might electorally empower his opponents. If a non-leftist candidate wins, conversely, Maduro may feel freer to escalate inside Colombia. Crucially, Colombia’s exports of heavy and medium sour crude oil, including medium-sour production in Caño Limón sent to the Coveñas terminal on the Caribbean for export, are highly suitable for producing middle distillates. About 40 percent of Colombian crude oil was shipped directly to the United States in 2024, and many Panama-bound shipments are transshipped to US Gulf Coast refineries. Accordingly, losses of Venezuelan and Colombian crude may significantly impact domestic fuel prices, especially for diesel.

Trinidad and Tobago’s ammonia supply chains are also vulnerable to disruption in a military conflict, especially one that expands beyond Venezuela. While accounting for only 2.5 percent of all global ammonia production, Trinidad and Tobago is responsible for 15-20 percent of global ammonia seaborne trade, and the country is the second-largest exporter to the United States, after Canada. This supply chain centers on Point Lisas, which sits on Trinidad’s west coast in the Gulf of Paria, directly facing Venezuela, about fifty kilometers away, leaving it exposed to disruption and retaliation in a prolonged conflict with the Maduro regime. Point Lisas has limited redundancy, with potential single points of failure such as the Phoenix Park Valve Station, a key hub for processing and routing gas feedstock to ammonia plants.

If Maduro sympathizers disrupt Point Lisas with cyber or kinetic attacks—including asymmetrical methods such as drones—then the effects will be felt throughout the Americas and potentially beyond. While the United States and Europe are Trinidad and Tobago’s largest ammonia partners by volumes, Mexico’s, Chile’s, and Brazil’s fertilizer markets are disproportionately exposed. Accordingly, an outage at Point Lisas would reverberate throughout the region. Mexico, too, would be impacted: It imported 250,000 tons of anhydrous ammonia from Trinidad and Tobago in 2024, while domestic ammonia production stood at only 319,000 tons. Due to deep US-Mexico agricultural ties—22.8 percent of US agricultural imports in 2024 by value hailed from Mexico—a fertilizer disruption at Point Lisas would likely send US, regional, and global food prices higher.

Carry a big stick, but think before swinging

The Maduro regime is one of the world’s worst, and it lost its legitimacy long ago. And while Maduro must step down, US policymakers should think carefully about the consequences that would accompany military force.

The United States’ strong domestic oil production and Strategic Petroleum Reserve, Venezuela’s limited role in global oil markets, and a projected state of market oversupply all lower the probability of an immediate crude-oil price spike in the event of hostilities. Yet a long road ahead for Venezuela’s oil production to rebound, as well as the possibility of spillover to other oil- or ammonia-producing countries, speaks to a wider and perhaps deeper set of inflationary risks that policymakers and market participants should take into account.

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

David Goldwyn is president of Goldwyn Global Strategies, LLC (GGS), an international energy advisory consultancy, and chairman of the Atlantic Council Global Energy Center’s Energy Advisory Group.

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How geothermal could enhance US energy security—if prioritized

Paul Stahle — Tue, 25 Nov 2025 22:09:49 +0000

Electricity demand in the United States is rising—along with prices. After nearly a decade of flat growth, the US Energy Information Administration projects that annual demand across the United States will grow 2.4 percent in 2025 and 2.6 percent in 2026. Meeting that demand affordably poses a formidable challenge. Oil and gas markets are volatile, while renewables have intermittency challenges and vulnerable supply chains. In this environment, accelerating the development of geothermal energy could help reduce exposure to these risks.

Compared to solar, wind, or battery storage, geothermal power relies relatively less on critical minerals like cobalt and lithium. And, unlike oil and gas generation, geothermal requires no fuel. As a result, geothermal can provide round-the-clock baseload power with lower exposure to disruptions in global supply chains.

As the cost of enhanced geothermal technologies continues to decrease and their geographic reach expands, now is the time for policymakers, especially in the United States, to take a serious look at geothermal as a key part of their energy security strategy.

The value of geothermal

Geothermal energy taps the earth’s internal heat for electricity and heating. A traditional geothermal well accesses natural steam and hot water, while an enhanced geothermal system (EGS) fractures hot rock and circulates fluid to absorb subsurface heat. This heat produces steam, which returns to the surface to spin turbines that generate electricity. Traditionally, geothermal energy production was limited to tectonic boundaries or hotspots where the earth’s crust is thin and subterranean heat is at its highest. However, technological advances, including drilling techniques borrowed from the oil and gas sector, have now made geothermal commercially viable in a broader range of locations.

In terms of energy security, geothermal offers two major advantages compared to other sources.

First, it can provide 24/7 baseload power without the need for fuel. Insulated from volatile global commodity markets, geothermal can offer the energy resilience necessary to achieve US energy policy priorities, like independently powering domestic and overseas US military bases and the fast-growing US data center industry. In fact, a growing number of tech giants are signing offtake agreements with geothermal companies to power artificial intelligence (AI) operations, including Meta’s agreements for 150 megawatts (MW) each from Sage Geosystems and XGS Energy, and Google’s agreements with Fervo Energy and NV Energy for 115 MW.

Second, geothermal is not as reliant on vulnerable supply chains as wind and solar are. China controls a high percentage of the global supplies of many minerals that are essential to the manufacture of wind and solar components and systems, especially in midstream refining. According to the International Energy Agency (IEA), for 19 out of 20 strategic minerals, China is the leading refiner, with an average market share of 70 percent. China refines 91 percent of rare earths, 77 percent of cobalt, 70 percent of lithium, 44 percent of copper, and 42 percent of chromium. According to International Aluminum data, it also consistently accounts for around 60 percent of aluminum production.

While geothermal technology uses more chromium than wind and solar, it uses less of other critical minerals, especially when battery storage is added to a system. Geothermal requires less copper and aluminum than solar photovoltaics, and less copper, rare earth minerals, and zinc compared to wind. Adding battery storage to intermittent wind and solar dramatically increases the need for chromium, cobalt, lithium, and rare earths even further for these technologies.

Downstream, the IEA estimates that China’s share in key solar panel manufacturing stages exceeds 80 percent. In terms of wind development, the IEA in its Energy Technology Perspectives 2023 also estimated China accounts for 70 to 80 percent of global blade manufacturing, 45 to 50 percent of tower production, and around 70 percent [SJ8] [PS9] of nacelle (turbine covers) assembly capacity. While geothermal still relies on global markets for standard components like turbines, steel, and piping, its ability to leverage the existing assets and technologies of the US oil and gas sector—primarily for drilling—significantly reduces its exposure to risks in the supply chain.

Geothermal also offers another major advantage: Multiple projects for lithium extraction from geothermal brine in California’s Salton Sea, as well in the Smackover Formation in Arkansas and the Upper Rhine Graben in Europe, show how geothermal could even become a net producer of critical minerals.

Renewed US interest in geothermal

Recent support from President Trump and Energy Secretary Chris Wright places geothermal firmly among the administration’s pillars for securing US energy dominance. In a speech in March 2025, Wright suggested that although geothermal “hasn’t achieved liftoff yet, it should and it can,” adding it “could help enable AI, manufacturing, reshoring, and stop the rise of our electricity prices.” Meanwhile, Trump’s executive orders, as recently as July, have consistently identified geothermal as a key resource to be developed and allowed expedited permitting.

This renewed enthusiasm has highlighted key areas for White House and Congressional cooperation:

Permitting reform: Establishing more streamlined permitting processes, including ensuring better interagency coordination and adequate resources would reduce uncertainty and project timelines, directly increasing their bankability.

Categorical exclusions (CXs): The Bureau of Land Management’s (BLM) could expand on its April 2024 and January 2025 adoption of CXs that exempt certain low-impact, early-stage activities from separate environmental reviews. The US Department of Energy (DOE) estimates that the January 2025 CX alone could shorten the geothermal permitting process by up to a year. Expanding CXs for other early-stage, low-impact activities and allowing concurrent environmental reviews for different phases of the same project would further shorten project timelines, boosting investor appeal.

Interagency cooperation: Designating one agency to conduct a single, unified review could further accelerate project timelines. Currently, developers must often complete a full environmental review with the BLM and then a second, separate review with the US Forest Service.

Sufficient staffing: Expeditious permitting also requires adequate staff to process requests, a factor for policymakers to consider amid proposed reductions to the workforce, including in key state offices responsible for federal licensing.

Continued tax credits and research and development (R&D) support:

Tax credits: The Trump administration’s maintenance of the Inflation Reduction Act’s (IRA) tax credits for geothermal is a win for the sector. Based on National Renewable Energy Laboratory data, the Center for Strategic and International Studies reported that the IRA’s tax credits could lead to the levelized cost of electricity from EGS to drop by nearly 85 percent, to $60 to $70 per megawatt-hour, making it competitive with other firm and intermittent energy sources.

Federal R&D support: The DOE’s Geothermal Technologies Office has helped advance drilling and reservoir techniques at the Frontier Observatory for Research in Geothermal Energy (FORGE) demonstration laboratory in Utah, but more research is needed. Challenges for EGS include drilling into hot rock, which represents over half the project’s budget and destroys standard equipment. This is compounded by the uncertainty of whether a viable underground fracture network can be successfully engineered to circulate water and extract heat without causing issues like induced seismic disturbances. Sustained federal support for testbeds like FORGE will help overcome these challenges, catalyze advances, reduce costs, and enable the scaling of traditional geothermal and EGS across the United States.

By prioritizing the rapid development of geothermal, policymakers could help the United States build a unique path to energy security—one that delivers reliable power 24/7, insulated from global hydrocarbon markets and vulnerable supply chains.

Paul Stahle is a senior energy advisor and government relations expert with over 18 years of U.S. government experience. His work spans energy and technology policy in Washington, D.C., China, Europe, India, and the Asia-Pacific.

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How Venezuela uses crypto to sell oil—and what the US should do about it

Maia Nikoladze — Tue, 25 Nov 2025 19:23:27 +0000

As the US military buildup increases near the shores of Venezuela, the United States could consider a measure to pressure Nicolás Maduro’s government without resorting to force: restricting its access to dollar-pegged stablecoins. Reports suggest that the Venezuelan government has been receiving oil payments in the stablecoin USDT since 2024—undermining the sanctions the Trump administration placed on Venezuela’s state-owned oil company and central bank in 2019. This method resembles sanctions evasion schemes used by other heavily sanctioned states, including Russia, Iran, and North Korea, and it merits a strong and coordinated US policy response.

Crypto adoption is Venezuela’s response to US sanctions

In recent years, the United States has imposed sanctions on Venezuela in response to the Maduro government’s repression of opposition groups and “subversion of democracy.” Much of this US economic pressure has come since 2017, when the Trump administration issued a series of executive orders that it then expanded. In 2019, the United States enacted full blocking financial sanctions against PDVSA (the state-owned oil company Petróleos de Venezuela, S.A.) and the Central Bank of Venezuela.

Venezuela’s oil sector was particularly exposed, given its complete reliance on PDVSA—a company already weakened by aging infrastructure and chronic underinvestment. This overreliance on PDVSA left both the energy sector and Venezuela’s broader financial system acutely vulnerable to financial sanctions.

This year, the Trump administration has increased economic pressure further, imposing a 25 percent tariff on buyers of Venezuelan oil in March. However, the Maduro government has not yielded to US economic pressure by ceding power. Instead, it has adopted sanctions evasion methods developed by China, Russia, Iran, and North Korea—a group for which my colleague Kimberly Donovan and I coined the term “Axis of Evasion” due to their shared tactics and cooperation in circumventing Western sanctions.

Like Iran and Russia, Venezuela needed to receive oil payments from China outside the reach of Western financial oversight. Transacting with cryptocurrencies is one such evasion method, which North Korea, for example, has used in the past to launder the proceeds of cybercrime. Last year, Russia softened its restrictive stance on cryptocurrencies by allowing companies to use them in cross-border trade. Reports from this year indicate that Russia has been receiving oil payments from Chinese and Indian customers in Bitcoin and other cryptocurrencies, with transaction volumes reaching tens of millions of dollars.

The Venezuelan government has spent several years experimenting with cryptocurrencies, most notably with the launch of the state-backed petro (PTR), which was launched in 2018 and collapsed in 2024. As US sanctions on Venezuela intensified in 2019 and the years since, the Maduro regime grew increasingly interested in leveraging digital assets to facilitate oil transactions—leading to US Department of Justice indictments against individuals brokering these deals. Over the past year, Caracas has turned to USDT, a dollar-pegged stablecoin issued by the offshore company Tether, as an alternative vehicle for international payments.

Tether has previously faced scrutiny over its alleged involvement in illicit finance and money laundering. Notably, Tether has also worked with the US Department of Justice in an investigation that led to the dismantling of the online infrastructure supporting Garantex, a sanctioned cryptocurrency exchange implicated in facilitating Russia sanctions evasion and money laundering by transnational criminal organizations. By 2024, Tether had also frozen forty-one wallets that were using USDT to evade sanctions on Venezuela’s oil.

By the end of first quarter of 2024, PDVSA began requiring new clients to use digital wallets and make payments in USDT for spot oil deals. Subsequently, Venezuelan authorities enabled a limited number of banks and exchange houses to offer USDT to private companies, in exchange for bolívars. In July alone, an estimated $119 million in cryptocurrencies were sold to the private sector. This shift marked the growing use of cryptocurrencies, predominantly USDT, as a substitute for physical US dollars in domestic financial flows. While crypto still represents only a small share of total oil trade by value, it plays an outsized strategic role by offering sanctioned regimes a parallel payment channel outside traditional banking.

Sanctioned oil trade schemes between China and Venezuela

Similar to other “Axis of Evasion” countries, Venezuela transports oil to China via shadow fleet tankers—sometimes called “ghost ships”—employing at-sea evasion tactics such as turning off trackers during ship-to-ship transfers and rebranding the Venezuelan crude oil as Malaysian. By 2020, official Chinese imports of Venezuelan oil dropped to zero, while Malaysian oil imports surged to a sixteen-year high.

Like Iran and Russia, most of Venezuela’s oil is refined by small independent Chinese refineries known as teapots, primarily located in Shandong province. Although China officially halted imports of Venezuelan crude after sanctions in 2019, China remains the primary destination for Venezuelan crude exports. In September, approximately 84 percent of Venezuela’s exported oil went there, either directly or indirectly. Thus, it is widely reported that Venezuelan oil goes to China, and that Venezuela ends up with USDT. What remains unknown—and needs investigation—is the payment chain that connects these two facts.

New Chinese investments in Venezuela’s oil sector

Venezuela has historically had investments from Chinese companies in its oil sector. While China National Petroleum Corporation halted operations in Venezuela in 2019 due to the risk of US secondary sanctions, reports from August indicate that the smaller China Concord Resources Corp (CCRC) is investing one billion dollars in two Venezuelan oil fields. In May 2024, CCRC signed a twenty-year shared production agreement, aiming to produce sixty thousand barrels per day by the end of 2026. Under this deal, lighter crude will be supplied to PDVSA, while heavier crude will be exported to China.

This development carries two major implications. First, it challenges the strategic framework through which the United States has traditionally approached sanctions on Venezuela. Washington has long operated under the assumption that escalating sanctions on Venezuela’s oil sector would deter foreign companies from operating there due to the risk of secondary sanctions—and, until now, that assumption has largely held. A twenty-year production agreement with a smaller Chinese firm, however, suggests that Beijing may no longer be willing to adjust its trade and investment decisions in Venezuela according to US sanctions.

Second, if CCRC can indeed raise production to the stated levels and deliver half of the output to Venezuelan authorities, restricting the Maduro regime’s access to cryptocurrencies may become the only remaining lever to curb its oil revenues. That said, CCRC has no prior drilling experience, underscoring the need for caution and close monitoring of whether it can realistically meet its production targets.

What should the US do next

Recent reporting by Reuters and the New York Times indicates that sanctioned entities—including PDVSA—are now using crypto to receive oil payments. To ensure the Maduro regime is not using cryptocurrencies to undermine the Trump administration’s sanctions strategy, the US government, in coordination with partners and allies, should build out the intelligence picture regarding Venezuela’s use of stablecoins and other digital assets to evade sanctions. After identifying the key actors and wallets involved, the government can use targeted sanctions and law enforcement actions, consistent with past actions against Venezuelan oil-trade–related schemes. It should also share relevant information with private-sector partners, particularly stablecoin issuers and exchanges. The government should then request their cooperation on freezing wallets linked to sanctioned individuals, which issuers and exchanges have done before.

Understanding how to counter sanctions evasion through cryptocurrencies is critical—not only in the context of Venezuela, but for the overall integrity of US financial sanctions. Our Axis of Evasion research shows that sanctioned regimes often replicate one another’s tactics to bypass restrictions. With Russia’s oil giants Lukoil and Rosneft now under sanctions, Moscow is likely to adopt Venezuela’s approach of using stablecoins to facilitate oil payments from Chinese buyers. Developing a clear strategy for how US sanctions and law enforcement authorities address the use of dollar-pegged stablecoins and other cryptocurrencies is therefore essential. Doing so would not only disrupt Venezuela’s ongoing sanctions evasion efforts. It would also send a powerful signal to other heavily sanctioned countries that the United States will not tolerate the use of digital assets to undermine its sanctions regime.

Maia Nikoladze is the associate director of the Economic Statecraft Initiative at the Atlantic Council’s GeoEconomics Center.

Energy Sanctions Dashboard

This dashboard focuses on US sanctions and restrictive measures placed on crude oil from Russia, Iran, and Venezuela—including the unintended consequences and the lessons learned.

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On critical minerals, the US needs more than just supply. It needs refining power.

Bart Piasecki — Tue, 25 Nov 2025 18:11:08 +0000

When China announced export controls on several critical minerals—including rare earth elements—and related processing technologies and materials this October, the United States well understood the enormous economic consequences such restrictions could carry. Washington rushed to the negotiating table, resulting in a one-year pause on the measures, wrapping up the latest round of tit-for-tat export control escalations between the two countries.

This episode illustrates the true power of critical minerals. They now sit at the center of economic policymaking worldwide, with advanced economies racing to secure reliable access to the metals that power the modern global economy.

It is no surprise that the global race to secure long-term access to these resources is accelerating. The list of critical minerals is extensive—the latest US Department of the Interior assessment identifies fifty-four such commodities. But four of them stand out for their strategic value: lithium, nickel, cobalt, and graphite. These minerals are foundational to the future energy economy, in part because they form the core inputs of lithium-ion technologies that power electric vehicles, drones, grid storage, and modern electronics. At the same time, key nodes of their supply chains are highly concentrated. Securing access to these minerals is essential for economic competitiveness, national security, and the global energy transition.

Serious players in the critical minerals landscape specialize in at least one of three key assets—and the assets that these countries lack can present strategic vulnerabilities. One asset is access to reserves or mineral supply, either through geographic fortune or effective dealmaking with nations that host these resources. A second is processing capacity. While raw materials matter, true strategic advantage comes from the ability to reduce dependence on others to make use of those raw materials. And a third is strong export capability, which depends on having either an abundant supply, advanced processing infrastructure, or, ideally, both.

For the United States, the picture is mixed when it comes to the first key asset. But it isn’t as bad as many assume. While the United States holds significant geological potential for various critical minerals, it has not benefited from the same geological fortune in several essential deposits. Even where resources exist, production is frequently uneconomical, permitting processes are highly restrictive, and robust environmental standards further constrain the ability to scale extraction and processing. What it does have, however, is a strong capacity for strategic dealmaking. Both the Biden and Trump administrations have been notably successful in securing deals with countries with reserves. The chart below illustrates just how effective these efforts have been.

US efforts to secure access to lithium, nickel, and cobalt supplies have been largely successful. Countries shown on the graph in green represent those with active critical minerals agreements with the United States. Notably, those agreements include the $8.5 billion deal with Australia, a country that holds substantial reserves of key resources. In addition, the United States benefits from its long-standing free trade agreement with Chile—a major lithium producer. Although the free trade agreement does not explicitly address critical minerals, it makes Chile eligible for US tax credits. This preferential status means that Chilean lithium can enter the US market without additional tariffs, effectively making Chilean exports more cost-competitive.

The United States continues to lag in securing formal access to graphite, with no completed agreements so far and only ongoing negotiations with Brazil and a few African countries, including Mozambique, Madagascar, and Tanzania. Graphite remains especially challenging because China controls roughly 90 percent of global output—including extraction, processing, and exports.

However, the absence of a deal on graphite or any other mineral does not mean the United States is inactive on the ground in countries that host important reserves. The United States uses its development agencies, such as the Development Finance Corporation, to support private-sector deals, especially in Africa.

Of course, there are the other two critical components of supply-chain power: processing capacity and exports. Using lithium as an example, the chart below shows that reserves are relatively well distributed across the globe. However, processing capacity is not. Refining is almost completely concentrated in just two countries: China, which controls about 65 percent, and Chile, which holds roughly 25 percent. Processing capacity also directly shapes export power. While countries such as Australia can export large volumes of raw materials, the real value in the supply chain comes from exporting processed products.

Looking again at the four examples of lithium, nickel, cobalt, and graphite, their combined global market value in 2024, based on my calculations, was roughly $100 billion, about the size of Luxembourg’s gross domestic product. For comparison, the global oil and gas market that same year was valued at around six trillion dollars. I estimate that by 2030, the market value of these four critical minerals is projected to nearly double to $186 billion. That figure isn’t slated to catch up to oil and gas soon, yet critical minerals are gaining rapidly in their strategic significance. As the transition to a modern, electrified economy accelerates, their importance will only continue to grow.

To address its vulnerabilities, the United States must now focus on building and securing access to adequate refining capacity. In their analysis, my Atlantic Council colleagues—Reed Blakemore, Alexis Harmon, and Peter Engelke—highlight US vulnerabilities and offer concrete policy recommendations, such as designing trade and partnership strategies to ensure access, stability, and resilience when a fully domestic supply chain is unattainable. Whatever path the current administration chooses, it is clear that expanding global processing capacity remains a crucial—and currently missing—step in strengthening supply-chain control and export competitiveness. Fortunately, when considering the capacity of the United States’ partners and allies, the overall picture is far more promising.

A strong example of cooperation between the United States and its partners is the recent US-Saudi agreement, which includes a deal to establish a critical minerals processing facility in the Gulf. The joint venture—bringing together mining group MP Materials, the US Department of Defense, and Saudi Arabia’s state-backed mining giant Ma’aden—will focus on rare-earth processing, a segment of the supply chain still largely dominated by China. Looking ahead, expect more of these public-private partnerships as the United States works to strengthen its critical minerals ecosystem.

Bart Piasecki is an assistant director at the Atlantic Council’s GeoEconomics Center.

This post is adapted from the GeoEconomics Center’s weekly Guide to the Global Economy newsletter. If you are interested in getting the newsletter, email SBusch@atlanticcouncil.org.

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In Mozambique, US economic priorities hinge on security investments

Rose Keravuori, Maureen Farrell — Mon, 24 Nov 2025 20:31:00 +0000

This article is the first in a series published by the Atlantic Council’s Africa Center and the GeoStrategy Initiative of the Scowcroft Center for Strategy and Security exploring the nexus between US security and economic interests across Africa.

On Africa’s southeastern coast along the Indian Ocean, Mozambique sits atop vast reserves of hydrocarbons and critical minerals. The country also controls a vital shipping corridor: the Mozambique Channel. Stretching between the mainland and Madagascar, this passage has become a critical chokepoint for commercial vessels seeking to bypass the pirate-ridden Red Sea.

Long overlooked by US policymakers, Mozambique’s resource wealth and strategic location have now brought it into the spotlight for foreign investment. Yet economic engagement in the country is anything but straightforward, as most of its assets are concentrated in the north—the same region where the Islamic State affiliate ISIS-Mozambique (ISIS-M) remains active.

For the United States, which increasingly seeks access to critical minerals and strategic resources—and remains committed to counterterrorism—this necessitates a twofold strategy: it must not only build commercial ties with Mozambique, but also strengthen security-sector cooperation to safeguard the country’s stability and economic potential.

From terrorism to trade?

Gas discoveries in the north during the 2010s catapulted Mozambique into the top ranks of global gas producers. Since then, the US Export-Import Bank (EXIM) and the US International Development Finance Corporation (DFC) have invested heavily in the country’s energy sector—and particularly in developing its liquefied natural gas (LNG) reserves—and more modestly in projects that support economic stability in northern communities. Today, the combined commitments of ExxonMobil’s Rovuma Basin LNG project and TotalEnergies’ investments in Mozambique exceed the country’s gross domestic product.

In March 2025, EXIM approved a $4.7 billion loan for LNG equipment and services. Similarly, DFC launched several projects, ranging from less than $175,000 to $1.5 billion, aiming to bolster energy security for large LNG ventures and the surrounding communities. Besides forming the basis for mutually beneficial economic engagement, the United States hopes that these investments help build resilience in areas that might otherwise tolerate or even support ISIS-M. Exxon’s and Total’s investments in Mozambique also represent key down payments to ensure a stable supply of non-Russian LNG for the United States and its allies. At the same time, they have already led to increased security coordination between Mozambique and the United States, proving that investment can drive engagement.

Violence in the north puts economic development at risk

Beyond its gas reserves, Mozambique hosts the Balama mine—one of the world’s largest graphite mines—along with several other emerging critical minerals sites. Mozambican graphite is used in steelmaking, nuclear reactors, lithium-ion batteries, and as a lubricant for heavy machinery—all essential to the US industrial base. In addition, new mining concessions continue to be announced across the country.

Yet progress toward exporting Mozambique’s LNG and critical minerals has been severely hampered by insecurity. ISIS-M’s terrorist attacks in the north, which began in 2017, pose a direct threat to major US energy and critical minerals investments in the province of Cabo Delgado. They not only disrupt local governance but also cause mass displacement and casualties. According to the Armed Conflict Location & Event Data Project (ACLED), Mozambique has witnessed 2,162 political-violence events and 6,165 total fatalities since 2017—2,554 of them civilian.

Mozambique was identified as a priority country under the Global Fragility Act (GFA), passed into law during the first Donald Trump administration. Despite that designation, meaningful policy attention and funding have not materialized. Instead, the current administration rescinded $200 million in GFA funds that would have been shared among Mozambique and eight other countries to promote stability near LNG and mining projects. This stands in stark contrast to the nearly $820 million in development assistance that Mozambique received in FY 2024, mostly for health programming.

Building stability through partnership and purpose

The Rwandan Defense Forces (RDF) first deployed to Mozambique in 2021 as part of the Southern African Development Community (SADC) mission in Mozambique and have since maintained a presence in the north. While imperfect, the RDF presence has helped reduce violence to the point that the TotalEnergies–ExxonMobil consortium recently lifted its force majeure declaration that froze its Cabo Delgado LNG project mid-construction in 2021. The mission—coordinated by Rwanda and SADC—reflects the oft-promoted principle of “African solutions to African problems.” Still, Rwanda’s efforts alone will not stabilize the area.

Given that Mozambique possesses strategic resources highly sought after in the United States and that its terrorist threat is manageable, the US administration—working with Rwanda and in partnership with France, Portugal, and other allies and partners with investments in Mozambique—should pool resources to stabilize the country. Such a diverse group working to promote Mozambique’s security and prosperity—while respecting the country’s sovereignty—would also align with the burden-sharing model the Trump administration aims to advance in its foreign engagements.

To reinforce regionally-led counterterrorism efforts that both preserve Mozambican lives and promote stability around key US investments, the Department of Defense and the State Department should expand security cooperation and security assistance in northern Mozambique—especially because failure to engage risks leaving US firms dependent on insufficient Rwandan support or Chinese security guarantees. US Special Operations Forces, with their unique capabilities in counterterrorism training and civil-military operations, could strengthen Mozambican and regional forces through joint combined exchange training, civil affairs projects, and military information support operations.

Mozambique could point the way for US engagement in Africa

Combined with the local economic growth that energy and minerals projects bring, such efforts can pave the way for northern communities to no longer view ISIS-M as their only opportunity. Instead, US security investments should help rebuild trust in the state by delivering security, essential services, and livelihoods that reduce the appeal of extremism. Maritime forces from the United States and partners such as India should also conduct freedom of navigation operations in the Mozambique Channel to preserve open access to this vital trade artery. Finally, the State Department’s counterterrorism programs should strengthen community-security force cooperation to protect strategic investments and prevent further terrorist attacks. Security for communities will translate into security for assets. If Washington wants sustainable influence in Africa, it must align stability with shared prosperity.

As global competition for critical resources intensifies, Africa will serve as a testing ground for the fusion of finance and security. Modest, targeted investments in Mozambique’s stability—building on those already made by regional partners—and a focus on value creation represent the clearest example for how US capital can shape a security posture in Africa. Mozambican President Daniel Chapo’s visit to Washington in late October, where he met with US Vice President JD Vance and the chief executive officer of the DFC, underscores this growing convergence of economic and security priorities. As Chapo announced on the sidelines of this year’s United Nations General Assembly, “Mozambique is open for business.”

Indeed, integrated regional solutions supported by measured US engagement can help ensure Mozambique remains a stable and secure partner contributing to the US industrial base. Such a strategy could make the country a model of “security through investment”—a blueprint the United States could apply elsewhere in Africa.

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Welcome to the front lines of climate change

Peter Engelke — Mon, 24 Nov 2025 16:59:23 +0000

THE BIG STORY | November 24, 2025

Welcome to the front lines of climate change

Just before the United Nations’ annual climate conference kicked off in Brazil November 10, three hundred mayors gathered in Rio de Janeiro. C40, a coalition of big-city leaders that has long pushed to be included in decision-making about climate action, hosted the mayors for talks about dealing with the extreme heat, turbocharged storms, and other results of a changed climate. As the summit opened, the conference’s president André Corrêa do Lago stressed “the need to place cities at the center of climate negotiations.”

Is the mayors’ moment here?

By Peter Engelke

Imagine standing on any street corner in any city center in the world: New York, Los Angeles, Tokyo, Shanghai, Delhi, Berlin, Dubai, Lagos, São Paulo, or thousands of others. You would see a bustling hive of activity, people conversing, working, selling, buying, playing, demonstrating, shipping, transporting, exercising, building, demolishing, loading, unloading, and a million other things besides. These scenes are both ancient and new: ancient in that they repeat countless similar activities on countless street corners over thousands of years; new in that the massive amounts of energy required by such activities in cities today are transforming the very planet we live upon.

Cities are where most of the world’s population lives, where the vast majority of its buildings, factories, companies, homes, and vehicles are located. They are also a central driver of anthropogenic climate change, accounting for 75 percent of global energy use and 70 percent of global carbon dioxide (CO₂) emissions.¹ But they are also where climate solutions will be found. The trick will be in minimizing the first and maximizing the second. As United Nations (UN) Secretary-General António Guterres has said, “Cities are where the climate battle will largely be won or lost.”²

If we are to decarbonize the global economy in time to ward off the worst climate impacts, then we are going to have to transform how thousands of cities around the world function, and how billions of people live, work, travel, and entertain themselves in cities.

Are cities up to the challenge of shaping a livable future for billions of people? Will the world’s nation-states enlist these powerful assets in the fight against climate change, helping cities find and scale up workable solutions?

Why cities matter

Cities can be a partner for—or a counterweight to—national governments.

The debate over how to reduce carbon emissions—decarbonization—typically focuses on nations: how China’s emissions stack up against India’s, for instance. Nations have the power as sovereigns to raise funds, direct investment, and drive policy. Yet the world’s national governments have failed to place binding limits on carbon emissions, with the nonbinding nationally determined contributions under the 2015 Paris Agreement being the most successful outcome of the United Nations Framework Convention on Climate Change process thus far. Unfortunately (and predictably), there has been little progress implementing those emissions caps: National governments’ current policies are insufficient to reach the Paris Agreement’s target of limiting warming to 1.5 degrees Celsius above preindustrial levels.³ (The 1.5-degree goal is swiftly disappearing as a realistic target. In 2024, the world’s hottest year on record, the global average temperature was 1.6 degrees Celsius higher than preindustrial levels.)⁴ Nor is progress guaranteed, as states’ decarbonization policies can change—including in the wrong direction—with electoral outcomes and shifts in priorities.⁵ The United States, to give a prominent example, scrapped its Paris Agreement commitments to cut emissions when President Donald Trump again withdrew the United States from the Paris Agreement on the first day of his second term.

Cities create wealth and power.

There is every reason for national governments to work with city governments on climate, for cities are among the greatest assets that countries have. Cities are an important element of national power: They are, the economist Edward Glaeser argued in his landmark 2011 book, Triumph of the City, gigantic value-adding machines. Why? People live close together in cities. This physical proximity leads to exchange, invention, cooperation, planning, and execution, enabling the formation of institutions—governments, stock exchanges, start-ups, factories, corporations, universities, philanthropies, hospitals, and much more.⁶ Proximity thereby creates wealth, through invention, innovation, collaboration, manufacturing, servicing, and a great many other valuable things besides. The data bear this out: Globally and on balance, the most urbanized countries are the wealthiest, the least urbanized the poorest.⁷

Cities are where most people live.

Although cities are among humanity’s oldest complex creations (the world’s first cities emerged at least five thousand years ago), it was not until recently in historical terms that a truly urbanized world emerged.⁸ Rising fossil fuel use was at the center of this shift. The Industrial Revolution, which captured energy from coal, was the turning point. Starting in northern Europe and expanding outward, the Industrial Revolution enabled mass urbanization, as steam-powered factories pulled workers off the land and into cities.⁹ The city’s appeal today is the same as it was when the revolutionary Boulton & Watt steam engines appeared in Birmingham, England, in the 1770s: Cities, per Glaeser, are where economic opportunities lie.¹⁰

The world is still going through this demographic realignment that began with the Industrial Revolution. In 2022, cities were home to 4.5 billion people, about 57 percent of the global population.¹¹ Those figures will rise for decades to come, by 2050 to nearly 70 percent of the world’s population (6.7 billion city dwellers), with most growth occurring in Asia and Africa.¹²

The five sectors to green up

Cities will need to swiftly cut carbon emissions if global warming is to be limited to 1.5 degrees Celsius above preindustrial levels, the goal set under the 2015 Paris Agreement, or even 2 degrees given that the 1.5-degree goal in 2025 is already nearly moot.¹³ There are numerous ways in which cities can cut their emissions, including removing fossil fuels from electricity generation and power grids, making buildings more efficient (buildings account for roughly 40 percent of all greenhouse gas emissions), electrifying urban transport, shifting to nonmotorized modes such as the bicycle, reducing waste streams, decarbonizing urban infrastructure, and expanding local carbon sinks such as urban tree cover.¹⁴ This diversity of urban decarbonization can be grouped into five main categories—electricity, buildings, transportation, waste, and carbon sinks and offsets—from which most local emissions are generated.

Examples of urban creativity across these five priority sectors can be found nearly everywhere in the world.

Tokyo in 2010 became the first city in the world to implement a mandatory CO₂ cap-and-trade program, focused on the metropolitan area’s largest CO₂ emitters (factories, large buildings, and so on).¹⁵

Paris is implementing Plan Vélo to substantially increase the share of residents traveling by the greenest mode of travel—the bicycle. The plan will dramatically expand the city’s network of bicycle lanes, prioritize cyclists on streets and at intersections (via traffic lights and other traffic rules), expand bicycle parking throughout the city, and otherwise encourage cycling at the expense of driving.¹⁶

Cape Town is piloting waste-to-energy plants to reduce methane releases from the city’s landfills, with an eventual goal of generating 7-9 megawatts of electricity. For decades, Cape Town has been a sustainability pioneer, having experimented with numerous approaches to reducing the city’s carbon emissions through renewable energy projects.¹⁷

Melbourne is piloting a neighborhood battery system that will store renewable energy generated during the daytime and then release it to communities—residents and small businesses—in the evenings when it is most needed.¹⁸

Medellín has planted thousands of trees and hundreds of thousands of shrubs along “green corridors”—roads and waterways—to cool temperatures in the city during heatwaves.¹⁹

A neighborhood battery in Melbourne, Australia. The local government installed three large batteries around the city in 2024 to store renewable energy for city residents to use. Photo courtesy energy.vic.gov.au

The scale of urban decarbonization at the global level is enormous, given the thousands of cities and billions of structures, vehicles, and people that will be involved if the world’s cities are to be successfully decarbonized. In the building sector alone, new urban construction will have to be much less carbon intensive—projections show that some 40 percent of all buildings that will exist in 2050 are not yet built—while the stock of existing buildings will have to be renovated.²⁰ Global energy demand in buildings continues to rise, owing (mostly) to rapid urbanization in a few world regions—Africa, the Middle East, the Asia-Pacific, and Eurasia. Most of the projected growth will occur in emerging economies that lack advanced energy-efficient building codes. However, there is enormous opportunity here as well: The adoption of efficiency codes for new buildings can help all economies, advanced and emerging; make buildings more energy efficient; spur demand for renewable sources of energy; and boost climate resilience by, for example, enabling buildings to better withstand heatwaves.²¹

An important piece of good news here is that local leaders tend to see decarbonization as a positive for their cities, rather than a negative. Decarbonization strategies in cities, if envisioned and implemented smartly, can enhance urban livability, address inequities for historically marginalized communities, reduce climate impacts, improve the local environment, and boost local economic competitiveness all at once. This positivity springs in large part from the pragmatism that abounds in cities. Cities are in constant flux as economic, demographic, environmental, technological, cultural, social, political, and other driving forces change in real time. To stay in office, mayors and city councils must competently anticipate and manage these forces.²²Increasingly, they seem to understand that the creation of a livable, healthy, safe, and sustainable environment buttresses their cities’ economic fortunes. They understand that the global competition for talent requires that their cities offer, all at once, a high quality of life, a clean environment, economic opportunity, and inclusive and competent governance.

In cities, these things are always linked because cities—as Glaeser has written—are where everything happens in one physical place. There is simply no way for local officials to avoid having to manage all these items at the same time. Hence cities are laboratories of policy experimentation, where bold initiatives can be trialed and then adopted, refined, or discarded.

The policymaking behind bus lanes and better building codes

Policy experimentation is commonplace in the world’s cities. In Valencia, Spain, the city government has built a decarbonization agenda around four pillars—energy efficiency, renewable energy, green infrastructure, and sustainable mobility. In each of these areas, Valencia’s efforts have focused on reducing carbon emissions while increasing the city’s livability and economic viability, a trifecta that city leaders insist is the right way to look at the decarbonization problem.²³ While Valencia has been working to reduce emissions, in October 2024 it fell victim to climate-driven disaster. Extreme rainfall generated unprecedented flooding in the city, demolishing parts of it and costing hundreds of lives. The event speaks to the need to build greater urban disaster resilience including through nature-based solutions.²⁴ In Rotterdam, Europe’s busiest port city, energy and shipping companies, local politicians, academics, architects and city planners, and civil society leaders generated the 2019 Rotterdam Climate Agreement, which sought to reduce greenhouse gas emissions by nearly 50 percent by 2030 through a three-pronged strategy: energy efficiency, low-carbon energy generation, and sustainable transportation.²⁵ Six years on, the latest data available from the Port of Rotterdam and surrounding industrial area showed a faster-than-projected drop in greenhouse gas emissions.

In January 2024, New York City began implementing a long-awaited building performance standard, Local Law 97, which requires owners to retrofit their buildings to reduce carbon emissions (buildings generate about two-thirds of New York City’s greenhouse gas emissions).²⁶New York’s regulation, viewed as one of the earliest and most important in the world, was well ahead of the federal government’s policymaking curve.²⁷ This phenomenon is not unusual. A 2022 survey conducted by the Organisation for Economic Co-operation and Development found that 88 percent of cities and regions required higher energy standards in buildings than did their national governments.²⁸

Cities are also banding together. For example, mayors and city councils in Mexico City, Medellín, Rio de Janeiro, Curitiba, San Salvador, São Paulo, and elsewhere in Latin America have been experimenting with a variety of efforts aimed at decarbonization and environmental protection, in some cases for many years, and have been working together in city-based coalitions to engage on these issues.²⁹

A few of these Latin American cities long have been acknowledged as world leaders—Curitiba, Brazil, for instance, is regarded as one of the world’s most sustainable cities. Starting under the visionary guidance of legendary mayor Jaime Lerner, Curitiba in the 1970s began innovative and highly successful programs focused on green space, environmental education, recycling, and transportation. (Lerner once enlisted hundreds of children to sit upon and paint a newly opened pedestrian street, thereby preventing a motorists’ protest that was planned for the same time on the same street; his creative intervention allowed the people-friendly innovation to survive.)³⁰ Curitiba’s most famous innovation, bus rapid transit, privileged mass transit over cars on the city’s streets and became a model for city planners around the world.³¹

For cities to maximize their individual and collective decarbonization efforts, local and national climate policies should match in a mutually reinforcing cycle. National governments have a critical, even foundational, role to play, through setting performance floors and providing much-needed funding to support local investments of all kinds, including but not limited to infrastructural investments. It is critical that national governments also encourage state and local governments to experiment with their own solutions, as with New York’s Local Law 97.

Synergies between local and national authority are not a given, however. California, for example, long has been empowered under federal Clean Air Act requirements to set its own more stringent automobile emissions standards. Owing to California’s massive consumer market, historically the state’s adoption of stricter emissions standards has driven automobile manufacturers to comply with these tighter standards—an example of a subnational standard leading to national-level improvements the national government might not have been able to achieve on its own.³²Yet the so-called California waiver under the Clean Air Act might be coming to an end. The Trump administration is suing the state of California to end its implementation of more stringent emissions requirements under the waiver.³³

Decarbonization policies are often controversial when they are first proposed and implemented, as New York’s building performance standard has been. This political fact requires city leaders to design inclusive processes that incorporate the views of residents. Attempts to do otherwise will fail on political grounds. Cleveland, for example, has spent years building the groundwork for a broad-based decarbonization strategy that is inclusive of historically marginalized perspectives—the city residents whose neighborhoods were divided by highway construction or lost jobs when factories closed or who live too far from bike lanes or bus stops to benefit from those investments. In conversation, Cleveland’s stakeholders stress that such efforts are difficult and time consuming, yet ultimately rewarding.³⁴When citizens and key stakeholders are systematically consulted, as they have been in Cleveland, Valencia, Rotterdam, and many other places, cities can enjoy sustained progress around a coherent decarbonization agenda.

Children take part in a 2022 workshop in Paris to teach children to bike safely and independently. The workshops are part of the city’s Plan Vélo launched in 2015 with a goal of making the entire city bikeable by 2026. Bicycle use in Paris rose by 54 percent in a single year during the plan’s first phase. Xose Bouzas / Hans Lucas via Reuters Connect

As nations stall, cities band together

Cities and intercity networks form a parallel global governance architecture, a counterweight to an unreliable international system. Cities therefore constitute a steady presence on the global landscape, a cooperative constant within an international system that is becoming less so. National governments, international institutions, and foreign and security policy communities alike should regard cities and the people who run them—city governments and local stakeholders—as allies in the fight against all manner of international challenges, climate change first among them. Cities bring unique strengths, including creativity, innovativeness, global outlook, and flexibility, to the table in finding positive-sum solutions to concrete problems.

Cities are far from parochial actors focused only on their own issues: Transnational cooperation is a hallmark of urban governance, especially for the world’s largest cities such as New York or Tokyo (but also for many of its smaller ones).³⁵ Cities do not exist in a state of geopolitical competition as do nation-states. China and the United States both have an interest in slowing climate change, but their on-again, off-again bilateral climate diplomacy has been hampered by geopolitical suspicion.³⁶ City governments are freed from existential worry about geopolitical power, allowing them to devote their efforts to pragmatic and cooperative problem-solving across national borders. (Geopolitics does have a hand here, if indirectly. China’s rapid growth to global power starting in the early 1980s was centered on its cities. Now China, in a bid to augment its power via the Belt and Road Initiative, is pouring huge sums into transforming cities from Asia to Europe to Africa.)³⁷

Over the past several decades, local governments have formed numerous city associations dedicated to tackling climate change and other problems at the global level. These include C40 Cities, United Cities and Local Governments, ICLEI–Local Governments for Sustainability, Metropolis, the Global Covenant of Mayors for Climate and Energy, and the Resilient Cities Network.³⁸ These networked associations share best practices, build interurban solidarity, and augment cities’ collective impact within global climate negotiations. For example, two organizations, the Global Taskforce of Local and Regional Governments and the Local Governments and Municipal Authorities Constituency, formally represent subnational governments within the UN system, including at the UN’s annual climate summits.³⁹

The upshot is that cities and their associations are not vassals but agents in world affairs. As Simon Curtis, a scholar of intercity diplomacy, has written, “Nation-states need quickly to realize the potential of global cities and take steps to empower them to meet the global challenges of the twenty-first century … [by allowing them] more fiscal autonomy and [giving] them a louder, more influential voice in the deliberations of international organizations.”⁴⁰ And individual cities and city networks (along with supportive institutions such as philanthropies) should continue to deepen and expand their cooperative decarbonization efforts.

Channeling Guterres, the climate problem is an urban one. Cities are at the heart of the global economy and therefore at the center of both the problem of climate change as well as its solution. If the world’s cities can be decarbonized, they will deliver what they are supposed to deliver—prosperity and a high quality of life to billions of people—at low ecological cost.

Cities around the world have proven their willingness to innovate in pursuit of these goals. Whether national governments will support their efforts remains an open question—and one on which the planet’s future may hinge.

About the author

Peter Engelke is a senior fellow at the Atlantic Council’s Scowcroft Center for Strategy and Security and its Global Energy Center. He is on the adjunct faculty at Georgetown University’s School of Continuing Studies and is a frequent lecturer to the US Department of State’s Foreign Service Institute. He was previously a member of the World Economic Forum’s Global Future Council on Complex Risks, an executive-in-residence at the Geneva Centre for Security Policy, a Bosch fellow with the Robert Bosch Foundation, and a visiting fellow at the Stimson Center.

Articulated buses pull into a terminal in Curitiba, Brazil. Curitiba pioneered bus rapid transit in the 1970s with dedicated bus lanes and protected bus shelters—creating a mass-transit system that reduces car use for much less money than building a new subway or light rail would cost. Video by bydronevideos/Storyblocks

1 Data from Empowering Cities for a Net Zero Future, International Energy Agency, 2021, https://www.iea.org/reports/empowering-cities-for-a-net-zero-future, 12.

2 Guterres said this in a 2019 speech. See UN Climate Change News, “Guterres: ‘Cities Are Where the Climate Battle Will Largely Be Won or Lost,’” United Nations Climate Change, October 11, 2019, https://unfccc.int/news/guterres-cities-are-where-the-climate-battle-will-largely-be-won-or-lost.

3 Lindsay Maizland, “Global Climate Agreements: Successes and Failures,” Council on Foreign Relations, December 5, 2023, https://www.cfr.org/backgrounder/paris-global-climate-change-agreements. The Paris Agreement lists two targets, 1.5 and 2 degrees Celsius, where countries should “pursue efforts” to limit warming below the former to keep temperatures “well below” the latter. The 1.5-degree-Celsius threshold is used here because scientists then (and now) assert that breaching that threshold likely will result in extreme Earth system consequences. For a short review, see Esme Stallard, “What Is the Paris Climate Agreement and Why Does 1.5C Matter?” BBC News, February 8, 2024, https://www.bbc.com/news/science-environment-35073297.

4 Kirsty McCabe, “World Exceeds 1.5°C Threshold for Entire Year for the First Time,” Met Matters, January 10, 2025, https://www.rmets.org/metmatters/world-exceeds-15degc-threshold-entire-year-first-time.

5 See, e.g., Simon Evans and Verner Viisainen, “Analysis: Trump Election Win Could Add 4bn Tonnes to US Emissions by 2030,” Carbon Brief, March 6, 2024, https://www.carbonbrief.org/analysis-trump-election-win-could-add-4bn-tonnes-to-us-emissions-by-2030/.

6 Edward Glaeser, Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier (New York: Penguin, 2011).

7 United Nations, Department of Economic and Social Affairs, Population Division, World Urbanization Prospects 2018 Highlights, 2018, https://population.un.org/wup/Publications/Files/WUP2018-Highlights.pdf, fig. 3, p. 8.

8 The Mesopotamian settlements of Uruk and Tell Brak might have been the world’s first cities, settled between the sixth and fourth millennia B.C., although some archaeologists argue that the first cities emerged even earlier, in present-day Israel and Turkey. See Bridget Alex, “Which Ancient City Is Considered the Oldest in the World?” Discover Magazine, August 28, 2020, https://www.discovermagazine.com/planet-earth/which-ancient-city-is-considered-the-oldest-in-the-world.

9 Although an oversimplification, the argument is that cities “pull” workers off the land, as people see brighter futures for themselves and their families in them. Frequently, rural economies also “push” workers toward cities, as on-farm mechanization reduces the demand for farm labor (a process linked to industrialization). See Remi Jedwab, Luc Christiaensen, and Marina Gindelsky, “Demography, Urbanization and Development: Rural Push, Urban Pull and … Urban Push?” Journal of Urban Economics 98 (March 2017): 6-16, https://doi.org/10.1016/j.jue.2015.09.002.

10 See J.R. McNeill and Peter Engelke, The Great Acceleration: An Environmental History of the Anthropocene since 1945 (Cambridge: Harvard University Press, 2016), ch. 3. On James Watt and Matthew Boulton, inventors of the first practical steam engine that enabled the first Industrial Revolution, see “James Watt, Scottish inventor,” Britannica, February 23, 2024, https://www.britannica.com/biography/James-Watt.

11 “Urban population” and “Urban population (% of total population),” World Bank Open Data, n.d., https://data.worldbank.org, accessed July 2024. The UN’s Population Division aggregates data from UN member states that define the term “urban” differently. “Urban” therefore includes central cities, suburbs, exurbs, and towns. The underlying point about rising urbanization globally remains sound and is supported by myriad data streams collected by numerous institutions around the world, the UN included. See UN Department of Economic and Social Affairs, “Frequently Asked Questions,”World Urbanization Prospects 2018, n.d., https://population.un.org/wup/General/FAQs.aspx, accessed July 2024.

12 Hannah Ritchie, Veronika Samborska, and Max Roser, “Urbanization,” Our World in Data, February 2024, https://ourworldindata.org/urbanization.

13 For a short primer on the 1.5-degree-Celsius benchmark goal, see Jennifer Chu, “Explained: The 1.5 C Climate Benchmark,” MIT News, August 27, 2023, https://news.mit.edu/2023/explained-climate-benchmark-rising-temperatures-0827. For an assertion of the importance of cities in limiting such warming, see H. de Coninck et al., “Strengthening and Implementing the Global Response,” in Global Warming of 1.5°C: An IPCC Special Report on the Impacts of Global Warming of 1.5°C above Pre-industrial Levels and Related Global Greenhouse Gas Emission Pathways, in the Context of Strengthening the Global Response to the Threat of Climate Change, Sustainable Development, and Efforts to Eradicate Poverty, edited by V. Masson-Delmotte et al. (Cambridge and New York: Cambridge University Press, 2018), doi:10.1017/9781009157940.006, 313-444.

14 Samantha Linton, Amelia Clarke, and Laura Tozer, “Technical Pathways to Deep Decarbonization in Cities: Eight Best Practice Case Studies of Transformational Climate Mitigation,” Energy Research & Social Science 86 (April 2022), https://doi.org/10.1016/j.erss.2021.102422.

15 “Japan—Tokyo Cap-and-Trade Program,” International Carbon Action Partnership, n.d., https://icapcarbonaction.com/en/ets/japan-tokyo-cap-and-trade-program, accessed July 2024.

16 “Un nouveau plan vélo pour une ville 100% cyclable,” City of Paris, March 28, 2024, https://www.paris.fr/pages/un-nouveau-plan-velo-pour-une-ville-100-cyclable-19554.

17 Ruth Arteaga, “Cape Town Turns Landfill Waste into Energy Gold,” Inspenet, May 1, 2024,https://inspenet.com/en/noticias/convert-landfill-waste-into-energy/; Renewables in Cities: 2021 Global Status Report: Case Studies (REN21, 2021), https://www.ren21.net/wp-content/uploads/2019/05/REC_2021_case-studies_en.pdf.

18 “Power Melbourne,” City of Melbourne, n.d., https://www.melbourne.vic.gov.au/about-melbourne/sustainability/power-melbourne/Pages/power-melbourne.aspx, accessed July 2024; “New Partnership to Ignite Power Melbourne,” Mirage News, January 30, 2024, https://www.miragenews.com/new-partnership-to-ignite-power-melbourne-1163253/.

19 Alcaldía de Medellín: Growing a Cooler City,” Ashden, n.d., https://ashden.org/awards/winners/alcaldia-de-medellin/, accessed July 2024.

20 Climate Action Pathway: Human Settlements: Executive Summary (Bonn: United Nations Climate Change, 2020), https://unfccc.int/sites/default/files/resource/ExecSumm_HS_0.pdf, 3.

21 Beyond Foundations: Mainstreaming Sustainable Solutions to Cut Emissions from the Buildings Sector, United Nations Environment Programme, 2024, https://doi.org/10.59117/20.500.11822/45095, 26-36.

22 These are core arguments advanced in Benjamin Barber, If Mayors Ruled the World: Dysfunctional Nations, Rising Cities (New Haven: Yale University Press, 2013).

23 See Peter Engelke and Joseph Webster, “Valencia, Spain: Decarbonization through Innovative Partnerships,” Atlantic Council, March 22, 2023, https://www.atlanticcouncil.org/in-depth-research-reports/issue-brief/valencia-spain-decarbonization-through-innovative-partnerships/.

24 Francisco Garcia Sanchez and Dhanapal Govindarajulu, “Valencia Floods Showed Why Coastal Cities Should Restore Their Wetlands,” The Conversation, December 19, 2024, https://theconversation.com/valencia-floods-showed-why-coastal-cities-should-restore-their-wetlands-245621; Ashifa Kassam and Faisal Ali, “Why Were the Floods in Spain So Bad? A Visual Guide,” The Guardian, November 1, 2024, https://www.theguardian.com/world/2024/oct/31/why-were-the-floods-in-spain-so-bad-a-visual-guide.

25 See Peter Engelke and Joseph Webster, “Rotterdam, Netherlands: An Integrated Approach to Decarbonization,” Atlantic Council, March 22, 2023, https://www.atlanticcouncil.org/in-depth-research-reports/issue-brief/rotterdam-netherlands-an-integrated-approach-to-decarbonization/.

26 Jennifer A. Kingson, “New York Jump-Starts the ‘Building Decarbonization’ Trend,” Axios, January 9, 2024, https://www.axios.com/2024/01/09/building-decarbonization-local-law-97-new-york-climate-change. See also “What Is Local Law 97?” Urban Green, February 2023, https://www.urbangreencouncil.org/what-we-do/driving-innovative-policy/ll97/.

27 The Biden administration created a National Building Performance Standards Coalition dedicated to highlighting this policy arena. State and local governments comprise the coalition’s membership and are driving its policy agenda. See the coalition’s website at https://nationalbpscoalition.org.

28 As cited in Global Monitoring of Policies for Decarbonising Buildings: Multi-level approach. Policy Highlights, OECD, 2024, https://www.oecd.org/cfe/cities/OECD_Global_Monitoring_of_Policies_for_Decarbonising_Buildings_Multilevel_Approach_2024.pdf, 12.

29 A summary of such efforts can be found in Robert Muggah and Mac Margolis, “Overheating Megacities Are a Climate Problem and Solution: A Latin America Case Study,” World Economic Forum, August 31, 2022, https://www.weforum.org/agenda/2022/08/overheating-megacities-climate-problem-best-solutions/.

30 Mike Power, “Common Sense and the City: Jaime Lerner, Brazil’s Green Revolutionary,” The Guardian, November 5, 2009, https://www.theguardian.com/environment/blog/2009/nov/05/jaime-lerner-brazil-green.

31 For a short summary of Curitiba’s many innovations, see Andrew Krosofsky, “How Curitiba, Brazil Became One of the Most Sustainable Cities on Earth,” Green Matters, March 19, 2021, https://www.greenmatters.com/p/curitiba-sustainable.

32 The “California waiver,” as it is called, has been particularly controversial in recent American politics. For a review, see Jeremy Esterkin, Rick R. Rothman, and David K. Brown, “Environmental Protection Agency Reinstates California Emissions Waiver,” Morgan Lewis, March 9, 2022, https://www.morganlewis.com/pubs/2022/03/environmental-protection-agency-reinstates-california-emissions-waiver.

33 Jonathan Stempel and Bhargav Acharya, “US Sues California to Block Tough Emissions Standards for Trucks,” Reuters, August 15, 2025, https://www.reuters.com/legal/litigation/us-sues-california-block-tough-emissions-standards-trucks-2025-08-15/.

34 Peter Engelke, Joseph Webster, and Maia Sparkman, “Cleveland, Ohio: Promoting a Local and Just Energy Transition,” Atlantic Council, March 5, 2024, https://www.atlanticcouncil.org/in-depth-research-reports/issue-brief/cleveland-ohio-promoting-a-local-and-just-energy-transition/.

35 See, e.g., Barber, If Mayors Ruled the World.

36 For a summary of the November 2023 bilateral climate talks between the two nations’ climate envoys, John Kerry and Xie Zhenhua, see Zack Coleman and E&E News, “U.S. and China Reach New Climate Agreement,” Scientific American, November 15, 2023, https://www.scientificamerican.com/article/u-s-and-china-reach-new-climate-agreement/.

37 Simon Curtis and Ian Klaus, “China’s Path to Power Runs through the World’s Cities,” Foreign Affairs, November 27, 2023, https://www.foreignaffairs.com/china/chinas-path-power-runs-through-worlds-cities.

38 For more about these associations, visit their websites: C40 Cities at https://c40.org; United Cities and Local Governments at https://uclg.org; ICLEI–Local Governments for Sustainability at https://iclei.org; Metropolis at https://metropolis.org; Global Covenant of Mayors for Climate and Energy at https://www.globalcovenantofmayors.org; and Resilient Cities Network at https://resilientcitiesnetwork.org. Many of these are based in Europe, including Eurocities (https://eurocities.eu), NetZeroCities (https://netzerocities.eu), and the Climate Alliance (https://climatealliance.org)

39 For these two institutions, see https://www.global-taskforce.org/about-us and https://www.cities-and-regions.org/about-the-lgma/.

40 Simon Curtis, “Global Cities in the International System: A New Era of Governance,” Chicago Council on Global Affairs, November 28, 2018, https://globalaffairs.org/commentary-and-analysis/blogs/global-cities-international-system-new-era-governance.

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Dispatch from COP30: In the Brazilian jungle, the private sector takes center stage

Jorge Gastelumendi — Thu, 20 Nov 2025 19:52:05 +0000

BELÉM, Brazil—As the 2025 United Nations Climate Change Conference (COP30) comes to a close, the weather here has been mixed, with intermittent storm clouds followed by periods of sun. Fittingly, the varying weather matches the mood among many COP30 participants in the Blue Zone, where the negotiations happen and where our Center’s Resilience Hub is located.

On the one hand, voices of doubt are rising from some negotiating groups on the ability of the Brazilian presidency and the multilateral process to deliver an ambitious package of decisions that deliver real impact, particularly on finance for adaptation for the least developed countries and small island states. But on the other hand, it is heartening that the heat and humidity of the Amazon have not slowed momentum on elevating the importance of adaptation, resilience, and the role of private finance. Holding this COP in the Amazon rainforest has sharpened the focus for many stakeholders, serving as a powerful reminder that strengthening climate adaptation will require forward-looking climate finance that includes private sector investment.

The private sector—particularly insurers, banks, asset managers, and other financial institutions—has the analytics, risk expertise, and growing appetite to engage in adaptation and resilience finance. And they are ready to work on devising the right investment vehicles to channel that much-needed finance. What they need now are strong policy signals, stable regulatory environments, and practical mechanisms from governments that can connect capital to projects.

Throughout COP30, there has been a recognition that the public and private sectors cannot act alone when it comes to climate finance.

One of the most notable developments at this year’s COP was the announcement of the National Adaptation Plans (NAP) Implementation Alliance. Led by the governments of Germany, Italy, and Brazil, as well as the United Nations Development Programme, with the support of the Atlantic Council’s Climate Resilience Center, this initiative aims to improve coherence in the complex ecosystem of financing for NAPs. Streamlining NAP financing will be critical to enable the flow of more public and private resources for climate adaptation and resilience. Over the next year, this initiative will bring together representatives from the private financial sector, multilateral development banks, civil society organizations, the public sector, and other stakeholders to find ways to improve collective action to support the implementation of NAPs.

For the private sector, this means greater visibility into future projects and greater confidence in the investment environment. For governments, it means being better equipped to design projects that meet investor expectations while delivering local resilience benefits.

The Atlantic Council’s Climate Resilience Center, along with the Natural Resources Defense Council (NRDC), will play a vital role in the alliance through Fostering Investable National Planning and Implementation for Adaptation & Resilience (FINI). Announced at a high-level session during the first week of COP30 with representatives of the governments of Australia and Switzerland, FINI is mobilizing more than one hundred actors from civil society, multilateral entities, philanthropy, and the private sector that are already advancing adaptation investments around the world.

Another remarkable development at COP30 was the announcement that fifty-three countries have committed a combined $5.5 billion to the Tropical Forest Forever Facility (TFFF). The TFFF incentivizes the conservation and expansion of tropical forests by making annual payments to tropical forest countries that maintain their standing forest. The initiative is especially notable within the climate community because of its proposed hybrid financing model. The TFFF will mix sovereign and philanthropic funding to de-risk investments on forest conservation, regenerative agriculture, and agroforestry that sustain standing forests. This, in turn, will help attract commercial capital toward these activities.

Throughout COP30, there has been a recognition that the public and private sectors cannot act alone when it comes to climate finance. The announcements and initiatives that have been launched so far at this year’s summit reflected a broad shift: the conversation is no longer about whether private finance should engage in adaptation and resilience, but how quickly financial ecosystems and policy frameworks can be aligned to deliver project pipelines to respond at the scale and speed that climate change requires.

Jorge Gastelumendi is the senior director of the Atlantic Council’s Climate Resilience Center. He formerly served as chief advisor and negotiator to the government of Peru, playing a critical role during the adoption of the Paris Agreement in the government’s dual role as president of COP20 and co-chair of the Green Climate Fund’s board.

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Carbon markets and climate finance for Ukraine’s recovery

Ievgeniia Kopytsia and Darka Harnyk — Wed, 19 Nov 2025 21:45:00 +0000

Bottom lines up front

Amid full-scale war, Ukraine is emerging as a laboratory for innovative finance, testing climate finance solutions—such as Article 6 of the Paris Agreement—as a way to channel finance directly into reconstruction projects.
A proposed “solidarity credits” framework, using the funding pool of a Green Recovery Fund and supported by a first-loss guarantee facility, could de-risk private investment and unlock concessional finance for Ukraine’s recovery.
By linking carbon integrity with human security, Ukraine can show how carbon markets can drive resilient development in fragile or transitioning economies, from solar roofs on hospitals to reforestation, setting a model for countries aligning climate action with security and inclusive growth.

As COP30 convenes in Belém, the first UN Climate Conference hosted in the Amazon and a symbolic turning point for global climate solidarity, the question before negotiators is not only how to scale climate ambition, but how to ensure it delivers on Nationally Determined Contributions (NDCs) finance for countries’ sustainable economic development. Ukraine’s recovery stands as one of the clearest tests of whether climate finance can function under conditions of war. Article 6, finalized last year in Baku, now enters its implementation phase; Ukraine’s experience could define how these mechanisms evolve.

The challenge of financing reconstruction in Ukraine is massive. Russia’s full-scale invasion has inflicted more than $176 billion in direct damage and over $589 billion in economic losses across Ukraine, which is nearly three times the country’s pre-war gross domestic product (GDP). The destruction is systemic, with the metals sector reducing steel production by almost 71 percent after several leading plants were destroyed or occupied. Millions of acres of farmland are unusable due to occupation or contamination from over two million landmines, making it the most heavily mined country in the world. Natural reserves such as Sviati Hory have lost thousands of hectares of forest and wetland ecosystems to fires and contamination. The energy sector ranks among the most heavily affected, with up to 93 percent of damaged or destroyed assets across power generation, transmission, and distribution infrastructure since the start of Russia’s full-scale invasion. As of December 2024, the sector’s recovery and modernization needs are estimated at $67.78 billion, including $53.7 billion to rebuild power generation on green transition principles aligned with EU climate and energy goals. The Ukrainian regions facing the highest reconstruction needs—Zaporizhzhia, Kharkiv, Dnipropetrovsk, Donetsk, Odesa, and Sumy oblasts—are industrial hubs and front-line territories.

Despite the scale of destruction, Ukraine’s recovery offers an opportunity for transformation. The country can not only rebuild what was lost, but also redesign its economy and infrastructure on resilient, sustainable, and future-ready foundations. Guided by the Build Back Better principle, endorsed by President Volodymyr Zelenskyy and supported by international partners, Ukraine aims to reconstruct using higher-quality, advanced, and sustainable technologies, aligning recovery with the EU’s Green Transition and Digital Transformation agendas.

If realized, this vision could radically reshape Ukraine’s economic landscape by mid-century. The economic dividends would be substantial: lower import bills, improved trade balance, and thousands of skilled jobs in engineering, manufacturing, and local services. Breaking its historic dependence on imported fossil fuels, once 70 percent of Ukraine’s energy mix, Ukraine could become nearly self-sufficient in primary energy. New value chains in clean technologies, sustainable construction materials, and bio-based industries would drive regional growth and anchor long-term industrial modernization.

As Ukraine aligns its recovery strategy with the EU Green Deal, one of the most pressing challenges will be balancing industrial revival with the obligations stemming from the EU’s Carbon Border Adjustment Mechanism (CBAM). Exemption from CBAM may be politically feasible in the short term, but in the long run, Ukraine’s competitiveness will depend on achieving genuine emissions reductions across energy-intensive sectors. Carbon finance under Article 6 could be instrumental in this process—directing investment toward low-carbon steel, cement, and fertilizer production, speeding the transition away from coal and gas, and helping Ukraine move toward alignment with the EU’s carbon pricing and reporting systems.

Yet the challenge is immense. Achieving this transformation will require annual investment around $35 billion across energy, industry, transport, and buildings, including $11 billion each year in renewable generation and grid infrastructure. Ukraine’s $524 billion reconstruction need is therefore more than rebuilding physical assets; it is a test of financial credibility, investor confidence, and political will. In defending Ukraine against Russia’s unlawful aggression—a threat not only to Ukrainian sovereignty but to the shared interests and security of its allies—Western countries have already demonstrated significant political will, mobilizing over $454 billion in military, financial, and humanitarian aid since 2022. The same resolve now needs to power a new framework for climate-aligned reconstruction, where solidarity is measured not just in aid, but in investment, innovation, and shared security.

The scale of Ukraine’s reconstruction is daunting, yet existing international frameworks currently being discussed at COP30 could potentially help mobilize the necessary capital. Can COP leaders leverage the framework of Article 6 of the Paris Agreement to bring reconstruction finance to Ukraine?

Article 6 as a bridge to climate, development, and green recovery finance

Article 6 of the Paris Agreement enables the trade of emission reductions and removals units as “internationally transferred mitigation outcomes” (ITMOs)—equal to 1 ton of CO₂ counted toward the country’s climate targets. In practice, a government or company can fund verified climate action abroad, and count the resulting emissions reduction toward its own NDC, or use them for corporate or investment needs.

If implemented at scale, Article 6 can become a channel for financing Ukraine’s reconstruction and green transition. Reimagined as a mechanism for countries to further demonstrate their unwavering support for Ukraine, Article 6 ITMOs could be redefined as “solidarity credits,” verified units of climate finance directed to Ukraine’s reconstruction. These credits would support grid restoration, renewable-energy deployment, and institutional capacity building, while following Article 6’s framework and maintaining its integrity and transparency requirements.The governments of the United Kingdom, the EU, and Ukraine could take the lead in testing this approach through bilateral agreements under Article 6. The initiative would pilot a new class of “solidarity credits” that uphold Article 6’s integrity rules while extending its application to post-conflict reconstruction. These credits would enable partner countries to channel verifiable climate finance (or results-based finance) into Ukraine’s recovery, supporting projects such as clean energy. Then, the supporting government could either claim these credits or let the private sector buy or invest in them, thus providing climate finance and advancing global decarbonization goals. Because these are authorized under the Paris Agreement, there is no risk of double-counting. Companies can retire these ITMO units to support high-integrity corporate climate claims, bolstering their climate accountability and transition plans while channeling capital into Ukraine’s recovery.

Current endeavors

Last year’s package agreed at COP29 in Baku effectively finalized the core rulebook for Article 6. In practice, this means that the Paris Agreement architecture for issuing and trading ITMOS under Article 6.2 and under Article 6.4 is now sufficiently clear for countries to move from design to delivery. Early movers, including Switzerland, Honduras, Suriname and Japan, have begun translating these rules into real national programs and project transactions, showing what the Article 6 implementation actually looks like.

That shift, however, has also underscored how complex and demanding Article 6 is to implement effectively. The framework builds on the Kyoto Protocol’s clean development and joint implementation mechanisms, retaining their focus on transparent governance, environmental integrity, and contributions to sustainable development while introducing stricter safeguards and transparency, and stronger alignment with national climate targets. Implementing this framework requires robust national systems, including clear authorization procedures, reliable monitoring, reporting and verification, and registries capable of tracking units from issuance to final use. Many countries are now developing and implementing these systems, and while progress is evident, it remains uneven across jurisdictions.

For the moment, international transfers of ITMOs remain modest in volume, but some countries, such as Honduras and Suriname have signed MoUs to trade large volumes with large banks and companies. Limited adoption is not a failure of the concept so much as a reflection of both the infancy of this new market and the work needed to align domestic institutions, data systems, and project pipelines with these new Article 6 rules and regulations. As more countries complete those building blocks and capital liquidity enters this market, a steady scale-up is inevitable.

Designing a new financial architecture

Implementing Article 6 to enable Ukraine’s reconstruction will be a test of financial ingenuity, with clear policy signals, proving that climate finance can operate even under extreme conditions of risk and instability, such as war.

The framework suggested by the Oxford Roadmap to Net-Zero Aligned Carbon Market Regulation, which is widely referenced as setting a gold-standard approach in carbon finance investment-grade, defines six pillars: efficient financing, net-zero alignment, ecosystem integrity, equitable outcomes, enforcement, and usability. These principles can support a de-risked Article 6 architecture, one that embeds high-integrity standards within Ukraine’s reconstruction finance. Applied to Ukraine, they suggest a model where carbon revenues complement grants and concessional lending. Even a modest stream of credits could channel between $2 billion and $3 billion annually into verified renewable and grid-resilience projects, roughly 5 percent of Ukraine’s annual recovery needs.

Translating these principles into practice requires a concrete governance model. Integrity and traceability are the bridge between abstract standards and operational finance. Each Article 6 credit should therefore carry verifiable metadata—satellite monitoring, reporting, and verification; third-party audits; and tangible co-benefits such as megawatts restored, hospitals powered, jobs created, or tons of diesel displaced.

Why now?

The UK and EU are uniquely positioned to partner with Ukraine on carbon finance. London retains diplomatic credibility on climate policy and has been among Ukraine’s staunchest allies since 2022. Its management of the International Climate Finance (ICF) portfolio and commitment to high-integrity carbon markets form a solid foundation, reinforced by the 2025 UK–Ukraine 100-Year Partnership Memorandum.

The EU, on November 5, 2025, approved a 90 percent emissions reduction target for 2040, allowing member states to use Article 6 international carbon credits for up to 5 percent of their emissions. This would allow and incentivize any EU member countries, companies, and investors to invest in Ukraine and use those Article 6 carbon credits for their emissions reduction purposes.

On October 29, 2025, the second NDC of Ukraine to the Paris Agreement was approved by resolution of the Cabinet of Ministers of Ukraine and published on the UNFCCC website during COP30. This sends a strong political signal and shows a clear determination by Ukraine to grow its economy sustainably. Ukraine aims to reduce its greenhouse gas emissions in 2035 by more than 65 percent from 1990 levels. Furthermore, Ukraine intends to continue participating in market mechanisms under Article 6 of the Paris Agreement as a party on whose territory projects under Article 6 of the Paris Agreement are implemented.

By participating in cooperative approaches, under Article 6, Ukraine will comply with the rules and guidelines in accordance with the decisions of the Paris Agreement to ensure proper accounting, environmental integrity, transparency, and avoidance of double counting.

A proposed bilateral Article 6 framework could consist of three pillars:

Solidarity credits: The UK and the EU would contribute approximately £200 million ($263.4 million) to a Ukraine Green Recovery Fund. This fund would finance projects such as grid reconstruction, solar energy initiatives, and energy efficiency upgrades. The resulting ITMOs would be transferred to the UK but explicitly not used to meet its NDCs. Instead, they would function as either “solidarity credits,” or sold to businesses and the capital markets, thus strengthening business cooperation and bringing symbolic political value.
Guarantee facility for risk mitigation: Utilizing UK-backed concessional finance, a first-loss guarantee facility would reduce investment risk for private developers. This guarantee would cover partial losses if a project is destroyed or interrupted by conflict, thereby lowering Ukraine’s perceived country risk.
Pilot “green corridors” with transparent monitoring, reporting, and verification. Two to three green corridors, for example, around Kyiv, Vinnytsia, and Dnipro, could serve as regional reconstruction zones integrating distributed renewable energy and upgraded transmission infrastructure within international carbon-market frameworks, including the Paris Agreement Crediting Mechanisms.

For quick and lasting impact, Ukraine should prioritize projects where carbon finance meets human security:

Distributed renewables on schools, hospitals, and administrative buildings—Ukraine’s rooftop photovoltaic potential exceeds 238.8 gigawatts, alongside distributed storage. Ukrainian firms such as KNESS have already deployed over 100 megawatt-hour of battery ca pacity. For example, retrofitting municipal hospitals in Chernihiv oblast with rooftop solar systems could unlock concessional financing backed by a UK guarantee covering 20 percent of potential losses, thereby reducing the cost of capital from 12 percent to 7 percent.
Energy-efficiency retrofits could cut heating demand by 50 percent and 60 percent since almost 80 percent of the housing stock in Ukraine is considered energy inefficient, with the bulk constructed between the 1960s and 1980s.
Circular-economy and low-carbon materials for reconstruction can cut emissions and reduce import dependency. Ukraine’s biomethane potential, estimated at 9.7 billion cubic meters annually, offers a strategic opportunity to replace fossil natural gas in heating, industry, and transport.
Nature-based solutions should be a priority in both ecological and urban recovery. With more than ten million hectares of degraded land, Ukraine could pilot high-integrity restoration projects under Article 5—from reforestation to green urban renewal in heavily affected cities such as Chernihiv and Mykolaiv.

These activities would diversify Ukraine’s mitigation portfolio and embed climate resilience in its recovery model.

Restoring trust through carbon finance cooperation

By linking emission reductions and removals to real reconstruction outcomes, Ukraine can turn climate cooperation into a driver of national renewal, and the COP process can become the beginning of this road for Ukraine. A transparent, high-integrity carbon market would show that climate action can restore energy generation capacities, reforest bombed landscapes, and reconnect communities.

In this sense, Ukraine’s carbon market could become a prototype for conflict-affected economies worldwide, where climate policy and recovery policy converge, and where the currency of carbon is measured not only in tons of CO₂ but in megawatts restored, hectares rehabilitated, and lives rebuilt.

about the authors

Ievgeniia Kopytsia is a legal scholar and policy expert with more than ten years of experience advancing climate and environmental governance across Ukraine, the EU, and international institutions. She specializes in climate and energy law, post-conflict reconstruction, and the legal alignment of Ukraine with European and global standards for a green transition. As a national legal expert, Kopytsia has provided legislative assessments, policy advice, and project leadership on the implementation of environmental and climate laws, including supporting Ukraine’s climate policy reforms and green recovery initiatives. She is a frequent contributor to international conferences and working groups, focusing on the intersection of environmental law, conflict resilience, and sustainable development within the Euro-Atlantic community.

Darka Harnyk is the director of the Energy Security Marshall Plan for Ukraine at EOPA, where she works with Ukraine’s Ministry of Economy, Ministry of Environment, and international partners to develop financing mechanisms for post-war green reconstruction. Her work focuses on Article 6 climate cooperation, war-risk de-risking, and critical raw materials. Before transitioning into reconstruction and climate finance, Harnyk worked in the tech sector at Unity Technologies and later earned a degree in environmental science and policy from Columbia University.

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