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Ukraine’s recent attacks on Baltic Sea oil terminals are part of a strategic bombing campaign to weaken Putin’s war machine by targeting the ports, refineries, and associated infrastructure that drive Russia’s economically crucial energy industry. This has been made possible thanks to Kyiv’s decision during the initial phase of Russia’s invasion to prioritize the development of domestically produced long-range strike drones and cruise missiles. As more drones and missiles become available, the scale of Ukraine’s strikes is steadily increasing.

Zelenskyy has repeatedly emphasized that Ukraine’s expanding long-range strike capability is critical for the current war effort and equally important as a deterrent against future Russian aggression. While long-range weapons provided by Kyiv’s partners often come with limitations on how they can be deployed, there are no such restrictions on the use of domestically produced drones and missiles.

Kremlin officials have certainly noticed Kyiv’s growing reach. In recent weeks, former Russian defense minister and current Security Council secretary Sergei Shoigu warned that Ukraine’s domestic drone program had now advanced to the point where no Russian region is safe from attack.

Ukraine’s ability to conduct large-scale airstrikes deep inside Russian territory has sparked vocal criticism from within Russia’s influential war blogger community, while also generating widespread concerns over the effectiveness of the country’s anti-drone defenses. Many have questioned how slow-moving drones could pass through multiple Russian regions to hit targets often located more than one thousand kilometers from the Ukrainian border.

In fact, the stage for Ukraine’s recent successes was set by efforts to methodically eliminate Russian air defenses and create corridors for long-range strikes. This approach looks set to continue. With much of the Kremlin’s existing air defense capacity already deployed along the front lines in Ukraine or being used to protect major Russian cities along with the palaces of Putin and his cronies, there is now thought to be little left in reserve to counter the growing Ukrainian drone threat.

The scale and frequency of Ukrainian strikes on oil and gas infrastructure will likely continue to increase in the coming months as Kyiv seeks ways to bring Putin’s invasion home to Russia. The Ukrainian authorities are hoping these attacks can help bring the end of the war closer by depriving the Kremlin of vital funding and threatening the foundations of Russia’s economic stability.

So far, Putin has rejected calls for a compromise peace. However, he may finally be forced to rethink his invasion if confronted with the prospect of dangerous destabilization on the home front. The Kremlin dictator remains determined to achieve his goal of erasing Ukrainian statehood, but he is also haunted by fears of a new Russian collapse to mirror the catastrophes of 1917 and 1991.

David Kirichenko is an associate research fellow at the Henry Jackson Society.

At the surface level, renewed engagement seems to be driven by fears of European marginalization in emerging diplomatic formats, particularly as the United States has engaged in limited talks about Russia’s war in Ukraine, which have now been paused due to the war in Iran. Europeans do not want to wait for a seat at the table in these talks—especially regarding peace in Ukraine and any future security architecture for the continent.

At a deeper structural level, engagement returns precisely when high-end deterrence and defense posture becomes politically costly, and institutional enforcement weakens. Dialogue appears less disruptive than sustained military modernization, sanctions, and forward deployments. But it is also less pertinent.

Limited but persistent European calls to re-engage with Moscow do not amount to a coherent plan to restore stability. They are reactions to the breakdown of the rules-based order—and to Europe’s inherent uncertainty about how to respond. The core fallacy here lies in conflating the existence of the rules-based order with the institutions that once embodied it. When those rules are violated, the question is not how to preserve institutions as they are, but whether they must be reformed, redesigned, or, in some cases, abandoned altogether.

The failure of stand-alone multilateralism

For decades, Euro-Atlantic security rested on the implicit assumption that institutions themselves generate stability by establishing expectations and enforcing adherence to norms. Multilateral diplomacy presumes rational actors and assumes that repeated interaction will gradually encourage restraint. Authoritarian regimes, nevertheless, have repeatedly exploited this logic by using engagement to gain time, acquire undeserved legitimacy, and garner asymmetric advantage. When enforcement erodes, institutions tend to maintain themselves through inertia rather than effectiveness. Processes replace outcomes, and participation becomes an end rather than a means for something more valuable.

Simply being at the table does not produce peace. When detached from military instruments of power, engagement consumes time while aggressors build strength. The Organisation for Security and Co-operation in Europe (OSCE) provides a cautionary example. Rather than confronting Russia’s systematic violations, the organization has increasingly prioritized procedural continuity over substance. Russia and Belarus remain formally engaged while openly dismantling every foundational principle of the OSCE. The result is a structure without content—an institution unable to defend itself, trapped in outdated working methods, and unwilling to adapt to strategic reality.

Multilateralism that cannot enforce its own norms ceases to be a safeguard and becomes a liability. But if a full-scale war in Europe has not forced an institutional transformation, what will?

Why neither engagement nor Cold War nostalgia works

Engagement is often framed as the alternative to escalation. History suggests otherwise. The United States did not pacify Europe during the Cold War through talks. Rather, Washington’s containment strategy deterred the Kremlin from aggression against the United States’ European allies. Kennan’s concept rested on sustained counterpressure—political, economic, and military—designed to shape adversary behavior over time.

At the same time, a nostalgic return to Cold War models is neither possible nor desirable. The Cold War–era strategies of “forward defense” and “flexible response” entailed a permanent, large-scale US military engagement in Europe. The era of such US engagement in Europe is ending. Washington has been explicit about this for years: Europe must develop its own capabilities, capacity, and strategic will. NATO’s ongoing command reforms reflect this shift toward greater European responsibility. The Alliance has begun moving toward a new agenda centered on credible deterrence and defense, resilience, scaling up industrial production, and burden-sharing.

Uncoordinated European initiatives to restart dialogue with Moscow risk undercutting this trajectory by weakening NATO deterrence and defense posture before it is fully restored. The real danger lies in drifting into an incoherent middle ground—where deterrence is insufficient to constrain Russia and engagement without the strength to back it up is insufficient to stabilize Europe’s relations with Moscow.

Updated containment: A functional Euro-Atlantic approach

Containment does not lead to escalation. Rather, it is a stabilizing approach that ensures any dialogue takes place within the framework of credible defense. Similarly, escalation and escalation dominance are different concepts. NATO does not seek to escalate conflicts, but it must retain the capacity to respond from a position of strength if escalation occurs. Securing such escalation dominance requires clear red lines, credible capabilities, political will, and courage.

An updated containment strategy for European countries should rest on five pillars:

First, deterrence before dialogue. Credible military posture is not optional—it is the precondition for engagement. Without the ability to deny cost-free aggression, dialogue risks becoming a channel for delay, leverage, and asymmetry rather than a tool for stability.

Second, institutions are judged by function, not sentiment. Structures that cannot enforce norms must be reformed, bypassed, or replaced. Preserving institutional continuity in the absence of enforcement does not uphold order—it obscures its erosion and delays necessary adaptation.

Third, favor regional and functional formats. Where consensus-bound forums fail, coalitions, primarily regional ones, need to come to the fore. Smaller, purpose-driven groupings can act where unanimity-based institutions are blocked, restoring effectiveness without waiting for unreachable consensus.

Fourth, European ownership. Defense industrial mobilization, infrastructure hardening, and sustained support for Ukraine must become permanent features of European security.

Fifth, strategic coherence. NATO must seize escalation management—through large-scale multidomain exercises, robust responses to hybrid attacks, and the explicit recognition that legacy arrangements with Russia no longer apply. Maintaining escalation dominance will also require breaking a long-standing taboo and integrating conventional and nuclear planning.

An updated containment strategy will require closing sanctions loopholes, integrating civil-military logistics, and expanding defense production through state-backed investment. The Kremlin’s allies and enablers will need to be constrained across multiple regions—from the Indo-Pacific to the South Caucasus and Central Asia.

Europe’s renewed debate over engagement with Russia reflects a deeper reluctance to accept that the previous security order has already collapsed. Peace is preserved through strategic clarity, credible deterrence, and robust defense capabilities—not through nostalgia for processes that no longer deliver stability. Only a comprehensive policy grounded in strength, combined with a refusal to compromise on core principles, can alter Moscow’s calculus.

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Can Europe—finally—turn an energy shock into a path toward energy security?

Charles Hendry — Mon, 30 Mar 2026 19:00:00 +0000

When President Trump returned the bust of Sir Winston Churchill to the Oval Office, I hope he might also have spent some time reading up on some of his most memorable quotes.

Two seem particularly relevant at this time. Speaking of the consequences of starting a war, Churchill wrote: “once the signal is given, he is no longer the master of policy but the slave of unforeseeable and uncontrollable events.” And more than a century ago, regarding fuel for the navy, he said that energy security comes from “variety and variety alone.” Both remain very relevant today.

One of the principal roles of energy policy is to protect a country and its citizens from massive, external, and unpredictable shocks. Without security, energy won’t be affordable and it certainly won’t be clean either. And while there is a cost to energy security, it is nothing like the cost of insecurity.

The lessons of inaction

Europeans are learning, for the second time in five years, that we have allowed ourselves to be too dependent on vulnerable supply routes. Europe paid a very high price for its overreliance on Russian gas. The argument had been that Russian gas was cheaper, which helped drive European economies, especially in Germany. That held good—until it went catastrophically wrong.

Now the world is seeing the economic threat from the overreliance on oil, gas, and their associated products through the Strait of Hormuz. It wasn’t as though there were no warnings about the risk. Over the past two decades, Iran has repeatedly threatened to blockade the Strait. When it didn’t happen, policymakers breathed a sigh of relief and did nothing more to address the long-term vulnerability it posed.

In the past couple of decades, the world has faced many massive energy shocks. The Fukushima disaster, which forced the world to consider whether it could safely keep its nuclear power plants open. The Macondo disaster, which led to doubts about the future of deep-sea drilling for oil and gas. Those past threats by Iran to blockade the Strait of Hormuz. Russia’s full-scale invasion of Ukraine, as well as an earlier Russian dispute, which stopped Russian gas transiting Ukraine to Europe. And, for the United Kingdom, the closures of the Lanegeled pipeline, which is our most important source of gas imports from Norway.

All of those crises were largely unpredictable and unexpected. The difference this time is that the consequences of war with Iran should have been better anticipated and the challenges the world has been facing from the closure of the Strait were far from unpredictable.

The energy crisis across regions

The degree of impact of the oil and gas blockage varies across regions. European and UK reliance on Qatari liquefied natural gas (LNG) has reduced in recent years, in part replaced by US LNG coming into the European market (which has increased four-fold since Russia’s invasion of Ukraine). However, the global impact is greater than ever, and after just a few weeks, Asia is seeing significant LNG supply shortages, and is taking steps to introduce rationing, reduce demand, or increase the use of coal. Fuel is being rationed in a growing number of countries in Africa, and may be required in Australia to prevent panic buying. Pakistan is cuttingsupplies to industrial customers, and Bangladesh is imposing temporary blackouts. With nearly 20 percent of the world’s LNG coming through the Strait of Hormuz, Europe will certainly also be impacted, as US LNG is pulled toward Asia.

To put it in a stark comparison, world demand for oil dropped by 8 million barrels a day during the first year of Covid. The closure of the Strait of Hormuz has led to a loss of 11 million barrels a day, so the impact is potentially significantly worse.

All this means, regardless of how long this crisis lasts, global policymakers need to start planning now for how we reduce this dependency in the future—not just for oil and gas but also for associated products like fertilizer. Around one-third of global fertilizer supply is currently blocked, and a similar proportion of the world’s helium, a product of natural gas processing.

Europe’s path toward variety

Security of supply is multidimensional. It relates to the sources of supply, the diversity of the supply routes, and also the physical security of those routes. Countries that depend on imports need to look at how they reduce that dependency, and make routes to market more secure.

Europe needs to act collectively to hasten the opening up of other sources of crude oil, gas, and refined products, for example in Syria, which can start producing again after years in force majeure.

For the UK, it should also mean maximizing output from the North Sea—regardless of how much gas we will need, it must make sense that as much as possible should come from its own resources (which will also contribute taxes to the government and sustain jobs, even if not affecting prices).

Europe must look at creating new routes to market. New pipelines can be built to reduce pressure points, for example, from Saudi Arabia through Jordan and Syria, or to enable more gas from the Caspian to flow to Europe.

Moreover, Europe needs a strategy to revitalize its declining refinery capacity, rather than too often seeing it as a nice-to-have optional extra. Government strategy will be central to delivering this, but it can only happen if European countries become competitive once again as places to operate energy-intensive industries.

This is a global challenge where Europe must work with partners in the Gulf. Reducing over-dependency is as much in their interests as producers as it is in ours as consumers, and, ultimately, their security is inextricably linked to ours. The Gulf countries fully understand that they need to be reliable partners, where supplies cannot be interrupted at catastrophic cost, and have a vested interest in working with Europe to deliver a more secure and sustainable model.

Let this crisis be a wake-up call

European governments want to reduce exposure to volatile global gas prices by shifting the economy further away from hydrocarbons. While this crisis brings home the risks of being dependent on imports, especially where there are geopolitical risks and natural pain points, we need to be honest in recognizing that, even with a transition away from hydrocarbons, we will be using oil and gas for many years to come.

Regardless of how long this crisis lasts, Europeans need to see it as a wake-up call and, when it is over, we cannot just go back to business as usual. Our energy security, our critical national infrastructure, and our vital energy industries are just too important to be left to the market.

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

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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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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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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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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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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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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.

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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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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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‘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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Dispatches Mar 3, 2026

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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.

#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 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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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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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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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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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.

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

The post In Iraq, China’s long game unfolds appeared first on Atlantic Council.

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

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Lisa Basquel

Program Assistant, European Energy Security

Energy & Environment Europe & Eurasia

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Elina Carpen

Associate Director

Americas Energy & Environment

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Amy Drake

Global Energy Center Nuclear Energy Policy Initiative

Energy & Environment Energy Transitions

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Alexis Harmon

Critical Minerals Geopolitics & Energy Security

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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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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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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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Why Ankara’s rising power in the Sahel could benefit the West

Alp Ozen, Haley Nelson — Wed, 19 Nov 2025 14:00:00 +0000

Bottom lines up front

Arms and infrastructure deals have steadily bolstered Turkey’s standing as a reliable partner in the Sahel, where coups disrupted French and US roles.
Turkey’s “solution-based” diplomacy contrasts sharply with Russia’s security-first playbook in Africa, yet they operate in parallel rather than competing in the countries with military juntas.
Ankara must decide whether to align more openly with Russia in the Sahel or mediate and potentially counter Russian influence, potentially coordinating with the West on security strategy.

As the US role in the Sahel is weakening, Turkey’s role is rising. With new defense agreements, increasing diplomatic engagements, and joint economic development projects with new, junta governments that espouse anti-colonial rhetoric in Burkina Faso, Mali, and Niger, Turkey finds itself working in the same theater as the Kremlin to fill the void left after Western forces departed. Turkey’s new trusted status among Sahelian governments and its state-led approach make it one of the nations positioned to influence regional security dynamics during a time when other Western powers are constrained. Although Turkish efforts in the Sahel have been primarily based on its own strategic ambitions and national interests, Ankara’s growing influence offers a rare channel through which the United States and its allies could recalibrate their approaches to the region.

The Sahel’s break with the West

Since these coups and the establishment of military juntas in Mali, Niger, and Burkina Faso, France and the United States have faced the annulment of defense agreements in the region, French and US troops have withdrawn from the region, the European Union’s Takuba Force ceased anti-Jihadist operations in Mali, and, in January, Niger revoked a counterterrorism accord with the United States, demanding the withdrawal of 1,000 US troops from the country. The United States has laws that prohibit it from assisting governments that have overthrown democratic governments, including clear guidance from the US State Department against foreign assistance to Niger, and now Washington finds itself without a clear role in the Sahel.

The region’s Western-backed security architecture has collapsed: Three withdrawals (i.e., Mali, Burkina Faso, and Niger) prompted the dissolution of the Group of Five (G5) for the Sahel. The same three departures from the Economic Community of West African States (ECOWAS) has left the Sahel searching for new patrons and new strategic frameworks. Mali, Burkina Faso, and Niger, for example, have formed the Alliance of Sahel States (AES), a political and defense bloc that rejects old alignments. To fill the new defense void, alternative partners without the baggage of colonial legacy—most notably Russia and Turkey—have stepped in, offering defense cooperation without the governance conditions demanded by the West.

The United States, which provided humanitarian aid, economic investment, and security forces to the region for roughly a decade prior to the coups, lost much of its ability to advance regional security interests when it was pushed out of the region. Its ability to monitor threats in the region and in neighboring countries like Libya, coordinate strategies with local forces, and access crucial intelligence was significantly degraded. Although US security operations in the region have been constrained by new partnerships, it still has options. Opportunities remain through indirect engagement—particularly with actors that retain both credibility on the ground and diplomatic standing in the West. Turkey is one of the only powers operating in the Sahel that meets both criteria.

Turkey’s role amid a shrinking Western presence, rising Russian influence

Turkey’s military cooperation in the Sahel draws on nearly two decades of experience positioning itself as a rising power in Africa, rooted in its 2003 Strategic Depth doctrine and early initiatives like the “Strategy for the Development of Economic Relations with Africa” and the “year of Africa” in 2005—the same year it secured observer status in the African Union. Initially, Turkey relied on soft power, leveraging shared Ottoman heritage, cultural diplomacy, and economic partnerships to expand its influence. However, what began as a soft-power push—through development aid, cultural ties, and embassy openings—has evolved into a defense and infrastructure strategy, especially under President Recep Tayyip Erdoğan’s aim to position Turkey as a leader among emerging powers. Turkish delegations have conducted regular visits to AES capitals, striking arms and infrastructure deals while pursuing bilateral military agreements.

At the same time, Russia, too, has made swift inroads. It is capitalizing on anti-colonial sentiment and offering support through its largest private military company, the Wagner Group, to provide “training, close protection, and counter-terrorism operations.” Through proxy forces, Russia has gained access to political influence and resource extraction in exchange for security-force training, arms deals, and protection of junta leaders. Russia’s use of proxy forces has allowed it to distance itself from Russian casualties and military failures.

However, Russia’s war in Ukraine has slowed its operations in the Sahel. Across AES, Russian forces are stretched thin. Despite Russia’s success in stabilizing the Touadéra regime in the Central African Republic in 2021—a conflict that gave Russia defense legitimacy despite the fact that Sahel—Russian forces have largely been unsuccessful. In 2024, fifty-one percent of global terrorism-related deaths took place in the Sahel. This was the deadliest year in the Sahel’s history as the region remains mired in conflict and plagued by violent insurgencies, fragile state institutions, and waning international engagement.

In the Sahel, Turkey can play the same role as Russia. Turkey can offer Sahelian militaries affordable, “rapidly deployable” equipment. And Russia, which has been struggling to keep up with military-industrial demands, is an increasingly unreliable partner. Sahelian clients grew more discontented with the Russian proxy forces’ unsuccessful operations and inability to fulfill weapons contracts, and the Wagner Group officially left Mali, announcing on Telegram that its mission was accomplished. In its place, Russia plans to consolidate its troops under the Russian Ministry of Defense-backed Africa Corps. Reestablishing connections, building trust, and establishing higher capacity supply lines will take time; meanwhile, alternative partners like Turkey are in place in the Sahel and can take advantage of the Kremlin’s declining foreign-operations capacity.

In contrast to Russia’s focus on mercenary deployments and direct-combat missions, Turkey offers a more varied tool kit: combining diplomacy, state-to-state defense deals, economic engagement, intelligence sharing, and technology transfers. Turkey’s defense industry, particularly its drone sector, made early moves into the African market, supplying low-cost, high-capability platforms like Baykar’s Bayraktar TB2 and Akinci drones. These have become cornerstones of AES air power, and are often more cost-effective than systems from Iran, Israel, or even Russia.

Turkey is now the main producer of combat drones for Africa, according to the Africa Center for Strategic Studies (part of the US Department of Defense). In December 2024 Mali received Turkish Akinci drones in addition to its eight TB2 drones; Niger has purchased six TB2 drones, five Karayel-SU drones, and Aksungur drones; and Burkina Faso has purchased at least six TB2s and two Turkish Akinci drones. These drones are managed and operated out of local airbases, like the Niamey air base in Niger or the Bamako Air Base 101 in Mali, and are managed by a “hyper-closed circle” of high-ranking officials. In early April 2025, Mali was also found to be using MAM-T bombs 20 kilometers from its border with Algeria when a Turkish-made Akinci drone was shot down. This was the first time the Malian armed forces were found to be using MAM-T bombs, which are guided, high-explosive fragmentation munitions that can be strapped to Bayrak drones, and are manufactured by Turkish company Roketsan.

On the ground, Turkey’s engagement increasingly makes up for declining Russian power. Turkish drones and, reportedly, Turkish-hired Syrian mercenaries disrupt insurgent operations in areas where state forces are absent, helping to alleviate local manpower shortages. Although unconfirmed, Sadat, a private Turkish military contractor often referred to as Erdogan’s “parallel army,” was alleged to have sent more than one thousand Turkish-trained Syrian mercenaries to Niger and Burkina Faso in 2024, tasked with protecting mines, petroleum infrastructure, and military installations. This is not the first time Sadat has been accused of using Syrian mercenaries in foreign conflicts.

Already, Turkey has increased intelligence-sharing capabilities in the region through its intelligence agency, Milli İstihbarat Teşkilatı, which recently opened a hub in Niger. Its growing network of embassies, companies, and security personnel across the Sahel gives Ankara access to critical information, which can influence security operations.

Turkey’s economic expansion in the Sahel

Turkey has slowly expanded its influence in the Sahel by expanding its security operations simultaneously with its commercial agreements.

While the AES has implicitly distanced itself from former colonial powers through new security partnerships and arms contracts, the three states are also turning to alternative partners for economic support. They had perceived prior Western economic conditions as unfair and are seeking more beneficial economic relationships. After revoking mining licenses and pulling out of economic partnerships with the West, the Sahel now needs new partners to help develop its potentially lucrative energy and raw materials sectors.

Since the 2010s, Turkey has increasingly engaged with Africa’s energy sector, leveraging its 2017 National Energy and Mining Policy to enhance its energy independence. It has signed agreements with at least seventeen African countries across North, West, and East Africa, as well as the Horn of Africa, focusing on renewables and critical minerals. Trade volumes between Turkey and Africa increased from $5.4 billion in 2003 to $40.7 billion in 2022, and a growing number of Turkish companies are expanding their operations in Africa.

Turkey now has greater reason to diversify its imports away from Russia and Iran— given the disruption of trade patterns by conflicts in Ukraine, the Mediterranean, and the Middle East—and toward Africa. The Sahel’s underdeveloped energy sector offers Turkey a foothold in new supply routes and economic opportunities.

A Turkish energy company has taken a leading role in Mali, supplying 60 megawatts of power and building a heavy fuel oil power plant. Turkish exports to Mali rose from $87 million in 2021 to $111 million in 2023. Similarly, Turkey has boosted trade with Burkina Faso, despite regulatory hurdles in the mining sector. Exports rose from less than $100 million prior to 2020 to $166 million in 2024, reflecting Ankara’s deeper economic engagement with the new military government.

In the Sahel region, Niger has traditionally been Turkey’s strongest energy partner in the region. Turkey and Niger have signed bilateral mining agreements and oil and natural gas agreements, established a working committee to expand economic cooperation, and held leadership-level discussions about infrastructure development projects in northern Niger. Turkish firms have been uniquely willing to engage in high-volatility regions, implementing critical infrastructure, energy, and mining projects simultaneously with increased defense cooperation.

The Sahel’s mineral wealth is critical to Turkey’s industrial ambitions and plans to become a processing hub for critical minerals. Turkey’s defense industry depends heavily on critical minerals used in advanced weaponry, aerospace systems, and batteries and, at the same time, Turkey’s rising clean technology industry has accelerated the need for lithium, nickel, copper, and other raw minerals. While Turkey is beginning to build up its raw mineral processing capabilities in an attempt to limit foreign control over critical supply chains, Ankara is in search of suppliers for these materials.

With limited domestic reserves and rising industrial needs, Ankara is targeting the region’s large supplies of raw materials. Mali is Africa’s second-largest lithium producer; Niger is a leading exporter of uranium; and Burkina Faso is a major gold supplier. Though Turkey has domestic reserves of tungsten, graphite, and cobalt, access to the Sahel’s minerals enables Turkey to compete in global markets and develop its own processing base.

Through diplomatic and corporate efforts, Turkey has tried to secure access to gold and uranium in Niger, the world’s seventh-largest producer of uranium; Turkish and Azerbaijani companies have discussed joint mining projects in the Sahel; and, until recently, a Turkish company held the industrial exploitation rights of the largest gold mine and the largest manganese mine in Burkina Faso. Russian companies have likewise expanded their economic presence in the Sahel; Russian companies have signed lithium mining deals with Mali, lithium and uranium mining deals with Niger, and deals on nuclear cooperation with Burkina Faso. While Western companies have been sidelined, governments in the Sahel remain open to cooperation with both Ankara and Moscow. Turkey, as a NATO ally that retains the political space to operate in these markets, is a potential counterbalance to Russia’s growing influence while advancing its own strategic and industrial objectives.

Solution-based diplomacy in a security-first landscape

What sets Turkey apart from other external actors—especially Russia—is the diversity of its engagement. Unlike Moscow’s arms-for-access model, which is often viewed as exploitative and destabilizing, Ankara has prioritized a multifaceted approach that includes trade, infrastructure, defense, diplomacy, and development. Turkish-African trade spans sectors from textiles to healthcare and energy, and Turkey’s public and private sectors have actively invested in education and capacity building across the continent. This “solution-based” diplomacy contrasts sharply with Russia’s security-first playbook.

Yet Turkey’s growing presence in contested regions comes with risks. Infrastructure investments in unstable political environments require security guarantees—and that often means greater military involvement. As Ankara deepens its footprint, it must decide whether to align more openly with Russia, or to use its position to mediate and potentially counter Russian influence.

Turkey is viewed by many African leaders as a reliable, noncolonial partner. This gives Ankara access that Western powers now lack. While Turkey has not publicly aligned with US or European policy in the Sahel, its access and credibility in the region offer an opportunity to bridge the growing gap between Western interests and Sahelian realities.

If Ankara chooses to leverage this position, it could quietly support Western objectives—sharing intelligence, coordinating security policies, or shaping development strategies that undercut Russian influence. Turkey would not be acting as a Western proxy, but as a sovereign actor leveraging its credibility and access to serve both its own interests and those of the broader international order. In a region where Western engagement is rapidly shrinking, Turkey’s role may become indispensable—not as a rival, but as a crucial partner.

Not a proxy but a pathway: The West’s reentry point in the Sahel

The power balance between Russia and Turkey is markedly different from conflict zones where they stood or stand on opposite sides—such as Syria, Libya, Ukraine, and the Azerbaijan-Armenia conflict. In the Sahel, both powers are engaging the same postcoup regimes—Russia through mercenary-led counterinsurgency and Turkey through state-led arms deals, drone operations, and economic development. They are not in direct confrontation in the Sahel, nor are they locked in zero-sum competition. Instead, they operate in parallel, often in the same theaters and with the same governments, but with divergent methods, capabilities, and long-term goals.

Parallel engagement between Russia and Turkey raises security concerns for Western powers who have lost their influence in the region, but it also creates a unique opening. While Russian security forces have been largely unsuccessful in their efforts to mitigate threats in the Sahel, Turkey has an opportunity to increase its engagement with local forces. And as the only Western partner force that is directly engaging with the region, Ankara can potentially disrupt Russian influence and coordinate with the West on security strategy. Its access to critical mineral assets, defense infrastructure, and high-level political relationships across the AES bloc can offer the West indirect access to a region from which it has been largely expelled.

Since President Donald Trump returned to office at the beginning of 2025, both Washington and Ankara have shown renewed willingness to deepen their bilateral partnership on regional matters and cooperate in third countries, most notably Syria. In addition to diplomacy, including Foreign Minister Hakan Fidan and Secretary of State Marco Rubio meeting in Washington and Brussels, both capitals have continued demonstrating top-level cooperation on Syria with the trilateral gathering in Riyadh, where Trump and Erdoğan met with Syrian President Ahmed al-Sharaa, together with the creation of the joint Syria Working Group to further enhance closer cooperation on Syria’s reconstruction and stability efforts. This dynamism and strategic alignment can be a strong foundation for extending the US-Turkey partnership into Africa, where shared interests in stability and security could help reshape the dynamics of great-power competition in the region.

Turkey’s pragmatic foreign policy is not without complications. But in the Sahel, that very pragmatism can work to the West’s advantage. If Washington moves beyond its reflexive skepticism and recognizes Turkey’s intermediary potential, the Sahel could shift from a symbol of Western retreat to a frontier of renewed influence—anchored by a partner that understands and navigates both the streets of Niamey and the corridors of NATO.

About the authors

Alp Burak Ozen is a program assistant at the Atlantic Council Turkey Program.

Haley Nelson is a Boren Scholar and a Georgetown University alumna. She is an independent geopolitical consultant with a focus on energy and infrastructure security in Eastern Europe, Central Asia, and Turkey.

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Operationalizing the National Defense Industrial Strategy for great power competition

Lt. Col. Jahara "Franky" Matisek and Morgan D. Bazilian — Tue, 18 Nov 2025 18:14:40 +0000

Russian President Vladimir Putin recently ordered his government to produce a national roadmap for rare-earth extraction and processing. This move wasn’t another mining policy; he was defining national power. The Kremlin’s move follows China’s two-decade lead in dominating global mining, refining, and permanent-magnet and battery production.

China’s weaponization of supply chains has already left industries across the United States and Europe scrambling, since these materials quietly underpin every digital-age economy, not to mention every munition and weapon system. Such actions by Moscow and Beijing to secure their own mineral supply chains signal that despite the growing prominence of digital-age economies in the 21st century, economic and military capabilities are still constrained by industrial capacity. We described this as the rise of mineral powers in a recent essay.

The United States, by contrast, remains an innovator without a foundation. It designs world-class systems but depends on others for the materials that make them work—although that is changing now with a new “muscular” approach to financing projects. While the Pentagon’s 2023 National Defense Industrial Strategy (NDIS) identifies supply-chain resilience as a national priority, Washington still lacks a basic performance metric for its own industrial base. For instance, the Department of Defense does not use a single “readiness-per-dollar” measure for industrial-base investments. Readiness is tracked at the platform level (i.e., mission-capable rates, supply availability, repair cycle times), while industrial-base actions remain fragmented across programs such as Industrial Base Analysis and Sustainment (IBAS), Defense Production Act Title III, and Department of Defense Manufacturing Technology(ManTech). This hodgepodge approach results in bureaucracies spending billions on “resilience” without any standard way to assess what each dollar actually buys in surge or recovery capacity.

This strategic planning shortfall matters because adversaries understand that economic growth and technological advancements pair with military effectiveness. It’s just now becoming more obvious that controlling the entire material process (e.g., mines, foundries, refineries, and specialized fabrication plants), is what enables an economy and military to gain a comparative advantage in an era of strategic competition. China’s 2023 export controls on gallium and germanium were less about markets than about leverage; they showed how quickly strategic materials could become tools of coercion. Russia’s rare-earth roadmap fits the same pattern: hardening its economy for prolonged confrontation with the West. If the United States wants the NDIS to mean something beyond PowerPoints and Congressional briefings, it must translate industrial ambition into measurable readiness, bankable financing, and built-in redundancy.

Operationalizing the NDIS requires a playbook with three lines of effort: measurement, financing, and doctrine.

First, the Pentagon needs better measurement metrics. We propose three industrial-readiness metrics: Lead-time reduction (how long until a critical subcomponent is delivered under normal conditions), time-to-recovery (how many weeks production bounces back after a disruption), and platform elasticity (how a 10-20 percent supply-chain shock maps into mission-capable rates). These metrics provide the basis for a “readiness per dollar” calculus that Congress and the Pentagon can use to compare investments, monitor progress and link industrial policy to warfighting outcomes.

Second, there needs to be financial incentives for midstream manufacturers. Due to market risks and low profit margins, many businesses struggle to find capital to fund and run magnet plants, alloy melters, and rare-earth separation, because demand is difficult to predict, especially as China essentially runs a mineral cartel, making costs, supply, and demand murky in global markets. Fortunately, existing authorities suffice: Title III of the Defense Production Act allows offtake commitments and price floors; the IBAS program funds workforce and facility scale-up; the Office of Strategic Capital (OSC) provides low-interest loans and credit guarantees for private investment. When layered together, we get what the energy sector uses: demand signal, patient capital, and private scale. Domestic deals, such as the billions pledged by the Pentagon and private sector companies to MP Materials to build a US magnet manufacturing facility, illustrate how such a stack works. But these deals cannot remain ad-hoc.

Third, there needs to be a defense industrial base doctrine that guides decisions through the acquisitions process of weapon systems and munitions. Supply-chain resilience must be treated like combat logistics; it’ s an operational imperative, not an administrative nuisance to be solved by an acquisitions officer. We recommend concentration-threshold triggers. For example, if 40 percent of any key material processing is sourced from a single country or firm, a domestic or allied alternative must be activated. Dual-qualified supply lines—one domestic, one allied—provide wartime options and peacetime flexibility. Allies are not just optional; they are force multipliers. America must embed cooperation frameworks like the Minerals Security Partnership and the US–Japan Critical Minerals Framework into its defense industrial base doctrine. Such surge playbooks should coordinate Australia’s rare-earth separation, Canada’s graphite and nickel capacity, and Japan’s magnet finishing. These materials, and many other import-dependent minerals and metals, are vital to American weapon systems and munitions. Such coordination avoids parallel buildouts, aligns subsidies with strategy, and leverages allied industrial bases instead of competing with them.

These three playbook approaches might seem bureaucratic compared with stealth fighters or warships, but the real surprise in any conflict will be the factory that couldn’t deliver—not the plane that couldn’t fly. As China’s 2025 export controls on medium and heavy rare earths demonstrated, the ability to choke US supply chains is already operationalized.

Deterrence depends less on “who builds the biggest bomber” and more like “who can re-qualify their magnet line in weeks when a competitor shuts ours down.” The alloys, magnets, and refining capacity of tomorrow will define whether the United States can mobilize and sustain its industrial base for the next crisis and conflict. Modern warfare begins in the furnaces and finishing rooms of allied industrial bases, not at an airbase or seaport.

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Sapuppo in Kyiv Post on Hungarian exemption from US sanctions targeting Russian energy

Mercedes Sapuppo — Sat, 08 Nov 2025 20:34:52 +0000

On November 8, Mercedes Sappuppo, nonresident fellow at the Atlantic Council’s Eurasia Center, was quoted in Kyiv Post on the one-year exemption for Hungarian imports of Russian gas.

Today’s presser offered no serious movement on Ukraine and gave Prime Minister Orbán an opportunity to legitimize his position that Ukraine cannot win this war and that Ukraine should make a compromise with Russia.

[Even if] President Trump did hold firm in perceiving President Putin as the holdout in seeking peace, he ultimately fell short of taking the opportunity to push Hungary to back off from blocking stronger European actions against Russia.

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Europe’s energy operating system: P-TEC as the North Star in a European maze

Michał Kurtyka — Thu, 06 Nov 2025 01:18:09 +0000

What was meant to be Europe’s coherent transformation toward sustainability has, in practice, become a maze of overlapping regulations, conflicting objectives, and competing national interests. This has led the energy system in Europe today to become extremely complex. Confusing the system even further is the reduction of Russian gas and hydrocarbons, which has redrawn the map of dependencies and rewritten the rules of engagement. Investors and partners who still see opportunity in Europe often struggle to interpret what exactly needs to be done to find their place in this market.

That is where the Partnership for Transatlantic Energy Cooperation (P-TEC), taking place in Athens today and tomorrow, has proven its unique value. P-TEC is an annual gathering of public and private energy leaders held by the US Department of Energy in partnership with Central and Eastern European countries and the Atlantic Council. It is more than just a forum for exchange—it is becoming a compass. On a continent governed by directives and evolving standards, P-TEC can serve as a guide through the labyrinth, helping partners understand not only the current rules but also how these rules might evolve.

Europe’s current regulatory architecture often reflects good intentions undermined by practical contradictions. The European Investment Bank, for instance, no longer finances natural gas projects, even in places like Moldova or the Western Balkans—regions still heavily dependent on Russian supply. This leaves them in a geopolitical dead end, precisely when diversification should be a top priority. 

The European Union’s Methane Emissions Regulation (MER) illustrates how the EU’s well-intended climate ambition can sometimes create operational uncertainty. Approved in 2024, MER includes measures to reduce methane emissions from fossil fuel operations. Even large and experienced companies, however, struggle to interpret what compliance with the policy means in practice—from methane reporting and certification to national implementation pathways. This experience has shown that Europe’s energy transition is not only about technology, but also about regulatory literacy. Understanding the system has become as critical as investing in it.

Similarly, the EU’s inconsistent treatment of nuclear power—recognized as a zero-carbon source, yet excluded by some from green financing frameworks—continues to divide member states and deter investors.

Such contradictions do not make Europe greener; they make it more fragile. They illustrate the gap between ambition and execution—between a decarbonization agenda that aspires to lead the world and a market reality that too often punishes pragmatism.

P-TEC’s mission, therefore, should be twofold. 

First, it should continue to act as a translator—helping US and regional partners understand the dense network of European rules, taxonomies, and climate instruments. Second, and more importantly, it should evolve into an architect of the next stage: a space where transatlantic cooperation contributes to a more coherent, realistic, and resilient European framework.

This evolution requires a shared strategic vision focused on connectivity. The North–South energy corridor, linking the Baltic, Adriatic, and Black Seas, remains the backbone of regional resilience. Expanding interconnections and ensuring market interoperability are not just technical goals but instruments of sovereignty. Here, the United States can add real value through investment and project expertise that turn political declarations into results.

At the same time, P-TEC can help demonstrate that much can already be achieved within the existing system. The recent success in enabling gas deliveries to Moldova under EU market principles showed that rules can be instruments of empowerment, not paralysis. The rules are changing, but not quickly or deeply enough: gas infrastructure and new nuclear builds remain trapped in a slow evolution.  

P-TEC provides an opportunity for Europe to accelerate needed change and create momentum with an eye toward the 2026 Three Seas Initiative Summit in Croatia. This shift requires the recognition that the real opportunity lies not in creating new institutions but in enhancing interoperability among those that already exist, including P-TEC and the Three Seas Initiative. These critical platforms share the same DNA: regional integration, diversification, and partnership with the United States. Together, they can become Europe’s version of a transatlantic “operating system”—a modular architecture that balances climate ambition with competitiveness and security.

To achieve this, both sides of the Atlantic must invest in more than infrastructure. They must invest in regulatory literacy—the ability to navigate, interpret, and align policy frameworks that increasingly define who can build what and where. This is not a bureaucratic detail; it is a strategic necessity. 

Europe’s future energy landscape will be shaped not only by new technologies, but also by new understandings. P-TEC stands at the intersection of both. It can guide the evolution of Europe’s energy operating system—one that is pragmatic, open to innovation, and resilient enough to serve both sides of the Atlantic. In a continent of rules, that may produce the most valuable export of all: clarity.

Michał Kurtyka is a distinguished fellow with the Atlantic Council Global Energy Center.

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The sixth P-TEC Ministerial convened industry leaders to discuss energy security and affordability, infrastructure projects, and investment opportunities from Athens, Greece.

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US power utilities must prepare for a crisis in the Indo-Pacific. Here’s how they can start.

Victor Atkins, Markus Garlauskas — Mon, 03 Nov 2025 16:35:20 +0000

As the last US National Security Agency director warned in alarming comments last month, China is hacking into American electrical infrastructure. Public reporting and government advisories also point to China pre-positioning backdoors in power grid control systems and electrical power supply chains. Through these means, China is establishing leverage over critical infrastructure, and it could use this leverage to threaten, disrupt, or degrade services in a crisis, especially if Beijing seeks to block US involvement if it moves against Taiwan.

This kind of access gives China options for coercion, deterrence, and signaling, pursued through temporary and targeted effects in a “gray zone” crisis, as well as for conducting larger-scale attacks in the event of a major conflict. With this in mind, it is essential that the private sector—not just the US government and military—better prepare for attacks on the US electrical grid resulting from a geopolitical crisis or conflict in the Indo-Pacific. Importantly, this preparation should include both assessing the geopolitical risks and practicing what to do in a crisis.

During a recent industry forum in California, we heard from senior utility executives, grid operators, market strategists, and other experts about the range of complex challenges that the energy sector faces. Utilities must, for example, keep costs in check, meet regulatory standards, manage load growth, and advance the energy transition. At the same time, we contend that they need to treat Chinese cyber and supply-chain exposure as a standing threat—part of the context of overall strategic planning and risk mitigation—given the geopolitical risks the United States faces. During the forum, we discussed a pressing question on a panel with an unusual focus for industry: how to protect the mission to deliver reliable, safe, and affordable power as geopolitical risks rise, particularly the threat China could pose to US electrical infrastructure in the context of a regional crisis or conflict. Based on our discussions, we came to three overall takeaways.

First, utilities should identify practical geopolitical crisis indicators to monitor that, when the indicators occur, should move utility leaders from watchful to active measures. One such indicator is Chinese military exercises that move beyond the routine and are on a scale indicative of invasion preparation and/or involve live-fire training that interferes with access to Taiwan. Other indicators could be narratives from Chinese official sources that aim to justify imminent “defensive” military action, sudden pressure on key vendors, or export controls that signal possible supply disruptions. None of these signposts require classified sources, as they are visible in publicly available information and sector channels.

Second, utility leaders need to take action now. Addressing cyber and supply chain infiltration risks to power infrastructure is not only a job for cybersecurity professionals and government officials, nor can it wait until a geopolitical crisis or attack. Grid operators, supply-chain leaders, control system engineers, and procurement officials each have roles in ensuring resilience.

A range of actions can help mitigate risk. For example, contract language can clarify product security and transparency requirements. Steps can be taken to harden control system equipment and network pathways, particularly for China-sourced devices. And utilities should regularly and thoroughly test controls on vendors’ remote access to operational technology. More broadly, utilities should seek to de-risk: diversify suppliers before a crisis, keep targeted spares for the most critical equipment, and engineer by focusing on addressing high consequence events so the most important grid functions have robust fail-safe controls.

The third—and clearest—takeaway from our conversations in California was about the need for preparation rather than prediction or reaction. Regular, realistic, leadership-level tabletop exercises are the single best way to build discipline for the first forty-eight hours of a fast-moving event, especially since misinformation is likely to surge.

Tabletop exercises, long used by the US military and government as a low-cost way to improve preparedness for a high-intensity crisis or conflict, can serve the same purpose for the private sector. Comprehensive exercises expose single points of failure, validate who decides what, test communications, and force hard choices on where to deploy resources. They also create a common picture of risk and available response options that hold under pressure.

These issues have important implications for a broader audience, given the potential implications of energy disruptions for all aspects of the United States’ national security and economy. This basic three-point approach is simple and practical, even if implementing it while balancing other considerations will be complex for the industry:

Watch for indicators that geopolitical risks are rising;
Keep sharing and implementing best practices within the energy sector and with its partners to strengthen resilience; and
Run regular leadership-level tabletop exercises that simulate the key decisions that leaders in a vital sector will face in a geopolitical crisis.

Introducing this three-step approach into response systems and building on it will go a long way toward making sure that essential services stay running, even if a crisis erupts halfway around the world.

Victor Atkins is a nonresident fellow with the Indo-Pacific Security Initiative at the Atlantic Council’s Scowcroft Center for Strategy and Security, where he specializes in cyber intelligence, national security, and industrial cybersecurity issues. A former Department of Energy official, he served as deputy director for operations of its Cyber Intelligence Directorate, and after details to the National Security Council staff and US intelligence community. He is the director for critical infrastructure security consulting at 1898 & Co., part of Burns & McDonnell.

Markus Garlauskas is the director of the Indo-Pacific Security Initiative at the Atlantic Council’s Scowcroft Center for Strategy and Security. He is a former senior US government official with two decades of service as an intelligence officer and strategist, including twelve years stationed overseas in the region.

The Best Practices Forum that helped inform this analysis, and the authors’ participation in it, was hosted and sponsored by Burns & McDonnell. The event adhered to the Chatham House Rule to foster transparency, candor, and forward-thinking approaches. The views expressed here are the authors’ own.

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Europe finally moves to ban Russian gas but potential loopholes remain

Aura Sabadus — Sat, 01 Nov 2025 00:30:25 +0000

In late October, the European Union moved to impose a full ban on Russian gas imports by 2028. After years of using energy exports as a political tool to blackmail Europe and fund the invasion of Ukraine, Moscow may finally be facing the loss of its last European costumers.

The decision to impose a complete ban on Russian gas is the latest stage in ongoing efforts to exclude the Kremlin from European energy markets. Since Russia began its full-scale invasion of Ukraine in February 2022, Moscow has lost nearly 80 percent of its European market share after curtailing supplies to undermine Western support for Ukraine. Even so, Russia has earned no less than €215 billion during the wartime period through the reduced but ongoing sale of gas to some EU clients.

EU policymakers now say European consumers can no longer bankroll Russia’s war budget. The move is timely because Europe could soon benefit from an abundance of liquefied natural gas (LNG) as the United States and Qatar are set to double their production in the upcoming years. However, there are still many challenges and possible loopholes that could stymie the process.

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A number of legislative complexities will need to be addressed during negotiations to determine the final version of the ban, with talks expected to continue into next year. The European Commission published the first draft of the phaseout roadmap for imports of Russian pipeline and liquefied natural gas during summer 2025. The document stipulated that short-term contracts of less than a year would be discontinued in 2026, while longer-term contracts would be terminated by January 2028.

The draft proposal raised some eyebrows, particularly due to the introduction of an article suggesting that the ban could be temporarily lifted in case of market emergencies. Contrary to expectations, the clause was not pushed through by Hungary and Slovakia, the EU’s most Kremlin-friendly Russian gas buyers. Instead, it was introduced under pressure from Spain, where several companies still hold long-term LNG import contracts with Russian producers.

The text has been reviewed by both the European Parliament and the Council of Ministers, with the former pushing for even more ambitious terms. For example, MEPs would like to see all imports terminated by 2027, a year earlier than initially stated by the European Commission. They also insist on closing loopholes by targeting circumvention risks.

The draft version adopted by the Council of Ministers aligns to a large degree with the version circulated by the European Commission and continues to include an emergency brake. The final text will have to be negotiated as part of talks involving the European Parliament, Council of Ministers, and European Commission.

To further complicate matters, the EU recently adopted its nineteenth Russian sanctions package, which includes a ban on Russian LNG imports from 2027, a year earlier than the deadline proposed by the EU’s own phaseout roadmap. This fast-tracked LNG ban was likely introduced in response to pressure from US President Donald Trump, who has singled out Europe for continuing to buy Russian fossil fuels.

While this sanctions-mandated ban may lead to an earlier block on Russian LNG exports, many observers fear that it is insufficiently robust and could be overturned, since EU sanctions are up for review every six months and require unanimous backing in order to be extended. This means the fast-tracked LNG ban could be vulnerable to opposition from any individual EU member.

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While the legislative path toward a full EU ban on Russian gas imports remains long and complex, enforcement may prove even more difficult. The ban enjoys strong political backing across Europe, but there are widespread concerns that the Kremlin will try to identify potential loopholes to evade the ban.

Russian gas is currently exported to Europe via the Black Sea and Turkey, using a dedicated pipeline transporting the gas to the Balkans and Hungary. The EU has included this entry point in legislation and notes that flows must stop from 2028, but Russian gas arriving in Turkey via an interconnection point nearby could be relabelled and sold under a different name. The risk of relabelling Russian gas also extends to the entire bloc because there are still a number of companies with large import portfolios which hold long-term LNG contracts with Russian producers.

Regulations related to the enforcement of the EU ban, including penalties for potential breaches, will need to be reviewed and tightened up. Existing EU proposals may not be sufficient, while it is still unclear how violations will be penalised. This must be addressed in order to deter non-compliance.

EU officials are well aware that Moscow will fight efforts to exclude it from lucrative European markets. Deprived of fossil fuel revenue and with its economy facing mounting difficulties, the Kremlin will seek any opportunity to continue selling oil and gas to Europe. Allowing loopholes to remain could create large grey areas in European energy markets that would fuel Russia’s war in Ukraine and allow the Kremlin to retain leverage over Europe.

Dr. Aura Sabadus is a senior energy journalist who writes about Eastern Europe, Turkey, and Ukraine for Independent Commodity Intelligence Services (ICIS), a London-based global energy and petrochemicals news and market data provider. Her views are her own.

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Kit Conklin: A floor for the US–China trade relationship—for now

Joseph Webster: Promises of an Alaska-to-China energy acceleration may be overblown

Dexter Tiff Roberts: Even the biggest victories from the meeting could prove hollow

A trade truce, if they can keep it

The long-awaited meeting between Trump and Xi delivered real results—and a lot of stepping back from ledges both sides created over the past year. China walks away with approximately the same tariff rate as most of its Asian neighbors, a welcome victory that will ensure its exports continue to provide ballast to a struggling domestic economy. The United States gets soybean purchases, which will alleviate some of the pressure the administration had been feeling from farmers—as a bipartisan vote against tariffs in the Senate showed this week. Key questions surround China’s one-year pause on rare earth export controls, including whether US allies will get the same exemption. Europe will be trying to negotiate a similar arrangement this week, but without the tariff leverage Trump has wielded effectively.

Meanwhile, it appears at least at this point there is no loosening of US export controls on high-end chips, something that was rumored throughout the day yesterday and created fears in Washington (as well as London, Tokyo, and Brussels) that China would be able to supercharge its artificial intelligence (AI) capabilities.

But many of these wins just get us back to where we were before the US-China trade wars of the spring. In fact, China still faces higher tariffs than it did when Trump came into office. And many of the most difficult issues in the relationship were left to be discussed another day. But will that day come? As we’ve seen over the past six weeks, it only takes one misstep or misinterpretation on either side for another round of tit-for-tat escalation and a full-blown trade war between the world’s largest economies.

Next week brings a critical Supreme Court hearing on the challenge to the president’s tariff authority—the very authority he’s used to levy tariffs on China and dozens of other countries. China and the rest of the world will be watching closely. But no matter what happens, Trump won’t fully relinquish what he sees as the best tool in his economic arsenal—and that means a trade truce is likely the best either side can hope for in the near future.

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

This relationship will get worse before it gets better

The United States and China are locked in what will likely be a decades-long rivalry that includes significant economic, technological, ideological, diplomatic, and military dimensions. Whether China buys a “tremendous amount of soybeans” is not the central issue and will not resolve the significant underlying issues at dispute between Washington and Beijing.

As just one example, shortly before meeting with Xi, Trump made an unspecified threat to start nuclear testing in response to the nuclear activities of China and Russia. It is unclear whether Trump meant nuclear explosive tests (which the United States has not done in decades) or the testing of nuclear delivery systems (which the United States does regularly).

Either way, expect the bilateral relationship to get worse before it gets better. 

—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.

Beijing is wielding the power of the calendar to its advantage

The Trump-Xi meeting in Beijing delivered no surprises. As expected, China is rolling out the fentanyl measures it offered earlier this year, and the US side is ratcheting down tariffs accordingly. Both sides are pausing planned measures, with more clarity on the US side than the Chinese side on what that pause really means. China maintains the ability to yank back every concession it provided to the United States.

The real story is a forward-looking one, and a major win for Beijing: China’s biggest concern with Trump is his unpredictability, and they are using an extraordinary line up of pre-scheduled 2026 meetings to box him in and force a degree of, if not quite predictability, at least plannability in US-China relations. We now know what 2026 will look like. Trump plans to visit Beijing in April, and Xi will visit the United States for the Group of Twenty (G20) summit in December (or at least dangle the possibility of that visit). The next fourteen months will be consumed with preparations for those two meetings. Moreover, Trump’s planned visit to Beijing gives China the opportunity to script the next interaction and to press for a new wave of US concessions over the coming months to lay groundwork for a “good” meeting. A similar dynamic will play out next fall.

Chinese leaders are strategic, and their diplomats are strong. Just as in the run-up to this week’s meeting, they will know exactly what they want ahead of these 2026 summits, and exactly where their red lines are. There is still no indication that the US side has the same strategic clarity. The White House will need to prioritize developing it—fast.

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

China has the advantage as talks continue—and the US risks losing the leverage it has

The relatively bland readout issued by China’s Ministry of Foreign Affairs after the meeting contained one profound understatement attributed to Xi: “China-U.S. economic and trade relations have experienced ups and downs recently, and this has also given the two sides some insights (italics mine).” For Xi, one core insight since Trump launched his campaign of punitive tariffs and export controls against China has been how much leverage his country has over the US economy and the US president himself. Beijing’s tight grip on rare-earth exports revealed the depth of US industrial vulnerability in a globalized economy. And the cutoff of Chinese soybean purchases underscored Trump’s own political exposure at a moment in which polls reveal Americans’ deepening unhappiness with the state of the economy.

However the White House chooses to portray the agreement in the coming weeks, there is no avoiding the fact that Beijing has tremendous advantages in the ongoing negotiations. The United States certainly still has its own leverage with China—especially in the realm of advanced semiconductors. But with semiconductor powerhouses such as Nvidia pressing the Trump administration to loosen controls on chip exports and China making rapid gains in the field, that US advantage could quickly evaporate.

—Jeremy Mark is a nonresident senior fellow with the Atlantic Council’s GeoEconomics Center. He previously worked for the International Monetary Fund and the Asian Wall Street Journal.

The US needs to up its game to counter Chinese espionage

Spying was not front and center at the meeting between Xi and Trump—at least according to the public readouts—but this should be an opportunity for Trump to take a clear and redoubled stance against China’s pernicious espionage activities and information operations against the United States and its allies. That adversaries spy on each other is, of course, not news (China recently accused the United States of a breach of its systems), but the diffuse nature of the Chinese espionage threat remains a serious challenge to US national and economic security that the Trump administration must address along with traditional trade and economic issues.

On any given day, it is reasonable to assume that China is almost certainly conducting multiple espionage attacks or operations against US national security infrastructure, personnel, or other critical infrastructure. There are hundreds of open-source documented cases of traditional espionage by China or its apparent agents in recent decades. On the cyber side, massive Chinese telecommunications breaches such as Salt Typhoon—assessed by multiple US agencies to be ongoing to this day—may have netted data from every single American and affected some eighty countries worldwide, according to experts. China’s sustained cyber breaches of US water, energy, transit, and other critical infrastructure systems are also well documented.

It is not hard to imagine China’s potential disruptive or coercive intentions with those infiltrations in the event of a military contingency or diplomatic crisis. China’s vast spying is not new, but AI’s exponential acceleration raises the stakes for the Trump administration. The Trump-Xi meeting is a reminder that the United States is behind and needs to up its game now against a determined and effective foe.

—Tressa Guenov is the director for programs and operations and a senior fellow at the Scowcroft Center for Strategy and Security. She previously served as the principal deputy assistant secretary of defense (PDASD) for international security affairs in the Office of the Under Secretary of Defense for Policy.

With “Taiwan is Taiwan,” Trump dispels fears he will fold to Xi on Taiwan

TAIPEI—For days leading up to the summit, some commentators took it as a given that Taiwan would be on the agenda, while highlighting the risk that Xi would seek to use trade issues as leverage to extract concessions from Trump on Taiwan. Their speculation appeared to be validated when a Chinese government spokesperson warned just a day before the meeting that China would not rule out the use of force to bring Taiwan under its control—an ominous formulation that was not new, but a departure from a softer tone that Beijing had struck days before.

Meanwhile, international media reporting was rife with worries that Trump might change the US position on the status of Taiwan, even citing the fears of unnamed officials in the White House, despite Secretary of State Marco Rubio having already dismissed the idea of Taiwan being a bargaining chip in the talks. Taipei wisely played it cool, with Foreign Minister Lin Chia-lung projecting confidence and dismissing these fears as unfounded.

Then, when Trump himself was pressed by a reporter not long before the meeting, he also spoke dismissively: “I don’t know that we will even speak about Taiwan . . . There’s not too much to ask about. Taiwan is Taiwan.” After the summit, Trump related that “Taiwan never came up,” suggesting that Xi hesitated, perhaps realizing that he did not have the leverage to get his way.

Though there may now be a “truce” of sorts on trade, as Josh Lipsky assesses, there is no “truce” in the ongoing struggle for the future of Taiwan. The Chinese Communist Party’s intimidation campaign to subjugate the small, but strategically key, island democracy will therefore continue. Fortunately, it also seems that Washington’s support for maintaining the status quo of Taiwan’s self-rule will do so as well.

—Markus Garlauskas is the director of the Indo-Pacific Security Initiative of the Scowcroft Center for Strategy and Security.

The G7 must be ready for China to try this export control tactic again

Trump returns to Washington having secured an important pause in China’s exploitation of its leverage in rare earth element supply chains. An agreement to walk back China’s export controls to pre-September 29 levels for one year provides some urgently needed relief. 

Yet while a cooling of temperatures in the rare earth supply chain is critical, there is a lesson to be learned in how China used export restrictions as a valuable lever in trade negotiations. Not only can one expect Beijing to use a similar tactic should US-China trade tensions resurface over the course of the next year, but it appears for now that the walk back applies strictly to the United States, with Europe and other Western partners still exposed to Beijing’s supply chain leverage as they negotiate their own deals. Further still, the scale of supply chain influence China displayed earlier this month by implementing export controls well beyond raw ores and precursors to manufactured components will likely remain a source of uncertainty for the private sector. The durability of this temporary pause and the subsequent risks of supply chain controls emerging once more will remain a top-of-mind issue. 

This underscores the need to treat this deal as a moment of relief, but not a solution. Expect this administration to continue to aggressively pursue supply chain partnerships such as those recently announced with Australia and Japan. Meanwhile, as Group of Seven (G7) energy ministers meet this week in Toronto, critical mineral supply chains will be at the top of the agenda, with ambitions to better coordinate supply chain security among the G7 members becoming a major priority. If the G7 can find the right mix of coordinated investment, trade tools, and market supports, the opportunity for true supply chain resilience is possible. Otherwise, negotiating with Beijing to secure these brief moments of supply chain relief will become the norm—and come at the expense of a number of other priorities in the US-China relationship. 

—Reed Blakemore is director with the Atlantic Council Global Energy Center, where he is responsible for the center’s research, strategy, and program development.

A floor for the US–China trade relationship—for now

Welcome to the new era of supply chain warfare, where geoeconomics are the frontlines of great power competition. The new US–China trade deal is a temporary cease-fire, not détente. Beijing has agreed to suspend its planned export controls on rare-earth elements—a move that had threatened to severely disrupt global manufacturing and reaffirmed China’s dominance in critical mineral supply chains. In exchange, Washington has paused the expansion of export restrictions on Chinese subsidiaries and eased select measures targeting the maritime, logistics, and shipbuilding sectors.

The deal sets a temporary floor for the US–China trade relationship, restoring a measure of predictability for industries navigating two competing economic systems. Yet it leaves the structural imbalances of that relationship largely intact. China retains significant leverage over rare-earth refining and processing, while the United States will continue to deploy economic security tools to safeguard control over critical and emerging technologies. These enduring realities point toward the eventual return of trade and national security barriers that will surpass the scope of this agreement. For example, there is no scenario in which the US Department of Defense and US defense industrial base should rely on China for critical minerals, even if Beijing’s export controls are delayed for twelve months.

As the Trump administration recalibrates its economic security strategy, both sides are likely to reimpose targeted restrictions—driven less by market efficiency than by strategic necessity. In the months ahead, the contest will continue to unfold in the gray zone between trade and security, where control over supply chains increasingly defines hard power. Global policymakers and industry leaders should prepare for renewed volatility in the year ahead.

—Kit Conklin is a nonresident senior fellow at the Atlantic Council’s GeoTech Center.

Promises of an Alaska-to-China energy acceleration may be overblown

Many in the energy community will breathe a temporary sigh of relief at Beijing’s pausing of critical mineral controls for a year. But elsewhere, the Trump-Xi meeting in Busan produced more sizzle than steak.

Trump stated that “a very large scale transaction may take place concerning the purchase of Oil and Gas from the Great State of Alaska.” There are many reasons to be skeptical that a transaction will occur, or that it will be large-scale, however.

Even if such an oil deal materializes, it would be insignificant: Alaska produced only 421,000 barrels per day of crude oil in 2024, or 3 percent of total US output. Any deal with China over Alaskan crude won’t materially impact the US oil and gas complex.

China is also very unlikely to make large purchases of Alaskan liquefied natural gas (LNG). While an Alaskan project would enjoy advantages due to lower shipping distances and canal fees, industry analysts at Rapidan Energy hold that the Alaskan LNG project is not viable, as the second phase alone is projected to cost sixty billion dollars. That’s because Alaska lacks the infrastructure to compete with other players, such as US Gulf Coast states. Alaska has limited natural gas production, challenging geography, a small labor pool, and would require a long greenfield pipeline plus imported steel for both the pipeline and liquefaction facility.

Additionally, China never fulfilled its “Phase 1” purchase commitments, including for LNG, in a prior iteration of the trade war. US-to-China LNG shipments may well rise in the coming months and years, but they will be determined by market factors such as supply and price, not optics.

—Joseph Webster is a senior fellow at the Atlantic Council’s Global Energy Center, a nonresident senior fellow at the Atlantic Council’s Indo-Pacific Security Initiative, and editor of the independent China-Russia Report.

Even the biggest victories from the meeting could prove hollow

A temporary trade truce with no real breakthroughs. That’s the best characterization of the first Xi-Trump face-to-face meeting since 2019.

That hasn’t stopped the US president from trying to spin it as a grand success, calling the meeting “amazing” and rating it a “twelve” on a scale from one to ten, speaking to reporters on the plane back to Washington. Even in his introductory comments before discussions began, Trump exuded positivity, calling Xi “a great leader of a great country” and a “great friend.”

Xi had a much less enthusiastic demeanor, barely smiling during the meeting. And when he stressed the importance of cooperation, he also cautioned that the two countries must avoid “falling into a vicious cycle of mutual retaliation.”

Xi’s most transparent attempt to make nice was his comment that China’s development “goes hand in hand” with the US president’s “vision to ‘make America great again.’”

The biggest victories—Beijing delaying for a year its plans to radically expand its controls over rare earths and Washington postponing plans to implement the “50 percent rule,” a move that would have put sanctions on a far larger list of Chinese companies by including their subsidiaries—could prove hollow.

The United States can always sanction new companies. And the rare earth licensing rules that Beijing put in place earlier this year haven’t gone away, which allows China to slow-walk permits for exports once again. Other supposed victories, such as China’s promise to purchase soybeans, just return things to the status quo of the last few years.

Finally, Trump’s comment that Chinese officials would be talking more to Nvidia going forward, and that Washington would only serve as a “referee,” hinted of a possible further loosening of restrictions on the sale of advanced semiconductors, which would be a huge win for Beijing.

— Dexter Tiff Roberts is a nonresident senior fellow at the Atlantic Council’s Global China Hub and the Indo-Pacific Security Initiative, which is part of the Atlantic Council’s Scowcroft Center for Strategy and Security. He previously served for more than two decades as China bureau chief and Asia News Editor at Bloomberg Businessweek, based in Beijing.

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A unified call for G7 cooperation on energy security

David L. Goldwyn, Lee Beck — Thu, 30 Oct 2025 13:43:24 +0000

Just ahead of today’s Group of Seven (G7) energy and environment ministerial meeting in Toronto, the Atlantic Council, in partnership with Natural Resources Canada and the Munk School of Global Affairs and Public Policy, convened leaders from government, civil society, and industry to discuss energy security, and the financing and technologies needed to achieve resilient systems. At the Summit on the Future of Energy Security, speakers explored solutions to meet rising energy demand, secure critical energy supply chains, and scale new energy infrastructure.

Atlantic Council experts David Goldwyn and Lee Beck, who participated in the summit, lend their insights:

Energy leaders showed remarkable alignment, optimism, and unwavering commitment to a sustainable, energy-secure future

The summit revealed a high degree of consensus around what an energy-secure world should look like. Nearly every energy supplier and financier focused on the importance of using all forms of energy—an “all of the above” approach—to meet demand, the need for durable regulatory frameworks, and fewer pendulum swings in government policy.

We heard optimism about the future of energy demand, including from new defense procurement and deployment needs. Likewise, we heard optimism on the availability of energy supply—from new nuclear plants, to expanded supplies of oil and gas, to the potential of renewable power and batteries to meet the heterogeneous needs of different energy buyers. Hyperscalers and oil sands and gas providers emphasized their continuing commitment to emissions reduction and increased process efficiency.

We also heard a call for government to help mitigate the risks involved in scaling up power supply quickly. For nuclear proponents, there was a call for financial support to mitigate cost risks. For other suppliers, this would mean more stability in fiscal frameworks (such as through the Inflation Reduction Act and the One Big Beautiful Bill Act) and regulatory frameworks to reduce their project risks.

Finally, there was a coded call for more collaboration and less confrontation among G7 nations. While companies did not directly call out US tariffs as a serious headwind, the consistent hopes for closer integration, for greater resilience, and for collaboration were a reminder that the future of energy security lies in greater—not less—cooperation among G7 innovators, capital providers, and entrepreneurs.

David Goldwyn is chairman of the Atlantic Council’s Energy Advisory Group and a former special envoy for international energy affairs at the US Department of State and assistant secretary of energy for international affairs.

Competitiveness has spurred major energy policy shifts, but new solutions are needed to ensure long-term resilience

With increasing global competition on technology, innovation, and supply chains, corporate leaders are calling on G7 policymakers to act with long-term strategic perspective to deliver regulatory and policy clarity.

At the Atlantic Council’s Future of Energy Security summit, leaders recalled that about eighteen months ago at the last G7 energy and environment ministerial under Italy’s presidency, the focus in Torino was on the Draghi report—a wake-up call for Europe to face its waning competitiveness. While that same pressure is still on—now applying to the whole of G7—it has translated into action, catalyzing three major shifts: the nuclear energy renaissance to meet artificial intelligence (AI)-driven energy demand growth; the exploration of new industrial policy tools in the manufacturing and critical minerals arenas; and the formation of new partnerships to harvest existing assets and innovative technologies to propel economic growth and energy security in the medium term.

Still, corporate leaders at the summit pleaded for the G7 to heed the sense of urgency for additional action. That includes meeting technology innovation with speedy policy innovation in areas such as permitting, public funding, along with long-term planning and industrial policy. As one panelist put it: “We need new models of collaboration and coordination that prevent a new Achilles heel and instead enable standardization, simplification, and sequencing.”

Notably, advancing emissions reductions and climate action only entered the conversation toward the end of the summit. However, private sector leaders insist this imperative hasn’t fallen off the agenda. In fact, some never “felt more optimistic” on the ability to advance carbon-free technologies due to the focus on action, and, for others, climate mitigation still remains “the north star.”

Lee Beck is a nonresident senior fellow at the Atlantic Council Global Energy Center.

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Kroenig quoted in The Hill on Trump-Xi Meeting

dfitzsimmons — Wed, 29 Oct 2025 13:00:00 +0000

ORIGINAL SOURCE

On October 29, Matthew Kroenig, Atlantic Council vice president and Scowcroft Center senior director, was quoted in The Hill on President Trump’s meeting with Chinese President Xi Jinping. He argued a more comprehensive economic strategy for China is needed beyond short-term summit talks.

I think this is a new Cold War — biggest national security threat we’ve ever faced. And so, I think we really need a more comprehensive economic strategy for China that includes a harder derisking, protecting ourselves from Chinese unfair trade practices, hitting back with tariffs where they are systematically cheating on the global trading system.

Matthew Kroenig

Staff

Matthew Kroenig

Scowcroft Center for Strategy and Security

China Defense Policy

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US energy firms are returning to Iraq—but politics could undo their fortunes

Raad Alkadiri — Tue, 28 Oct 2025 21:54:31 +0000

Something unexpected is happening in Iraq’s oil sector. After years of watching from the sidelines as Chinese and European firms dominated, US energy companies are suddenly returning. ExxonMobil, Chevron, HKN, and oil services giant KBR have all signed major deals with Baghdad over the past two months. Meanwhile, in the power sector, GE Vernova is expanding operations.

The timing of this sudden activity is no coincidence. Iraqi Prime Minister Mohammed Shia al-Sudani has discovered what the Kurdistan Regional Government (KRG) learned long ago: Oil and gas deals buy political influence in Washington. He is also hoping that the new deals will buy him US backing for a second term. Thus, at least in part, the latest activity reflects a calculated political dance between Baghdad and Washington.

But it is unclear whether this strategy will bear lasting fruit for either al-Sudani or the oil companies—largely because everything will depend on the outcome of Iraq’s upcoming elections and the messy government formation that will follow. As such, the surge in US company interest represents both opportunity and risk in a country where political calculations can override commercial logic overnight.

Why US firms are suddenly interested

The commercial logic for the companies themselves is straightforward. Iraq offers some of the world’s cheapest-to-produce oil, on a scale that matters to the biggest international oil companies. Few places can match Iraq’s combination of low extraction costs and massive reserves. For companies facing depletion elsewhere and needing to build long-term supply, Iraq represents one of the last great opportunities.

ExxonMobil and Chevron have an additional motivation, as they seek insurance against potential problems in Kazakhstan—where their operations represent sizeable assets for both firms. The current government there is seeking to modify contracts to secure more revenues for the state, and if ExxonMobil’s or Chevron’s ventures in Kazakhstan do face difficulties, Iraqi production could provide crucial backup.

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But what has really changed the game in Iraq for US firms is the new contracts on offer. The old technical service agreements first introduced by Iraq’s oil ministry in 2009—with their per-barrel fees and limited upside—drove away many US investors, including Chevron, which many in the oil industry had regarded as the partner of choice in postwar Iraq. The recent deals signed by the US firms are different. Companies negotiated directly with Iraq’s oil ministry based on a contractual formula that offers the firms a larger share of overall profits and grants them access to physical barrels of crude that they can trade to their advantage. These are not just better terms; they are fundamentally different agreements that will improve the oil companies’ bottom line.

Baghdad’s political calculus

Iraqi Prime Minister Mohammed Shia al-Sudani attends a signing ceremony for a preliminary agreement between Iraq’s Oil Ministry and Exxon Mobil to develop the Majnoon oil field, in Baghdad, Iraq, October 8, 2025. Iraqi Prime Minister’s Media Office/Handout via REUTERS THIS IMAGE HAS BEEN SUPPLIED BY A THIRD PARTY

Commercial considerations only tell half the story. Al-Sudani’s rush to sign deals with US firms over the past few months is fundamentally about political survival, both his own and Iraq’s.

Energy deals, beginning with earlier agreements inked with TotalEnergies in 2023 and BP * in 2024, have been an important element of the prime minister’s ambitious capital investment agenda, which he has used to project the image of an effective administrator among Iraqis as he pushes for a second term in office. With elections fast approaching, he needs more wins to maintain his political momentum, which he hopes to turn into votes.

Al-Sudani’s emphasis on building partnerships with US firms also reveals deeper anxieties. Rising tensions with Washington since the summer over Iraq’s long-standing economic, political, and security ties to Iran—including allegations that Iraqi groups were smuggling Iranian crude—have sparked genuine fear in Baghdad about potential sanctions on Iraq’s oil industry (the country’s economic lifeline and a major supplier to global oil markets). The Iraqi government also fears that Israeli military strikes against Iran-supported Islamist Shia militias in Iraq remain a possibility and that only the United States can keep Israel at bay. Consequently, the prime minister has sought to appeal to US President Donald Trump’s transactional instincts by delivering what his administration often values most: commercial opportunities for US companies.

The strategy is borrowed directly from the KRG’s playbook. For years, the KRG has parlayed relatively minor energy deals to bolster its already outsized political influence in Washington. Al-Sudani is attempting the same maneuver on a grander scale, using major oil contracts as both shield and sword—protection against US economic punishment and leverage for political support. His calculation appears to be that US companies with billions at stake will become important de facto lobbyists for Baghdad in Washington, arguing against policies that might destabilize their investments.

So far, the results of this strategy have been mixed. While the Trump administration has not imposed the harshest measures al-Sudani feared, such as sanctions on senior political figures or on officials in the State Oil Marketing Organization, Iraq has not escaped unscathed as Washington pushes Baghdad to disarm Iran-linked militias. In its latest sanctions move, the US Treasury earlier this month targeted an Iraqi state firm for the first time (al-Muhandis General Company), which Washington alleges is associated with the US-designated group Kataib Hezbollah. The move was a stinging rebuke to al-Sudani, and it embarrassed him domestically in light of his efforts to court the Trump administration. The complicated political and security relationship between the Iran-linked militias and the Iraqi government makes disbanding the armed groups unlikely in the short term, which in turn could lead to more punitive measures if Iraq and Iran hawks in Washington get their way. The oil card, it seems, only buys so much protection.

The election wild card

The upcoming elections in November, and the government-formation circus that is expected to follow, could further complicate things for US investors. Indeed, Iraq’s attractiveness could quickly diminish depending on the outcome.

Al-Sudani’s alliance is favored to win a simple majority, and he is campaigning hard on promises to accelerate his national investment program. Behind closed doors, my sources in Iraq also argue that only he can manage the relationship with Washington. Given his track record so far, a second al-Sudani term would likely mean continued momentum for US investment and perhaps even better terms for US investors.

But Iraqi politics rarely follow simple scripts. Government formation traditionally takes months of horse-trading, as all of Iraq’s major parties seek to reach consensus on powersharing and appointments, paralyzing decision-making in the interim. More importantly, the main Shia Islamist factions—who ultimately choose the prime minister—mostly want al-Sudani gone. It is quietly understood that al-Sudani’s rivals see him as too independent, too powerful, and therefore as a potential threat to their parochial interests and patronage networks. Al-Sudani’s success in centralizing decision-making, and his domestic popularity, have made him dangerous in their eyes. Washington also seems lukewarm about him, despite his commercial overtures, viewing him as too willing to accommodate Iranian interests when necessary.

The electoral math is crucial. Iraqi politics is not about simple majorities but intra-sectarian dynamics. Al-Sudani needs to win not just an incontrovertible majority of “Shia” seats but the right Shia political configuration as well. If al-Sudani fails to win the majority he needs, and his rivals among the established Islamist Shia parties unite against him, a simple majority will not matter. He will be pushed aside in favor of a more pliable and less dangerous alternative.

Al-Sudani’s departure will not necessarily end efforts to attract US investment, but it will remove the most administratively effective post-2003 Iraqi premier. Through personal oversight and a strengthened prime minister’s office, al-Sudani has fast-tracked negotiations with US firms and pushed deals to completion and implementation in ways his predecessors—including previous US favorites—never managed.

This effectiveness is precisely what his rivals fear and want to eliminate. The risk for US companies is getting a new prime minister who embodies the administrative ineffectiveness of past Iraqi leaders, resurrecting the bureaucratic problems that drove many of these same firms away before. Without Sudani’s administrative experience, centralized authority, and political will to push things through, Iraq’s energy bureaucracy risks reverting to its natural state: gridlock punctuated by occasional decision-making.

The bigger picture

Even with increased US investment, Baghdad may find itself at odds with the Trump administration. US strategic interest in Iraq continues to diminish. If oil deals no longer provide political protection, Baghdad’s incentive to prioritize US companies diminishes. Worse, if Washington perceives that the new government in Baghdad is tilting more towards Iran—or even that it simply has the wrong factional balance—the United States could trigger some of the very sanctions al-Sudani has worked to avoid.

If relations do sour, US firms could pay a price. Investment opportunities are not just carrots for Baghdad to offer Washington; they can also become sticks to signal displeasure. While the United States holds most of the leverage, Iraq has shown it is willing to play this game when pushed.

The fundamental reality is that above-ground factors—politics, personalities, and US-Iraq relations—will continue to matter more than geology or commercial terms for US firms in Iraq. Al-Sudani has created a window of opportunity, but windows in Iraq have a habit of slamming shut unexpectedly.

US energy companies returning to Iraq are betting that political winds will remain favorable. They may even be banking on al-Sudani’s survival, continued accommodation between Baghdad and Washington, and their ability to navigate Iraq’s fractious politics. It is a gamble because the next phase of Iraqi politics is uncertain, and elections throw up surprises. The question is not whether Iraq offers attractive opportunities (it does), but rather how the political risks unfold to shape the investment environment.

So, for now, US firms are back in Iraq. Whether their outlook is as propitious a year from now depends entirely on how Iraq’s political drama develops.

Raad Alkadiri is managing partner at 3TEN32 Associates, an international advisory group that assists corporations and governments in navigating the complex political, economic, and social trends that shape the energy sector. Its clients include BP.

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Taylor quoted in American University article on the geopolitics of Kurdistan’s gas

Atlantic Council — Tue, 28 Oct 2025 19:32:59 +0000

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Taylor quoted in the Kurdistan Chronicle on Kurdistan’s natural gas reserves

Atlantic Council — Tue, 28 Oct 2025 19:32:36 +0000

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Working within a ‘Central Asia Quartet’ can strengthen US ties in the region. The foundations for it have already been laid.

Kiran Baez — Tue, 28 Oct 2025 17:56:25 +0000

In recent years, Central Asia has become increasingly important to a vast array of countries, which have been enticed by the region’s rapidly developing markets, proximity to China and Russia, vast energy and mineral resources, and growing role as a transport hub through projects such as the Middle Corridor. Central Asian states are deepening ties with countries from Saudi Arabia to India while developing political autonomy and distinct identities.

In the United States, however, Central Asia occupies a strange position: strategically important enough to demand attention, yet distant enough that few are willing to commit the substantial economic and political resources required to build US presence in the region. The United States occupies a similarly awkward place for many Central Asians. Though many welcome pragmatic relations with the distant superpower, these are often burdened by geography, domestic US and Central Asian political complications, and the presence of nearby Russia and China. Furthermore, few Central Asians relish the idea of being relegated to the chessboard of a “great game” between superpowers and seek to establish an empowered and autonomous identity on the global stage.

To navigate the dilemma between Central Asia’s vast importance and the challenges that efforts to build US presence in the region would face, the United States should look to its allies better established in the region, especially Turkey, South Korea, and Japan. By building a mechanism to coordinate and communicate on policy, such a “Central Asia Quartet” could act as a force multiplier to each country’s individual efforts, allowing the United States to make a substantial impact at minimal economic and political cost.

No hegemony needed

Officially, US strategic priorities in Central Asia have not been updated since 2019. This strategy emphasizes six areas: strengthening sovereignty and independence, combating terrorism, supporting the now-defunct US-backed government in Afghanistan, promoting connectivity with Afghanistan, protecting human rights, and securing openings for US investment.

In practice, however, US policy on Central Asia has moved away from Afghanistan and human rights and increasingly focused on the development of energy and critical minerals bound for the West and strengthening the Middle Corridor. When it comes to these policy objectives, the United States can promote its goals without fighting an uphill battle to establish widespread economic, political, military, and cultural presence. In fact, unless the American people are willing to commit enormous resources to a little-known region thousands of miles away from home, an indirect approach to engaging with the region could lay a more secure foundation for US-Central Asian relations in the long run.

Among the challenges that the United States faces in promoting its interests in the region are a distinct lack of political and economic capital in Washington, high risks and operating costs for US companies, and poor cultural understanding. The United States must also contend with local apprehension toward working with Americans that is driven by the prominence of nearby China and Russia, as well as a desire among Central Asians to avoid becoming pawns in a great-power competition. The United States would be far better positioned by working in concert with its allies that are already present in the region.

Introducing the Quartet

Of the United States’ allies, Turkey, Japan, and South Korea stand out as the best established in Central Asia, each with deep corporate, political, and cultural ties to the region. The nature of these ties varies by country: Japan is a leading provider of official development assistance, facilitates vast technical aid programs, and is a major financier of infrastructure and energy projects. With over five hundred thousand ethnic Koreans across the former Soviet Union, South Korea has deep cultural connections to Central Asia alongside a formidable corporate presence, especially in energy, critical minerals, and heavy industry. Bolstered by common linguistic and cultural ties, Turkey has directed considerable energy into shoring up its political and economic ties with the region, including as a founding member of the Organization of Turkic States. Today, some four thousand Turkish businesses operate in Central Asia in sectors including hospitality, infrastructure, and increasingly defense. Both South Korea and Turkey consistently rank among the most important trade partners for Uzbekistan and Kazakhstan, while Turkey ranked fourth in terms of trade volume for Kyrgyzstan.

Though each country has largely set policy independently, the foundations for cooperation have already been laid. US businesses, including Caterpillar and Bechtel, have used partners from third countries to operate in Central Asia for decades. Turkish and Japanese companies have also cooperated extensively on projects in Uzbekistan and Turkmenistan. Each of these four countries has designated energy, critical minerals, and transport connectivity as key features of their regional policy priorities, and these sectors also indirectly promote Central Asia’s economic and political autonomy.

Beyond de-risking, knowledge sharing, and distributed financing, there are further distinct incentives for each country to participate in the Quartet. Like the United States, Central Asia remains on the political periphery for Japan and South Korea, though they both have greater ties to the region than Washington. Further coordination with allied countries could offer a low-cost method for expanding these ties. Though Turkey has established the strongest presence of the four countries, Ankara could use help from its partners to expand it engagement as well. Turkey’s presence in the region is restrained by the country’s affinity for pan-Turkic ideology—appealing to some Central Asians but complicating to others—as well as economic instability and technical limits in some highly specialized fields.

Importantly, all four countries in the Quartet have strong bilateral relations with one another. Turks and Koreans often refer to each other as “brothers” owing to Turkey’s participation in the Korean War, strong bilateral cultural exchange, and increasing defense ties. Japan and Turkey similarly have a warm history, sometimes described as “two nations, one heart.” In August, Turkish President Recep Tayyip Erdoğan even suggested Japan and Turkey lead the reconstruction of Ukraine and Syria. And Japan and South Korea have witnessed significant progress in their relations over the past decade.

The imperative for cooperation and coordination in Central Asia between the Quartet countries is nothing new, as recent Atlantic Council publications on the benefits for the United States of cooperating with Japan and with Turkey in the region demonstrate. Elsewhere in Washington, Central Asia is increasingly being raised in conversations related to the other Quartet countries.

Working in concert

The operations of the Central Asia Quartet could be simple: These could include, for example, annual ministerial-level meetings, small working groups, mechanisms to jointly finance projects, and a joint chamber of commerce. Importantly, the Quartet should maximize Central Asian participation by inviting experts and officials to participate in regular convenings hosted by a rotating chair. Little bureaucracy would be required, and the group would be focused primarily on coordination over institutionalism. Even largely consultative, nonbinding, mechanisms could have major positive impacts.

The financing of projects, especially, could be vastly improved with relatively simple tweaks and coordination. At present, national development finance institutions such as the US International Development Finance Corporation, Japan Bank for International Cooperation, the Export-Import Bank of Korea, Türk Eximbank, and the European Bank for Reconstruction and Development only approve projects that can be certified as advancing their own countries’ strategic or economic interests. This creates gaps when promising initiatives lack an obvious national sponsor.

To address this, the Quartet could establish a streamlined joint certification mechanism that prescreens projects for alignment with each agency’s mandate while standardizing risk-sharing and procurement rules. This would allow projects that nevertheless serve allied objectives, such as mineral supply-chain resilience or Middle Corridor upgrades, to move more smoothly through national approval processes and attract blended cofinancing. Similarly, the Quartet countries could leverage their combined 37 percent shareholder stake in the Asian Development Bank to great effect. The power of the Quartet would come from its simplicity and flexibility, with each member offering something the others cannot.

To maximize the Quartet’s success, it should prioritize minerals, energy, digital security, market access, and connectivity: areas that Quartet members largely agree on, and which ultimately support Central Asian political and economic autonomy. A defense-focused Quartet would likely fare poorly, both due to diverging interests and strategies, as well as the increased likelihood that it would be rejected by Central Asians. Similarly, engaging in cultural diplomacy that focuses on questions of identity, religion, and historical narratives should be avoided: this would risk both fracturing the Quartet and alienating large portions of the diverse region. This is particularly relevant to South Korea and Turkey, both of which leverage ethnic ties to the region to advance soft power presence. The Quartet should nonetheless remain flexible and open to tackling a wide range of issues. For example, as the Quartet matures, it could work to support Turkey and South Korea’s already rapidly expanding Central Asian guest worker programs, which are vital given the importance of Russian remittances to the Central Asian states’ economies.

Of course, implementing the Quartet would not be without its challenges. Despite each country broadly filling a niche, they will still compete with one another in certain areas, such as energy and the automotive industry. Furthermore, all four countries have global priorities that eclipse Central Asia. Though participation in the Quartet is designed explicitly to allow for this, a minimum amount of participation is still required to be successful. Additionally, the Quartet will have to manage its perception carefully to avoid provoking Russia- and China-aligned actors. Similarly, Turkey would have to negotiate a dual approach to the region, considering its prominent role in the Organization of Turkic States, which also has an investment component.

Still, despite the challenges, the creation of the Central Asia Quartet would provide the opportunity for like-minded nations to multiply the effectiveness of their policies. Such a consultative consortium, at minimal political and economic cost, could significantly enhance the efficiency of projects, reduce costs, diversify risk, and share cultural, diplomatic, and technical knowledge. The Quartet would further fit into the model of partnership that Central Asia increasingly searches for: one that is empowering, flexible, opens the door to the West, and is minimally tied to great-power politics. If structured carefully, the Central Asia Quartet could act as a platform for exactly the kind of stable, low-cost, high-reward engagement that Central Asians want and that the United States needs.

Kiran Baez is a research assistant with the Atlantic Council Turkey Program focusing on Central Asia and energy issues. Add him on LinkedIn and X.

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

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David Goldwyn and Andrea Clabough: The Russian oil sanctions signal a major shift, but critical questions remain

The post Working within a ‘Central Asia Quartet’ can strengthen US ties in the region. The foundations for it have already been laid. appeared first on Atlantic Council.

How the new US sanctions on Russian oil will impact energy markets

Andrea Clabough, David L. Goldwyn, Ellen Wald, Andrei Covatariu — Thu, 23 Oct 2025 21:25:59 +0000

The Trump administration has taken decisive action to leverage its considerable sanctions authorities and increase pressure on the Russian government and its war machine. The latest US sanctions, targeting the major Russian oil and gas producers Rosneft and Lukoil, bring the United States into much closer alignment with both the United Kingdom (which issued similar sanctions last week) and the European Union, which has just finalized its own fresh package of sanctions including a complete phase out of Russian natural gas imports into the bloc. What this will ultimately mean for global energy markets depends on several factors.

Atlantic Council experts provide their takes:

Click to jump to expert analysis

Ellen Wald: Enforcement could mean higher oil prices—but the lack thereof risks failure

Andrei Covatariu: From discounts to disconnect: US sanctions and the potential changing geography of Russian oil demand

The Russian oil sanctions signal a major shift, but critical questions remain

Designating Rosneft and Lukoil is the most effective step of the Trump administration has taken to pressure Russia during its second term so far. Between them, these companies export 3.1 million barrels of oil per day—overwhelmingly to buyers in East and South Asia who have thus far remained willing to purchase Russian crude oil.

However, that may now be changing. Indeed, the Treasury announcement came with the explicit warning that secondary sanctions—targeting those buyers of Russian crude oil from these companies that continue to do so—could be considered in the near future. This threat is arguably as powerful, if not more so, than the concrete actions already taken. The threat of secondary sanctions will have an immediate and powerful effect on India and Turkey, two of the three largest consumers of Russian crude. Meanwhile, Chinese state oil companies PetroChina Sinopec, CNOOC, and Zhenhua Oil have announced that they will no longer deal in seaborne Russian crude oil supplies at least for the short term. It is thus a real possibility that two to three million barrels of oil could be taken off the global markets with no major buyers available to take them.

That said, a critical question remains: enforcement. It is unclear yet whether the United States will match the threat of secondary sanctions with actual enforcement of the new sanctions measures it has already enacted. The shadow fleet remains vast and elusive, and although the recent tranche of UK and EU sanctions continues to file away at the fleet’s available vessels, the willingness of the United States to meaningfully support sanctions enforcement will make all the difference in how much crude actually comes offline, and to what extent Russian crude production must be shut in for lack of anywhere to go.

Chinese refiners are already well practiced in evading US sanctions, for their part, and can usually find workarounds if they still want these Russian cargoes at bargain-basement prices. Importantly, the approximately 900,000 barrels per day (bpd) of Russian crude oil that China imports via pipeline will be unaffected by these new sanctions, and independent refiners may likewise hedge their bets and resume Russian imports faster than the larger national refiners. In either scenario, the actual volumes of crude oil taken off markets may be significantly less than initial estimates but still very material.

Ultimately, however, the price impacts are another matter and what will matter most to the White House. OPEC could replace displaced supply, a topic likely to be on Trump’s agenda with Saudi Crown Prince Mohammed bin Salman in November. Undoubtedly, these new sanctions will be on the agenda for the Xi-Trump Summit, and a major consideration for ongoing US-India trade talks as well.

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

Enforcement could mean higher oil prices—but the lack thereof risks failure

The Trump administration has painted the sanctions as a significant development in the ongoing conflict between Russia and Ukraine. In combination with similar sanctions from the United Kingdom and the European Union, the sanctions could potentially hit Russia’s oil revenue in a significant way, but, as with all sanctions, the effect depends on implementation and enforcement.

Global markets will likely see some disruption in Russian oil flows to China and India as the financial implications of the sanctions become clear. For example, China’s state-owned oil companies suspended new seaborne purchases of Russian oil, for now. Most of the companies that buy crude oil from Rosneft and Lukoil already do so through intermediaries, and it is likely that new companies will be set up to subvert financial connections between Russian oil suppliers and customers. Many Indian refiners are also reviewing whether their Russian oil purchases can be directly linked to Rosneft, Lukoil, or any of the subsidiaries named in the recently sanctions. It is expected that they will also pause purchases until the impact of the sanctions becomes clear.

The impact of these sanctions on both the global oil market and on Russia’s economy will depend entirely on how the United States, UK, and EU enforce the sanctions. If these western powers show that they will swiftly and severely punish entities that transact with Russian oil companies, then sufficient fear may be instilled in Russia’s crude oil customers to cut back on seaborne Russian oil imports. The Trump administration’s best bet is to make a few high-profile examples of sanctions’ enforcement, while simultaneously promising China and India that they will not be cut off from Russian oil for very long—if Putin comes to the negotiating table. Such a move would cause global oil prices to rise, potentially to $80 or higher, but given the abundance of oil currently on the global market and spare capacity from producers like Saudi Arabia, the impact on consumers would not be economically disastrous.On the other hand, if the Trump administration doesn’t follow these sanctions with a show of force, they will simply become another blip on an oil price graph.

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

From discounts to disconnect: US sanctions and the potential changing geography of Russian oil demand

The latest US sanctions on Russia’s two main oil producers, Lukoil and Rosneft (though notably not on Novatek), mark a new stage in the economic pressure campaign against Moscow. Sanctions are typically designed to target specific sectors and countries while avoiding major shocks to global markets—and, by that definition, this package seems relatively well-calibrated. While no sanctions regime is perfect, some are better timed and structured than others, but its reinforcement represents a sine qua non condition for achieving the intended impact.

However, duration will also be a critical factor influencing oil markets in the months ahead. Although these sanctions aim to pressure Putin toward negotiations, they could also trigger long-term disruptions in Asian crude flows—even beyond any potential agreement between Russia, the United States, and Ukraine. Asian refiners may increasingly turn to alternative suppliers, gradually moving away from discounted Russian barrels. To this end, the ongoing US–India trade discussions suggest that a reduction in tariffs, combined with stricter enforcement of oil sanctions, could finally drive India back toward Middle Eastern oil suppliers. This and how OPEC responds to market dynamics after sanctions will be a key topic for the US-Saudi dialogue this November.

Together, with the United Kingdom’s similar sanction measures and the European Union’s accelerating phase-out of Russian LNG, this coordinated Western effort could further squeeze the Kremlin’s revenue stream. Whether it proves sufficient will depend not only on how long these sanctions last, but also on whether markets make decisions that permanently alter Russia’s own perception of its long-term crude supply and export capacity.

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

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Why Washington should pay attention to Turkey’s presence in Central Asia

Kiran Baez — Thu, 23 Oct 2025 13:00:00 +0000

Introduction
A brief history: Turkey in Central Asia until the 2010s
Assessing attitudes towards Turkey today
Understanding Turkish soft power
Regional integration, changing dynamics, and the Organization of Turkic States
Economic presence
Security
The Russia question and limits to Turkish ambitions
Spotlight on Turkmenistan
Interpretations for the American policy maker

Key findings

Turkey has taken significant strides over the last two decades to establish itself in Central Asia, now boasting significant economic, cultural, and political presence, as well as steadily growing defense ties.
Turkey and the other four Central Asian Turkic states continue to highlight shared cultural and linguistic heritage in government communications and public media. The underpinnings of these relationships are nonetheless pragmatic, with “pan-Turkic” thought remaining both diverse and debated across Central Asia. Turkey’s growing presence in the region—combined with local media and governments promotion of pan-Turkic narratives, however—will likely mean such ideologies will be more influential on future generations of both Central Asians and Turks.
Turkey’s activities in the region pose a dilemma to Russia: They are not overtly threatening enough to justify a strong reaction, but ultimately encourage economic and political autonomy. As a result, the Kremlin is concerned by Turkey’s presence in the region, though it has limited options to respond.
Turkey’s activities and goals in the region often align with those of the United States. Those that do not are largely benign to US foreign policy objectives.
The United States should consider greater partnership and communication with its allies better established in the region, including but not limited to Turkey. Doing so could augment US foreign policy goals at limited political and economic cost.
Despite strides in economic, cultural, and political presence, Turkish activities are still ultimately dwarfed by those of Russia and China. Russia, in particular, exhibits immense cultural staying-power that permeates many Central Asian societies.
Both Tajikistan and Turkmenistan deserve increased examination by policymakers. Tajikistan will be an important factor to watch in determining the ultimate direction of Central Asian regional integration. Turkmenistan has major potential for augmenting the Middle Corridor project. Turkey’s relationships with both countries will prove important.

Introduction

In an increasingly turbulent world, the importance of Central Asia has grown rapidly. Abundant with mineral and energy resources, burgeoning markets, and strategically located between China, Russia, and Iran, the region that includes Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan is quickly drawing the attention of actors from around the globe—while Turkey burnishes its Central Asia ties.

Russia and China still dominate the economic and political landscape of Central Asia, though the region is increasingly engaged by a diverse cast of characters. The rise of the Trans-Caspian International Transport Route—a project also known as the Middle Corridor, which functions as a multilateral transport network linking China and the European Union through Central Asia, the Caucasus, and Turkey—has opened the door to billions of dollars in funding and associated projects, including over £20 billion ($26.78 billion) from the United Kingdom, and €12 billion from the European Union since 2024. ¹ France, Germany, the UK, and India have all fostered ties to the region in recent years, while Japan, South Korea, and the United Arab Emirates have long maintained an economic presence.² In recent years few countries have so successfully integrated themselves into the cultural, political, or economic fabric of Central Asia as Turkey.

As the region rises in importance, understanding the increasingly complicated field of actors in Central Asia and its implications for US policy goals is key. A major NATO member with a complicated bilateral relationship with the United States, Turkey’s extensive presence in Central Asia deserves exploration, as well as an analysis of the opportunities and challenges surrounding Ankara’s influence in the region. This report seeks to understand Turkey’s policy toward and presence in Central Asia and offer interpretations for US policymakers.

For this report, the author interviewed thirty-seven foreign policy experts, including former and current government officials from across Central Asia, many of them speaking anonymously given consideration of their respective countries’ political environments. Information that could not be substantiated by open-source media is only included if it was widely agreed upon and regarded as “common knowledge” across several interviews and is explicitly indicated as such.

A brief history: Turkey in Central Asia until the 2010s

Following the Soviet Union’s collapse, Turkey quickly engaged Central Asia’s Turkic states and, to a lesser degree, Tajikistan, leaning heavily into the perception of shared linguistic, cultural, and religious ties to strengthen relations. The region’s opening coincided with Turkish politicians seeking greater global influence.

In 1991, Turkey swiftly recognized the independence of Central Asian countries, in particular building ties through its development agency, Turkish Cooperation and Coordination Agency (TIKA), and co-founding the International Organization of Turkic Culture (TURKSOY). Turkish businesses were some of the first to enter newly opened Central Asian markets.

The reception to Turkey’s overtures in the early 1990s was mixed. Relishing their newfound independence from Russia, many Central Asian states were skeptical of Turkish intentions and feared exchanging one “big brother” for another. At the time, Turkey was in an economically precarious situation and unprepared to assume the role it may have imagined; in addition, its growing and complicated relationship with Russia did not aid its outreach in Central Asia. Combined with Turkish aspirations to rapidly liberalize the region economically, many Central Asian leaders feared a loss in their newly gained sovereignty.

The religious aspects of Turkish engagement also raised alarm for many. While Kemal Atatürk’s secular legacy was largely respected by regional post-communist elites, outreach in the 1990s prominently featured religious elements through religious schools and the Turkish Directorate of Religious Affairs (Diyanet). Still a major soft-power institution today, the Diyanet established the Eurasian Islamic Council in 1994 and financed mosques across the region. Despite progress, by the mid-1990s, Turkey’s momentum in the region had notably declined, a product of economic constraints, Russia’s return to the region, and Turkey’s lukewarm reception among the Central Asian states.³

Uzbekistan represented the most severe fallout from mismatched expectations. President Islam Karimov deeply distrusted Turkish intentions, linking them with growing domestic terrorism from the Islamic Movement of Uzbekistan (IMU).⁴ In 1993, Uzbekistani opposition leader Muhammed Salih fled to Istanbul, further fueling Uzbekistani suspicions. Subsequently, Uzbekistani authorities targeted Turkish-associated political movements including the Erk and Birlik parties.⁵ Tensions peaked in 1999 when Uzbekistan accused a Turkish citizen of attempting to assassinate Karimov. Over the ensuing years, Uzbekistan would go on to target several Turkish businesses with severe restrictions.⁶ Relations did not recover until Karimov’s death in 2016.

By the late 1990s, pan-Turkic ambitions had given way to quieter, steady cultural and economic interactions. Under Recep Tayyip Erdoğan’s regime, Turkey reemerged in the late 2000s within a transformed geopolitical environment: Russia’s resurgence and China’s growing influence. Erdoğan’s administration balanced ideological outreach with more pragmatic strategies, emphasizing aid, infrastructure work, military cooperation, and expanded trade.

This era marked a shift toward more inclusive engagement, supporting broader mutual interests, while retaining some of the pan-Turkic undertones. Multilateral forums emerged, notably the Turkic Council (today’s Organization of Turkic States, OTS), which was founded in 2009 on the basis of shared “historical ties, common language, culture, and traditions.”⁷ Although Turkish media and politicians continued emphasizing ethnic narratives, relations became driven primarily by pragmatism and Central Asia’s desire for diversification away from China and Russia. Erdoğan’s strong personal relationships with other Central Asian leaders also play a key role in deepening connections. Similarly, Erdoğan’s son, Bilal, is famously interested in and has spent extensive time in the region—both as an unofficial representative of his father and the head of the Turkish Youth Foundation and World Ethnosport Confederation, which was originally established in Bishkek before moving to Istanbul.⁸

Assessing attitudes towards Turkey today

Turkish cultural and business presence across Central Asia has elicited mixed reactions in the region, generally ranging from “lukewarm” to “brotherly.” A 2023 Central Asia Barometer (CAB) survey ranked Turkey as the most favorable country among respondents from Kyrgyzstan and Kazakhstan, ahead of Russia, Iran, China, and the United States. Kyrgyzstan displayed the greatest affection, with 40 percent of respondents holding “very favorable” views and 44 percent holding “somewhat favorable” views.⁹ Turkmenistan and Uzbekistan placed Turkey second, behind Russia. Turkish goods, particularly textiles, carry positive cultural associations of quality, bolstered by Turkish companies often importing European goods. Turkish diplomatic visits receive prominent coverage in Central Asian media. In non-Turkic Tajikistan, favorability remains notably lower but positive despite historical Turkish support for its then-regional rival Kyrgyzstan (the survey predated the landmark Tajikistan-Kyrgyzstan border agreement).

Among the political and business elites with warm attitudes toward Turkey, motivations vary. Some genuinely support pan-Turkic ideals; others view Turkey pragmatically as a reliable partner or gateway to the West. Debate persists over Turkey’s ideal role, with ideological factions including traditional pan-Turkists, pro-Russian groups, pragmatic nationalists, and advocates for regional integration as independently as possible from major powers.

Central Asia is increasingly trending toward regional integration, yet critical questions persist: How should non-Turkic Tajikistan be incorporated? How close should ties remain with Russia? What is Turkey’s appropriate regional political role? Such discussions remain contentious and vary significantly from country to country.

These questions are particularly important to Uzbekistan, which generally favors regional integration yet appears to remain among the most skeptical of pan-Turkic messaging, especially due to its deep economic and cultural ties with Tajikistan. Beyond the large populations of Tajikistani migrant workers, and a dependence on the Amu Darya and Zeravshan rivers,¹⁰ the two nations are culturally linked at the hip: Tajik is spoken widely in several important Uzbekistani cities, including Bukhara. Many Uzbekistanis interviewed for this project echoed the words of an Uzbekistani political analyst asked about the topic: “Uzbekistan will always put the idea of ‘Central Asia’ above Turkey.”

The Zeravshan river near Panjakent, Tajikistan. Photo by Petar Milošević, via Wikimedia Commons.

Despite ideological divides, interviewees across the region expressed that Ankara has cultivated strong institutional trust and bilateral relationships, particularly among senior state officials and younger diplomats who began their careers after the dissolution of the USSR. In contrast, older career bureaucrats trained or educated in Moscow tend to identify more with their Russian past.

Turkey’s reputation and diplomatic standing is not without its limits, however. Several Uzbekistanis and Kazakhstanis interviewed for this paper commented that the “big brother” attitude of Turks famously documented in the 1990s persists in the minds of many Turkish businessmen and diplomats,¹¹ though most agreed this has improved in recent years. In interviews with Uzbekistani experts, there was a consensus that the decision of the Organization of Turkic States (OTS) to admit the Turkish Republic of North Cyprus (TRNC) as an observer state was done with great apprehension. This aligns with Uzbekistan’s later public downplaying of the situation and ensuing confusion about the status of the TRNC in Uzbekistani and Central Asian politics.¹² In April 2025, Uzbekistan, Kazakhstan, and Turkmenistan appointed ambassadors to the Republic of Cyprus, and affirmed support for UN Security Council resolutions 541 and 550 which calls “attempts to create a ‘Turkish Republic of North Cyprus’ invalid,” to bolster ties with the EU—marking the pragmatic limits of Turkish influence.¹³ A joint declaration at the 2025 OTS summit held in Gabala called for the need to “reach a negotiated, mutually acceptable […] settlement,” to the “Cyprus issue”, and expressed “solidarity with the Turkish Cypriot people,” a statement likely designed to strike a neutral tone that balances both Ankara and Brussels.¹⁴

Understanding Turkish soft power

Media

Central Asian news media remains dominated by Russia and Russian-language sources, except in Uzbekistan, where local-language media promotion is vigorous. The Turkish state-owned Turkish Radio and Television company (TRT) is the sole major Turkish media outlet distributing content in Uzbek, Kyrgyz, Turkmen, and Kazakh. In December 2024, it expanded to include broadcasts in Farsi, spoken in Tajikistan.¹⁵ TRT also runs Avaz (meaning “voice”), a channel largely focused on promoting pro-Turkey and Turkic narratives through the form of soap operas, documentaries, news, and movies, which is distributed throughout the region in local languages. Other Turkish outlets typically publish only in Turkish or English, restricting local accessibility, while Turkish media that publishes in Russian, such as Anadolu Ajansi (the Turkish state-run news agency), rarely cover Central Asia. Turkish news is not widely consumed, except in Turkmenistan, where 47 percent of respondents in a CAB survey reported “occasionally viewing” Turkish news.¹⁶

In entertainment media, Turkish films and soap operas enjoy broad popularity throughout the region, including Tajikistan. Kazakhstan’s state television regularly airs Turkish dramas, and the two states have intensified cooperation in the field including jointly producing TV series and hosting a “Turkic film festival”.¹⁷ Some Turkish musicians are well-known, although Uzbekistani, Russian, and Kazakhstani artists still dominate the music scene. Media exchanges are increasingly reciprocal: Kazakhstan’s state-owned Silk Way TV began broadcasting in Turkish in May 2024, and many Turkish shows are filmed in the region. These Turkish TV exports are part of a broader trend, with global demand for Turkish series increasing 184 percent from 2020 to 2023.¹⁸

Development aid and projects

Turkey’s global development aid programs extensively engage Central Asia, historically prioritizing Kyrgyzstan and Kazakhstan. Uzbekistan resisted Turkish aid until rapprochement in 2017, while resource-rich Turkmenistan has shown fluctuating interest and non-Turkic Tajikistan fell lower on the list of priorities. Between 1991 and 2018, Turkey ranked as Kyrgyzstan’s largest official development assistance provider ($1.156 billion) and the second largest to Kazakhstan ($669 million).¹⁹ Turkish aid often focuses on prominent infrastructure projects—including museums, mosques, hospitals, and universities—typically built by Turkish construction firms.

Recently, Turkey’s soft power model appears to be moving away from direct development aid however, influenced by rising alternative donors such as India, Gulf countries, and the European Union, Turkey’s own economic constraints, and its increasing prioritization of Syria and Africa. Importantly, rapidly developing Central Asian states like Kazakhstan and Uzbekistan prefer investments and technical assistance over traditional aid. Kazakhstan has rebranded itself as an aid provider, establishing the Kazakhstan Agency for International Development (KazAID) in January 2021.

Despite this shift, Turkish aid’s legacy continues to enhance its image in the region. TIKA’s projects are often strategically located and visible. Examples include the Recep Tayyip Erdoğan Bishkek Kyrgyz-Turkish Friendship State Hospital, adorned with Turkish flags, and the renovated Kyrgyz State History Museum, featuring a plaque thanking Turkey, adjacent to the Kyrgyzstani parliament.

Turkish-supported projects, such as archaeological excavations in Akmola (Kazakhstan) and a traditional handicrafts center in Khiva (Uzbekistan), frequently reinforce pan-Turkic narratives. Education initiatives explicitly promote Turkic cultural and historical studies, particularly the creation of “Turkology” departments, including in autonomous public universities. Despite the creation of numerous faculties of Turkology across the region, there is still a major disconnect with everyday people, many of whom assume it is simply the study of Turkey, with one Kazakhstani professor of Turkology describing “even our students didn’t know about Turkology before they came to the department.”²⁰

Beyond supporting Turkology departments, the Turkish government maintains a network of schools in the region both through its Maarif program and two joint universities: Hoca Ahmet Yesevi University (Kazakhstan) and Manas University (Kyrgyzstan), alongside quotas designed to encourage Central Asians to study in Turkey. In 2020, Central Asians received 793 university scholarships, comprising 21 percent of all Turkish international scholarships despite representing 6.5 percent of applicants.²¹

Regional integration, changing dynamics, and the Organization of Turkic States

Originally founded as the Turkic Council in 2009, the OTS has grown increasingly influential in Central Asia. Since its 2021 rebranding, OTS has moved toward more concrete regional integration and coordination, addressing significant economic and political issues. OTS’s evolution has involved the establishment of several working bodies like the Civil Protection Mechanism for disaster relief, the Union of Turkic Chambers of Commerce (TCCI), and the Turkic Investment Fund (TIF), which launched in May 2024 with $500 million in starting capital,²² and increased to $600 million with Hungary’s entry in February 2025.²³ As of September 2025, the TIF has yet to post its first tenders, which are largely expected to focus on supporting SMEs, renewable energy, and transportation. An announcement from OTS heads of state at a meeting in Budapest suggested the TIF may begin operating in full by the end of 2025, though few details remain available.²⁴

Turkish President Recep Tayyip Erdoğan speaks at the 7th OTS summit in Baku, Azerbaijan. Handout from the Press Office of the President of the Republic of Azerbaijan.

OTS’ primary focus has increasingly transitioned from cultural to economic integration, supporting standardized customs processes, transport infrastructure development, and logistics improvements through its Transport Connectivity Program and Turkic Investment Fund. These projects have received broad international support, aligning with China’s Belt and Road Initiative and the Trans-Caspian International Transport Route (TITR/Middle Corridor), backed by institutions like the Asian Development Bank, European Bank for Reconstruction and Development, and the EU. Instead of working through these routes, Turkey prefers to support these initiatives via OTS and the Eurasian Transport Route Association, cofounded in September 2024 with Azerbaijan, China, Kazakhstan, Kyrgyzstan, Tajikistan, and Austria.²⁵

It should be noted that OTS is not a military alliance, something that would conflict directly with the charter of the Collective Security Treaty Organization,²⁶ but is increasingly moving toward security cooperation. The most recent development in this area came during the 2025 OTS summit in Gabala, Azerbaijan, when Azeri President Ilham Aliyev called for joint OTS military exercises, a significant step.²⁷ Similarly, Kazakhstani President Kassym-Jomart Tokayev called for the establishment of a Turkic cybersecurity council designed to jointly prepare for and respond to cyberattacks and threats.²⁸

While Turkey remains a major economic, military, and demographic power within OTS, it does not appear to dominate unilaterally. Experts interviewed from Uzbekistan, Kyrgyzstan, and Kazakhstan broadly emphasized their satisfaction with their representation in OTS, highlighting, for example, the foundational role of the former president of Kazakhstan, Nursultan Nazarbayev, and Azerbaijan’s active participation. Nonetheless, Turkey has secured notable policy victories through OTS, such as establishing the curriculum for the International University of Turkic States, based on Turkey’s university system, and admitting the Turkish Republic of Northern Cyprus as an observer state.²⁹

Economic presence

Turkish businesses have established significant presence across Central Asia, leveraging shared language, culture, geographical proximity, and Western business connections. Predominantly active in construction, hospitality, and manufacturing (especially textiles), nearly 4,000 Turkish businesses currently operate in the region.³⁰ By 2025, eight years after Uzbekistan’s reproachment with Turkey, nearly 1,900 Turkish companies operated in the country, ranking only behind China and Russia.³¹ Since 2008, Turkey has consistently ranked in Kyrgyzstan’s top three sources of foreign direct investment (FDI), sometimes as number one on the list, most recently in 2022.³² Additionally, Turkish markets are increasingly attracting Central Asian investors, exemplified by Kazakh fintech firm Kaspi.kz’s acquisition of Turkish e-commerce giant Hepsiburada in October 2024.³³

Turkish businesses enjoy key competitive advantages in Central Asia, particularly easier access to capital and financial transactions through established Turkish banks. Demir Bank in Kyrgyzstan, now owned by HSBC, has operated for over twenty years and was Kyrgyzstan’s first fully foreign-capitalized bank.³⁴ In September 2024, the Turkish state-owned Ziraat Bank announced plans to open a Bishkek branch, and was already operating subsidiaries in Uzbekistan, Turkmenistan, and Kazakhstan.³⁵ By 2018, shortly after Turkey’s rapprochement with Uzbekistan, Ziraat’s Uzbek subsidiary had roughly 1,000 institutional customers and 13,000 individual clients, and it secured a $350 million credit line.³⁶

Turkish businesses also maintain extensive connections and experience working alongside Russian banks and corporations, which are crucial to regional operations. Turkish companies often serve as intermediaries for Western firms hesitant about local market conditions, particularly in Uzbekistan and Kyrgyzstan. Three of sixteen US businesses in Kyrgyzstan operate through Turkish intermediaries. Additionally, US Chambers of Commerce (aka AmChams) in Central Asia increasingly welcome third-country involvement, promoting regional dialogues with Western businesses. Central Asian AmChams established partnerships with those from Turkey, Greece, and Bulgaria during the October 2024 Eurasian Economic Summit in Istanbul.³⁷

Turkey’s economic footprint in Central Asia is increasingly shaped by bilateral agreements and diplomatic ties. Public pledges to aggressively increase bilateral trade often follow high-level meetings. Between 2018 and 2024, Turkey announced bilateral trade targets of $5 billion with Turkmenistan, $2 billion with Kyrgyzstan, $15 billion with Kazakhstan, $5 billion with Uzbekistan, and $1 billion with Tajikistan. Despite the goals, actual bilateral trade has only increased substantially with Kazakhstan and Kyrgyzstan, largely stagnating or inching forward elsewhere, according to UN Comtrade data.³⁸ Nonetheless, Turkey has struck several deals to support its economic position in the region in recent years like preferential trade agreements with Uzbekistan or Turkey’s November 2024 commitment to purchase Kazakh beef at double China’s offered price.³⁹ Though the economic impact of deals such as these is often limited, they are widely covered in local news, serving to strengthen Turkey’s local image. Economic policy increasingly underpins diplomatic ties, exemplified by an April 2024 memorandum of understanding for central bank cooperation between Turkey and Kazakhstan; Turkey’s November 2024 decision to waive Kyrgyzstan’s $59 million debt in exchange for renewable energy projects; and plans for a Turkish-backed industrial zone in Kyrgyzstan’s Chui province.⁴⁰

The port of Aktau, in Kazakhstan, is pictured. Ashina via Wikimedia Commons.

Competition is intensifying as Central Asia’s geopolitical importance grows. Gulf-based companies are rapidly entering sectors traditionally prized by Turkish firms, particularly energy and hospitality in Uzbekistan and Kyrgyzstan. In Uzbekistan alone, Saudi Arabia recently launched $3 billion in renewable projects,⁴¹ the UAE has signed several agreements on tourism,⁴² and Qatar Airways launched flights to Uzbekistan in February 2024, challenging Turkish Airlines’ near monopoly on long-distance routes following Russia’s full-scale invasion of Ukraine.

Energy diversification ambitions significantly influence Turkey’s Central Asian strategy. Kazakhstan holds substantial gas reserves and thirty billion barrels of crude oil; Turkmenistan has the world’s fifth-largest gas reserves alongside major oil deposits. Uzbekistan, though comparatively smaller, has considerable undeveloped fossil-fuel reserves. While currently minor suppliers, these countries have long entertained increasing westward exports via Turkey, benefiting both Central Asian energy producers and Turkey by reducing Turkish dependence on Russian energy, enhancing Turkey’s energy hub ambitions, and allowing Central Asian states to gain direct European market access. Accessing Europe’s markets may be increasingly important for Turkmenistan, which exported 70 percent of its gas to China in 2024, while China has taken steps to diversify its energy sources, and Russia moves to corner the Central Asian gas market.⁴³ Though the theoretical potential for western movements of Central Asian gas is often entertained by some outspoken Turkish energy analysts, there is a wide gap between potential and reality.⁴⁴

The political environment may be changing to make these projects more feasible: Russia’s 2022 invasion of Ukraine, international interest in the Middle Corridor, and major infrastructure advancements present new opportunities for westward energy exports. The Baku-Tbilisi-Ceyhan pipeline (BTC), initially designed for Azerbaijani oil, now increasingly sources from Central Asia. Kazakhstan began BTC oil shipments from its Tengiz field in 2008; Turkmenistan followed in 2010.⁴⁵ Discussions are reported to be underway for Turkmenistan to export gas via the Trans-Anatolian Pipeline (TANAP), bolstered by plans to double the pipeline’s capacity from 16 billion cubic meters to 32 bcm.⁴⁶ By 2024, Kazakh and Turkmen oil accounted for about 18 percent of BTC’s throughput.⁴⁷ In November 2024, Kazakhstan’s energy minister, Almasadam Satkaliyev, announced intentions to significantly reduce oil exports via Russia’s Caspian Pipeline Consortium (CPC), shifting instead to BTC and boosting exports from 1.5 million metric tons annually to 20 million tons.⁴⁸

Security

Over the past decade, defense and intelligence cooperation has become increasingly central to Turkey’s Central Asia strategy, driven by the rapid growth and quality of Turkish arms. Turkish weapons exports grew 29 percent in 2024 alone, with Turkish ships, drones, and armored vehicles appearing in regions including Libya, Indonesia, Saudi Arabia, and Ukraine.⁴⁹ Central Asia is no exception, as all four Turkic states now utilize Turkish defense technology, notably the competitively priced Anka, Akinci, and TB drone series to fill gaps left by Russian assistance. Historically reliant on neighboring Russian and, to a lesser extent, Chinese arms, Central Asian countries are cautiously exploring diversification. Kazakhstan’s agreements with Turkish firms YDA and Asfar to expand its Caspian fleet,⁵⁰ and Kyrgyzstan’s October 2021 purchase of Turkish armored vehicles, exemplify this slow but steady shift.⁵¹ Turkey also pursued weapons sales to Tajikistan, including a July 2023 agreement offering to front $1.5 million of arms purchases⁵² and, according to Turkish media reports, drone sales.⁵³ However, Tajikistan’s procurement remains uncertain, even after its landmark February 2025 border agreement with Kyrgyzstan—a recipient of Turkish weapons and military aid. With Russia maintaining its sole regional military base there, and China having built an extensive security apparatus, including private contractors—and a “secret” base, according to The Telegraph (a British newspaper) but denied by China and Tajikistan—external pressures severely limit Tajikistan’s maneuvering space.⁵⁴ Considering little has been heard from either Tajikistan or Turkey since their July 2023 agreement, these and other factors may indicate that further cooperation has stalled.

Turkey’s military cooperation in Central Asia extends beyond arms sales. Uzbekistan signed agreements for military and technical cooperation in 2022 and intelligence sharing in 2024.⁵⁵ Kyrgyzstan, which first partnered militarily with Turkey in 1993, benefited from Turkish, Uzbek, and Russian support in defeating the IMU’s 1999 Batken incursion.⁵⁶ By 2024, Kyrgyzstan-Turkey relations elevated to a “comprehensive strategic partnership,” explicitly incorporating security issues.⁵⁷ All four Turkic Central Asian nations regularly join military exercises with Turkey and send personnel for training in Turkish military institutions.

The Indian Chief of Army Staff, General Bipin Rawat visits the Aselsan Engineering Defence Industrial Base in Kazakhstan, a joint project with Turkey. Handout from the Press Information Bureau of the Ministry of Defense of the Government of India.

Kazakhstan’s security relationship with Turkey is the deepest, particularly in defense industrial collaboration, beginning with the establishment of Kazakhstan Aselsan Engineering (KAE) in 2011, a joint venture between Kazakh Engineering JSC and Aselsan. Operational since 2013, KAE quickly expanded from electronics and optics to aircraft components and complete weapon systems refurbishments.⁵⁸ Importantly, KAE is increasingly focusing on producing more sophisticated technologies including circuit-boards and cryptographic communication systems.⁵⁹ Beyond KAE, Kazakhstan and Turkey reportedly signed agreements on broader defense-industry cooperation and intelligence sharing in 2020 and 2023.⁶⁰ In 2022, both countries agreed to jointly produce Turkey’s Anka unmanned aerial vehicle, with additional reports of potential collaboration with Turkish drone manufacturer Baykar.⁶¹ Similarly, in August 2024 Turkey and Kazakhstan drafted an agreement opening their airspace to each other’s military personnel and equipment, although the current status remains unclear.⁶²

Turkey’s NATO membership is a key consideration for its security engagement with Central Asia. Turkey has actively supported NATO’s Partnership for Peace program’s expansion to the region since the 2004 NATO Istanbul Summit,⁶³ which also appointed a Turkish official as NATO’s first special representative to the region.⁶⁴ Though NATO’s work in the region is collaborative and distributed among members, it is not uncommon to encounter Central Asians who perceive Turkey as a “bridge” to the Alliance. Many Central Asians “count on Turkey, as a member of NATO and the international order, to assist [Central Asian states] with sensitive international issues,” according to a former senior Uzbek foreign policy adviser. Still, Turkey does play a role in boosting NATO’s Central Asia presence through its sale of NATO-compliant arms as well as support for projects like Kazakhstan’s Military Institute of Foreign Languages. The institute has received funding from the United States and United Kingdom because of its perceived value to NATO relations.⁶⁵

The Russia question and limits to Turkish ambitions

Russia remains an unavoidable factor in Central Asia, deeply influential in almost every sector ranging from agriculture to defense, telecommunications to aid (despite low formal official development aid rankings, Russia often acts through intermediaries like the World Food Programme.)⁶⁶ Beyond economic and military might, Russians, along with many Central Asians, view the region as firmly within even the most conservative definitions of its sphere of influence, and essential to its interests.

So far, the Russian government’s official reaction to Turkey’s increasing regional presence appears largely muted; Turkey has historically balanced its approach to the region carefully, with consideration for Russia. Russian and Turkish officials in Central Asian countries reportedly maintain amicable relations and have cooperated previously. Yet Russia likely feels increasing discomfort with Turkey’s expanding security and political involvement—domains Russia guards zealously. Turkish firms are gaining market share in sectors prized by Russian companies such as defense, energy, and construction. In just the three months following December 2024, Turkish companies announced major infrastructure projects in areas historically dominated by Russia and China, including a 400 megawatt power plant in Kashkadarya, Uzbekistan;⁶⁷ a seaport in Kuryk, Kazakhstan;⁶⁸ and four power plants across Kyrgyzstan.⁶⁹

Russia’s policy toward Turkey in Central Asia remains complex. First, Russians generally do not categorize Turkey as a blatantly “Western” entity despite its NATO membership, reflecting the pragmatism that exists between the two countries and Turkey’s often complicated relationship with the West. Additionally, Russia’s regional strategy has suffered from complacency, assuming Central Asia’s permanent alignment despite significant advancements in Central Asia’s economic wealth and development, cultural and political trends favoring increased autonomy, and the entrance of other actors in the region. Only in recent years has Russia begun to refocus on the region, due to both economic necessity amid the war in Ukraine and a response to geopolitical changes in the region. Second, increasing levels of economic interdependence between Turkey and Russia, particularly after the latter’s 2022 full-scale invasion of Ukraine, complicates direct confrontation; as of August 2025, Turkey is now Russia’s largest purchaser of oil products and third-largest buyer of both crude oil and pipeline gas.⁷⁰ This economic interdependence helps ensure Russia and Turkey compartmentalize any issues to avoid broader disruptions; the two countries have sparred in Libya, the Caucasus, and elsewhere, with little impact on broader diplomatic and economic engagement. Third, while Turkey’s regional influence grows, it neither fully replaces nor directly threatens Russia, unlike a US presence would. Instead, Turkey merely provides a degree of relief to Russia’s dominance in security, intelligence, and energy, cautiously pushing boundaries without provoking extreme Russian reactions. Turks, Russians, and Central Asians recognize this dynamic, granting Turkey some protection; any severe Russian response would undermine Russia’s narrative as the region’s “benevolent protector.”

Nonetheless, there are signs that Turkey’s deepening security and economic ties may increasingly unsettle Russia. A leaked internal Russian document addressed to Russian Federation Prime Minister Mikhail Mishustin in April 2023 explicitly warned that Central Asian states sought integration “without Russia,” highlighting the Organization of Turkic States.⁷¹ The same document expressed anxiety over the region’s shifting worldview, including English replacing Russian as a second language. Shortly after, all OTS members except Kyrgyzstan adopted new Latin-script alphabets closely aligned with those of Azerbaijan and Turkey.⁷² In response, Russia initiated a campaign promoting Cyrillic script in Kyrgyzstan, including launching russian.kg, a website explicitly promoting Cyrillic and Russian use.⁷³ A September 2025 analysis done by renowned Kazakhstani foreign policy expert Eldaniz Gusseinov found that Russia is increasingly promoting a “Greater Altai narrative” in its outreach to the region as a cultural counterweight to OTS’ pan-Turkic underpinnings, and that “Russia is beginning to see OTS as a challenge to its presence in Central Asia.”⁷⁴ Though anecdotal and unquantifiable, many of the Uzbekistan experts interviewed for this paper noted a perceived uptick in “anti-Turkish” and “anti-pan-Turkic” sentiments in Russian-language news media over the past two years.

The drive to diversify relations intensified following Russia’s 2022 invasion of Ukraine. Symbolic incidents such as Tokayev’s last-minute decision to switch a speech to Kazakh to rebuke Putin’s claim that “Kazakhstan is a Russian speaking country,”⁷⁵ or Tajik President Emomali Rahmon’s emotional demand for “respect” from Russia,⁷⁶ though small were meaningful enough to garner millions of views. Such events do not imply sudden hostility between Russia and Central Asian states but illustrate a trend towards empowerment and regional autonomy.

Despite these subtle shifts, underestimating Russia’s profound influence remains unwise. Turkey, like all other external players, must tread carefully: The decision to expand its presence more aggressively than its current rate could lead to push back from not only Russia but also Central Asians. Beyond political leverage, and despite recent conversations raising a pan-Turkic or pan-Central Asian identity, the lingering cultural impact of nearly 150 years of Russian rule is impossible to ignore; as one Kyrgyzstani former cabinet minister mused when asked about relations with Turks: “I think in Russian.”⁷⁷

Spotlight on Turkmenistan

Special attention should be paid to Turkey’s uniquely strong relationship with Turkmenistan, a reclusive, neutral country that tightly controls its media, economy, and security apparatus. Most countries struggle to engage meaningfully with Turkmenistan despite its vast resources, including the world’s fifth-largest gas reserves, significant oil deposits, critical minerals, and strategic location along the Caspian Sea.⁷⁸ Turkey, however, enjoys exceptional access, rooted in its greater linguistic similarities than other Central Asian nations, prompting Turkey’s Ministry of Foreign Affairs to frequently describe relations as “one nation, two states.”⁷⁹

Energy and construction form the pragmatic foundation of their relationship, initially driven by Turkish businessmen in the 1990s who actively lobbied for deeper economic ties. Today, Turkish-led projects are substantial, including an active role in the construction of the new smart-city project, Arkadag,⁸⁰ and a major seaport in Turkmenbashi.⁸¹ Over 600 Turkish companies operate in Turkmenistan, with contractors undertaking $216 million in projects in 2024 and $50 billion since independence.⁸² A notable milestone occurred in February 2025, when the two countries agreed on their first gas swap via Iran. They exchanged a modest yet symbolic 1.3 bcm, representing progress toward linking their energy sectors. In March 2025, Turkey publicly invited Turkmenistan to “jointly develop its oil and gas deposits” as well as expand cooperation on electricity transfers, according to Hurriyet Daily News.⁸³

The growing economic partnership has expanded into media and security, positioning Turkey alongside a select group of states—including Russia, Azerbaijan, and China (notably, Turkmenistan supplies more than 28 percent of China’s gas imports).⁸⁴ Turkey has previously acted as a diplomatic bridge between Turkmenistan and the West, promoting broader regional engagement. Turkmenistan has indicated some receptiveness to the idea of joining OTS as a full member but progress remains slow.⁸⁵

Signs of Turkmenistan’s gradual opening have emerged recently, including the Caspian Sea-Black Sea transport corridor agreement with Romania, Georgia, and Azerbaijan,⁸⁶ and a free trade agreement with Uzbekistan.⁸⁷ In March 2025, Turkmenistan announced it was considering joining the Gas Exporting Countries Forum, another meaningful step.⁸⁸ However, optimism should be tempered, as prior hopeful developments have been undermined by Turkmenistan’s deep-rooted isolationism and stringent security priorities.

Turkmenistan’s potential role in the Middle Corridor

Meaningful engagement with Turkmenistan remains valuable to the West, as the country occupies a critical position between Russia and Iran and could significantly bolster Europe’s energy and mineral security. Turkmenistan’s complicated relationship with Russia, aggravated by Russia’s expanding interests in Central Asian gas markets⁸⁹ and China’s ongoing diversification away from Turkmen gas, underscore this opportunity.⁹⁰ Furthermore, Turkmenistan’s full participation in the Middle Corridor could notably improve the viability of the project. This would alleviate Uzbekistan’s and Kyrgyzstan’s reliance on Kazakh transit routes, previously a source of concern for Bishkek,⁹¹ and ease congestion in Kazakh ports such as Kuryk and Aktau, enhancing overall transportation efficiency. Despite major progress in the creation of key infrastructure—including port expansion projects in Kuryk, Poti, and Anaklia; Kazakhstan’s plans to purchase 446 new locomotives by 2028;⁹² and a 70 percent increase in Middle Corridor freight volume in 2024—significant challenges remain.⁹³ These include inefficient Caspian port operations, overloaded rail infrastructure in Georgia, outdated logistics software, and inconsistent customs standards. Transportation via the Middle Corridor remains roughly 150 percent more costly than via the Northern Corridor, according to multiple interviews with experts. Turkmenistan seems unusually eager to expand its outside connectivity through corridors beyond the Middle Corridor project, including exploring coordination with Afghanistan.⁹⁴

Interpretations for the American policy maker

Over two decades, Turkey has steadily grown into a major player in Central Asia across economic, security, and cultural spheres. Even in Tajikistan, the region’s sole non-Turkic state closely aligned with Russia and China, Turkey now ranks among the top five import and export partners, having accrued substantial economic and cultural presence.⁹⁵ Similarly, Turkey has gained exceptional access to isolated Turkmenistan despite the nation’s restrictive political environment.

Despite Turkey’s significant presence in the region, Russia continues to dominate security, telecommunications, and media, while China holds unmatched economic influence. While Turkish media frequently emphasizes shared ethnic ties as the foundation for Turkey-Central Asia relations, pragmatism likely remains the primary driver of warm relations, with linguistic and cultural commonalities supporting, though not forming, the basis-of deep ties. Yet as the Organization of Turkic States strengthens and cultural and economic exposures increase, ethnic bonds will likely genuinely strengthen over time.

Turkey’s influence in Central Asia faces some external constraints, particularly from Russia, China, and to a lesser extent, Iran, all holding significant leverage over Turkish and Central Asian affairs. By gradually expanding its presence, Turkey can maintain control over its regional narrative and avoid overly provoking nationalist or pro-Russian elements. Attempting a more aggressive strategy risks backlash, both internally within Central Asia and externally from Russia or China. Internally, Turkey’s constraints have somewhat eased as it shifts from foreign aid to energy and security issues, thereby reducing the direct financial burden. Despite this, Turkey’s potential to project power in the region also remains constrained by its increasing commitments to other regions, including Somalia, Libya, and Syria.

On the flip side, the array of international actors interested in transport connectivity across Central Asia may end up bolstering Turkey’s presence and goals in the region, including the EU and China, due to Turkey’s key geostrategic position along the Middle Corridor route. The EU, which has already begun investing billions of euros in Central Asia’s energy, mining, and transport sectors, finds common ground with Turkey on this issue, which has long sought to function as an energy hub for Europe.⁹⁶

All told, American policymakers should regard Turkey’s growing regional presence favorably, even amid broader disagreements between Washington and Ankara. Turkey has historically shown the ability to compartmentalize relations—collaborating and competing simultaneously with other states. Considering geographic distance, local attitudes, domestic politics, and budget constraints, US goals and expectations towards the region should be focused and pragmatic, a far cry from any dreams of hegemony.

US official policy objectives for Central Asia have not been publicly updated since 2019.⁹⁷ Based on interviews and existing public documents, this paper proposes defining America’s core objectives in Central Asia today as:

Securing European and US critical mineral and energy security.
Providing viable political and economic alternatives to China and Russia to bolster Central Asian autonomy.
Promoting regional stability.
Countering Islamic terrorism, especially as radicalized Central Asian fighters and groups have demonstrated their reach as far as Russia, Syria, and Afghanistan, while continuing to threaten the stability of the region.⁹⁸
Facilitating American business access to Central Asia’s growing markets.

Investing and engaging in Central Asia is in the United States’s interests, though this will inevitably remain severely limited by lack of political will and geographical difficulties.⁹⁹ Though there is no substitute for fully focused American economic and military might, these goals may be more achievable at minimized political and economic cost by supporting partner countries already committed to and invested in the region, including Turkey. There is already established business collaboration, with many American businesses opting to partner with companies from friendly nations in joint ventures or as intermediaries to navigate the complexities of the region. Most importantly, Turkey’s activities in the region largely align with US interests, whether by promoting autonomy from Russia and China or developing transport and energy infrastructure. Areas of Turkish policy that don’t align with US interests, such as the emphasis on Turkic heritage or cultural overtures, are largely benign to US goals. Major opportunities for increased coordination remain, bolstered by the Trump administration’s already-indicated interest in working with Turkey on other foreign policy areas such as Libya and Syria.¹⁰⁰ This paper recommends the following cost-effective policy actions:

Consider informal or technical engagement with the Organization of Turkic States, particularly to coordinate on transit and economic issues. Unlike the C5+1 format, OTS includes Azerbaijan and Turkey, both of which maintain deep and strategic ties to Central Asia and are essential players in projects like the Middle Corridor.¹⁰¹ Appointing a special envoy may be a solution that allows dialogue without full endorsement of OTS, akin to the US approach to the Organization of Islamic Cooperation (OIC). At the September 2025 OTS summit in Azerbaijan, the ensuing joint declaration also called for the establishment of an OTS+ framework to significantly expand cooperation with other states, though details remain to be revealed.
Create a regular multilateral dialogue platform involving major US-allied regional partners with strong existing ties to the region, especially Turkey, South Korea, and Japan, to coordinate Central Asian policy and facilitate greater dialogue. Partially inspired by the 2023 Camp David trilateral summit—which established annual trilateral dialogues, outlined common policy goals, and included a commitment to coordinate policy in the Indo-Pacific—this could further institutionalize policy coordination in Central Asia.¹⁰²
Contribute targeted technical expertise to partner-led aid programs, especially in agriculture, water management, and resource mapping—fields where US technology outperforms that of many regional donors. For example, American seed and soil management technologies demonstrated superior results in Kyrgyzstan during prior USAID programs compared to a similar Turkish program.¹⁰³ With direct US aid scaled back, supporting partner agricultural or environmental initiatives by contributing American tools or knowledge can yield significant development gains and enhance regional food and water security—at minimal cost and without expanding a direct US aid footprint.
Invest selectively in critical transport and energy infrastructure projects through minority stakes, with Turkish or other allied countries’ firms as primary operators. Though American companies have a long-established presence in Kazakhstan and in Uzbekistan to a lesser degree, elsewhere they often hesitate to lead due to regional complexities and geopolitical sensitivities. Indirect investment through trusted intermediaries, with consideration for political and environmental, social, and governance compliance, when necessary, could mitigate risk while advancing US objectives to link Europe and Central Asia economically.¹⁰⁴
Explore consolidating intelligence sharing, particularly regarding Afghanistan and Taliban threats, among NATO allies, particularly Turkey and the UK, with the intention of coordinating with Central Asian states. The Taliban are a source of significant unease to Central Asian states, particularly with their diversion of 20 percent to 30 percent of the Amu Darya River’s water, which poses a serious security threat to Uzbekistan, Turkmenistan, and Tajikistan.¹⁰⁵ Uzbekistan has made progress in overtures to resolve the issue in recent months, though major concerns remain. Leaked documents widely circulated on Russian and Central Asian social media platforms allege that the United States and the UK may already have intelligence-sharing agreements with Uzbekistan;¹⁰⁶ extending this partnership across the region, as is safe and feasible, would bolster security against Taliban-linked extremism such as the Islamic Movement of Uzbekistan.¹⁰⁷
Assist partner-led migrant labor exchange programs to reduce Central Asian dependence on Russian remittances,which form the supermajority of total remittance inflows in the region. Remittances are a major portion of the economies of Uzbekistan, Tajikistan, and Kyrgyzstan, representing 49 percent of Tajikistan’s gross domestic product in 2024, for example.¹⁰⁸ Uzbekistan already actively sends migrant workers to Turkey, South Korea, and several European countries through exchange programs. Expanding such programs with US diplomatic and modest financial support would further loosen Russia’s economic grip at minimal cost.
Leverage Turkey’s relationship with Turkmenistan to advance US relations with this strategically critical but isolated state. Turkish President Erdoğan’s close ties with the Turkmen father-son presidential leadership of Gurbanguly and Serdar Berdimuhamedov, combined with American private-sector interest in partnering with Turkish corporations already trusted in Turkmenistan, represent strategic opportunities for enhancing Western access.

Over the past twenty years, Turkey has managed to secure a significant foothold in Central Asia, presenting as both a pragmatically useful economic and security partner, while reinforcing its standing through common linguistic and cultural ties. The bonds between Turkey and the region appear to be growing in strength. Though pragmatism largely motivates high-level relations today, future generations will likely bear increasingly tight bonds that supersede only the pragmatic.

Though Turkey’s influence is still overshadowed by the titans of the neighborhood—Russia and China—it is nonetheless noteworthy. For the United States, Central Asia represents a region with great potential value, though the current political and geographic circumstances make major investment difficult. By critically assessing and coordinating with other partners that are far more established and dedicated to working in the region, the United States could see significant progress toward goals that match its foreign policy objectives.

About the author

Kiran Baez is a research assistant at the Atlantic Council’s Turkey program focusing on Central Asia and energy issues. Add him on LinkedIn and X.

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1 Toghrul Ali, “European and International Financial Institutions to Invest $10 Billion in the Middle Corridor,” Caspian Policy Center, January 2024, https://www.caspianpolicy.org/research/economy/european-and-international-financial-institutions-to-invest-10-billion-in-the-middle-corridor; Dana Omirgazy, “UK Parliament Sees Middle Corridor as Strategic Route for Resilient Global Supply Chains,” Astana Times, July 4, 2025, https://astanatimes.com/2025/07/uk-parliament-sees-middle-corridor-as-strategic-route-for-resilient-global-supply-chains/; and Emma Collet, “EU Pledges €12 Billion to Consolidate Its Position in Central Asia,” Euractiv, April 4, 2025, https://www.euractiv.com/section/politics/news/eu-pledges-e12-billion-to-consolidate-its-position-in-central-asia/.

2 Neils Drost, Giulia Cretti, and Babette van Giersbergen, “Central Asia Emerging from the Shadows,” Clingendael Institute, January 2025, https://www.clingendael.org/sites/default/files/2025-01/central-asia-emerging-from-the-shadows.pdf.

3 Svante Cornell, “Türkiye’s Return to Central Asia and the Caucasus,” Central Asia-Caucasus Institute, July 2024, https://www.silkroadstudies.org/publications/silkroad-papers-and-monographs/item/13515-t%C3%BCrkiye%E2%80%99s-return-to-central-asia-and-the-caucasus.html.

4 Ahmed Rashid, “They’re Only Sleeping,” New Yorker, January 6, 2002, https://www.newyorker.com/magazine/2002/01/14/theyre-only-sleeping.

5 Bayram Balci and Thomas Liles, “Turkey’s Comeback to Central Asia,” Insight Turkey 20, no. 4: (2018), https://www.insightturkey.com/commentaries/turkeys-comeback-to-central-asia.

6 Altay Alti, “Turkish Businesses Getting Set for Uzbek Bonanza,” Asia Times, July 10, 2018, https://asiatimes.com/2018/07/turkish-businesses-getting-set-for-uzbek-bonanza/#.

7 “Nakhchivan Agreement: On the Establishment of the Cooperation Council of Turkic Speaking States,” Organization of Turkic States Online Archives, October 3, 2009, https://www.turkicstates.org/u/d/basic-documents/nakhchivan-agreement-on-the-establishment-of-the-copperation-council-of-turkic-speaking-states-1-en.pdf.

8 “The President of Turkmenistan Held a Meeting with the Head of the World Ethnosport Confederation,” Ministry of Foreign Affairs of Turkmenistan, September 27, 2024, https://mfa.gov.tm/en/news/4769.

9 Tlegen Kuandykov, Public Perception of Turkey in Central Asia, Central Asia Barometer, 2023, https://ca-barometer.org/assets/files/froala/7c9df247afe316b054e56a538aa8810219ae584d.pdf.

10 Young-Jin Ahn and Zuhriddin Juraev, “Examination of Regional Water Governance and Water Insecurity Issues in Central Asia,” Sustainable Water Resources Management 10, no. 3 (2024), https://doi.org/10.1007/s40899-024-01099-y.

11 Toni Alantra and Kritstiina Silvan, “Turkey in Central Asia: Limits and Possibilities of a Greater Role,” FIIA Briefing Paper 328, Finnish Institute for International Affairs, 2022, https://fiia.fi/wp-content/uploads/2022/01/bp328_toni-alaranta-kristiina-silvan_turkey-in-central-asia.pdf.

12 “Норов опроверг информацию о принятии Северного Кипра в Организацию тюркских государств (Norov Denies Information About Northern Cyprus’s Admission to the Organization of Turkic States),” Fergana News Agency, November 11, 2022, https://fergana.agency/news/128300/.

13 “Central Asian States Send Envoys to Cyprus, Accept UN Resolutions on Occupied North,” eKathimerini, April 14, 2025, https://www.ekathimerini.com/politics/foreign-policy/1266999/central-asian-states-send-envoys-to-cyprus-accept-un-resolutions-on-occupied-north/.

14 “Gabala Declaration of the Twelfth Summit of the Organization of Turkic States,” Organization of Turkic States, October 7, 2025, https://turkicstates.org/u/gabala-declaration-.pdf.

15 “Turkey Launches Persian Language News Media Aimed at Iran,” bne IntelliNews, December 18, 2024, https://www.intellinews.com/turkey-launches-persian-news-media-aimed-at-iran-359138/.

16 Kuandykov, Public Perception.

17 Abira Kuandyk, “Kazakhstan and Turkey to Cooperate in Alp-Arslan Historical TV Series,” Astana Times, April 5, 2021, https://astanatimes.com/2021/04/kazakhstan-and-turkey-to-cooperate-in-alp-arslan-historical-tv-series/.

18 Robert Badendeick, “Booming Turkish TV Drama Industry Captures Hearts and Minds Worldwide and Boosts Tourism,” eKathimerini, July 12, 2024, https://www.ekathimerini.com/in-depth/society-in-depth/1243830/booming-turkish-tv-drama-industry-captures-hearts-and-minds-worldwide-and-boosts-tourism/.

19 Arsen Omuraliev, “Donor Activity in Central Asian Countries Since 1991,” Central Asian Bureau for Analytical Reporting (CABAR), a project of Institute for War & Peace Reporting, 2020, https://cabar.asia/en/donor-activity-in-central-asian-countries-since-1991.

20 Virtual interview by author with Astana-based professor of Turkology, April 2025. Turkology is the study of the languages, culture, history, and linguistics of peoples who speak Turkic languages.

21 Turkiye Scholarships, Annual Report 2020, Presidency for Turks Abroad and Related Communities (aka YTB), 2020, https://arsiv.turkiyeburslari.gov.tr/Content/Upload/files/TB%20Report-2020.pdf.

22 “Turkic States’ Joint Investment Fund to Debut with $500M Capital,” Daily Sabah (pro-government Turkish newspaper), May 19, 2024, https://www.dailysabah.com/business/economy/turkic-states-joint-investment-fund-to-debut-with-500m-capital.

23 “Charter Capital of Turkic Investment Fund to Be Increased to $600 Million,” kun.uz, February 17, 2025, https://kun.uz/en/news/2025/02/17/charter-capital-of-turkic-investment-fund-to-be-increased-to-600-million.

24 “Budapest Hosted Informal Summit of Heads of State of Organization of Turkic States,” APA Group (Azerbaijani press and media agency), May 21, 2025, https://en.apa.az/foreign-policy/budapest-hosted-informal-summit-of-heads-of-state-of-ots-updated-2-468138.

25 “Seven Nations Including Turkiye Establish Eurasian Transport Route Association,” Turkiye Today, September 21, 2024, https://www.turkiyetoday.com/region/7-nations-including-turkiye-establish-eurasian-transport-route-association-55663.

26 The CSTO is a security organization involving Russia, Belarus, Kazakhstan, Armenia, Tajikistan, and Kyrgyzstan. See Alexander Libman, Igor Davidzon, and Rheea Saggar, “How to Intervene Symbolically: The CSTO in Kazakhstan,” Chatham House, June 27, 2023, https://www.chathamhouse.org/2023/06/how-intervene-symbolically-csto-kazakhstan.

27 “12th Summit of the Council of Heads of State of the Organization of Turkic States Commenced in Gabala,” Office of the President of the Republic of Azerbaijan, October 7, 2025, https://president.az/en/articles/view/70283/print.

28 “Инициативы Казахстана на XII саммите ОТГ и как тюркское сотрудничество будоражит горе экспертов [Kazakhstan’s initiatives at the 12^th OTS Summit and how Turkic cooperation is stirring up grief amongst experts],” Top Press KZ, October 8, 2025, https://toppress.kz/article/iniciativi-kazahstana-na-xii-sammite-otg-i-kak-tyurkskoe-sotrudnichestvo-budorazhit-gore-ekspertov.

29 Sergey Kwan, “International University of Turkic States Established in Tashkent,” Times of Central Asia, February 3, 2025, https://timesca.com/international-university-of-turkic-states-established-in-tashkent/?mc_cid=85def86067&mc_eid=3059708741.

30 “Turkiye’s Relations with Central Asian Republics,” Ministry of Foreign Affairs of Turkiye, accessed February 2025, https://www.mfa.gov.tr/turkiye_s-relations-with-central-asian-republics.en.mfa.

31 “Количество иностранных и совместных компаний в Узбекистане сократилось на 2,2% за месяц [The number of foreign and joint ventures in Uzbekistan decreased by 2.2% over the month],” LogiStan, March 14, 2025, https://t.me/logistan/8266.

32 Haley Nelson, “2022 FDI in the Caspian Region,” Caspian Policy Center, April 18, 2023, https://caspianpolicy.org/research/economy/2022-fdi-in-the-caspian-region.

33 “Kaspi.kz Completes Acquisition of Controlling Interest in Hepsiburadad,” GlobeNewswire, January 29, 2025, https://www.globenewswire.com/news-release/2025/01/29/3016953/0/en/Kaspi-kz-Completes-Acquisition-of-Controlling-Interest-in-Hepsiburada.html.

34 “Shareholders,” DemirBank, accessed February 2025, https://demirbank.kg/en/about/about/shareholders.

35 Abdullo Janob, “Discussions Underway for Opening Turkish Ziraat Bank in Kyrgyzstan,” Trend News Agency, September 20, 2024, https://en.trend.az/casia/kyrgyzstan/3947464.html.

36 Altai Alti, “Turkish Businesses Getting Set for Uzbek Bonanza,” Asia Times, July 10, 2018, https://asiatimes.com/2018/07/turkish-businesses-getting-set-for-uzbek-bonanza/.

37 “1^st AmCham Eurasian Economic Summit Kicks Off on October 24-25, 2024, in Istanbul,” American Chamber of Commerce of Bulgaria, accessed January 2025, https://amcham.bg/2024/09/26/the-1st-amchams-eurasian-economic-summitkicks-off-on-october-24-25-2024-in-istanbul/.

38 Data accessed from the United Nations Commodity Trade Statistics Database (aka UN Comtrade), April 2025, https://comtradeplus.un.org/.

39 Dmitry Pokidaev, “Turkey Ready to Buy Kazakh Meat at Twice the Price Offered by China,” Times of Central Asia, November 11, 2024, https://timesca.com/turkey-ready-to-buy-kazakh-meat-at-twice-the-price-offered-by-china/.

40 Batygul Osmonalieva, “Turkey Invited to Participate in Creation of Industrial Zone in Chui Region,” 24KG (news agency), February 17, 2025,

41 Mohammed Al-Kinani, “Saudi Arabia’s ACWA Power Launches $3B Renewable Projects in Uzbekistan,” Arab News, December 18, 2024, https://www.arabnews.com/node/2583537/business-economy.

42 “UAE to Help Uzbekistan in Developing the Hotel Business,” Uzbek Travel, June 23, 2020, https://uzbek-travel.com/about-uzbekistan/news/uae-to-help-uzbekistan-in-developing-the-hotel-business/.

43 “Turkmenistan: Transition Report 2024-25,” European Bank of Reconstruction and Development, 2025, https://www.ebrd.com/publications/transition-report-202425-turkmenistan.

44 Bakhtiyar Mammadov, “Oguzhan Akyener: Turkiye Ready to Import up to 65 Billion Cubic Meters of Gas from Turkmenistan,” News.Az (portal), February 24, 2025, https://news.az/news/-oguzhan-akyener-turkiye-ready-to-import-up-to-65-billion-cubic-meters-of-gas-from-turkmenistan-interview.

45 Balci and Liles, “Turkey’s Comeback to Central Asia.”

46 “Turkemenistan: Homage to Anatolia,” Eurasianet, October 24, 2023, https://eurasianet.org/turkmenistan-homage-to-anatolia.

47 “Kazakhstan, Turkmenistan See Growth in Oil Transportation via BTC,” KazInform, August 20, 2024, https://qazinform.com/news/kazakhstan-turkmenistan-see-growth-in-oil-transportation-via-btc-f45f09.

48 “Kazakhstan Eyes Significant Boost in Oil Production Bypassing Russia,” Reuters, November 25, 2024, https://www.reuters.com/business/energy/kazakhstan-produce-884-mln-tons-oil-this-year-2024-11-25/.

49 Haluk Gorgun (@halukgorgun), “Türkiye, savunma sanayiinde uluslararası rotasını tüm paydaşları ile birlikte çizmeye devam ediyor! […], (English: Türkiye continues to chart its international course in the defense industry together with all its stakeholders!),” X, January 31, 2025, https://x.com/halukgorgun/status/1885276270390362256.

50 Paul Goble, “Turkey Set to Help Kazakhstan Expand Its Caspian Fleet,” Jamestown Foundation’s Eurasia Daily Monitor 20, no. 123 (2023), https://jamestown.org/program/turkey-set-to-help-kazakhstan-expand-its-caspian-fleet/.

51 “Kyrgyzstan Procured Turkish TB2 UAVs,” TurDef, October 22, 2021, https://turdef.com/article/kyrgyzstan-procured-turkish-tb2-uavs.

52 Derek Bisaccio, “Tajikistan Ratifies Turkish Military Assistance Agreement,” Defense and Security Monitor, April 23, 2024, https://dsm.forecastinternational.com/2024/04/23/tajikistan-ratifies-turkish-military-assistance-agreement/

53 “Tajikistan Mulled to Buy Turkish Drones Amid Border Dispute with Kyrgyzstan,” Daily Sabah, April 28, 2022, https://www.dailysabah.com/business/defense/tajikistan-mulled-to-buy-turkish-drones-amid-border-dispute-with-kyrgyzstan.

54 Sophia Yan, “China Constructs Secret Tajikistan Military Base amid Fears of Taliban,” Telegraph, July 10, 2024, https://www.telegraph.co.uk/world-news/2024/07/10/china-secret-military-base-tajikistan-taliban-afghanistan/; and Paul Goble, “China Increasing its Military Presence in Tajikistan,” Eurasia Daily Monitor 20, no. 109: (2024), https://jamestown.org/program/china-increasing-its-military-presence-in-tajikistan/.

55 Richard Outzen, “Security and Military Cooperation among the Turkic States in the 2020s,” Central Asia-Caucasus Analyst, December 8, 2021, https://www.cacianalyst.org/publications/feature-articles/item/13781-security-and-military-cooperation-among-the-turkic-states-in-the-2020s.html.

56 Kanybek Kudayarov, “Kyrgyz-Turkish Cooperation in the Military Sphere,” Russia and the Moslem World: Science Information Journal, March 2023, https://hal.science/hal-04175958/document.

57 “Turkiye, Kyrgyzstan Boost Ties, Cooperation with Erdogan Visit,” Daily Sabah, November 5, 2024, https://www.dailysabah.com/politics/diplomacy/turkiye-kyrgyzstan-boost-ties-cooperation-with-erdogan-visit.

58 Zhanna Shayakmetova, “Aselsan Engineering Seeks to Increase Domestic Involvement in Kazakhstan in Producing Military Products,” Astana Times, April 17, 2019, https://astanatimes.com/2019/04/aselsan-engineering-seeks-to-increase-domestic-involvement-in-kazakhstan-in-producing-military-products/.

59 Damir Serikpayev, “Оптика, связь, боевые модули: как в Казахстане производят оборудование для силовиков (Optics, Communications, Combat Modules: How Equipment for Security Forces Is Produced in Kazakhstan),” Forbes Kazakhstan, July 25, 2023,
https://forbes.kz/articles/optika_svyaz_boevyie_moduli_kak_kazahstano-turetskoe_sp_rabotaet_na_vpk_respubliki.

60 “Turkey, Kazakhstan Agree on Military Cooperation That Covers Intelligence Sharing, Defense Industry,” Nordic Monitor, May 16, 2020, https://nordicmonitor.com/2020/05/turkey-kazakhstan-agree-on-military-cooperation-that-covers-military-intelligence-defence-industry-and-joint-projects/.

61 Vagit Ismailov, “Kazakhstan May Manufacture Turkish Bayraktar,” Times of Central Asia, October 25, 2024, https://timesca.com/kazakhstan-may-manufacture-turkish-bayraktar-drones/.

62 “Казахстан и Турция готовят новое соглашение в военной сфере (Kazakhstan and Türkiye Are Preparing a New Agreement in the Military Sphere),” Tengri News, December 26, 2024,https://tengrinews.kz/kazakhstan_news/kazahstan-turtsiya-gotovyat-novoe-soglashenie-voennoy-sfere-544616/.

63 “Turkey’s and NATO’s Views on Current Issues of the Alliance,” Turkish Ministry of Foreign Affairs, accessed January 2025, https://www.mfa.gov.tr/ii_—turkey_s-contributions-to-international-peace-keeping-activities.en.mfa.

64 Richard Weitz, “Towards A New Turkey: NATO Partnership in Central Asia,” Turkish Policy Quarterly 5, no. 2 (2006), https://www.hudson.org/sites/default/files/researchattachments/attachment/500/turkey_nato_partnership.pdf

65 Sébastien Peyrouse, “The Central Asian Armies Facing the Challenge of Formation,” Journal of Power Institutions in Post-Soviet Societies, no. 11: (2010), https://doi.org/10.4000/pipss.3799.

66 Russian Federation Helps World Food Programme to Support Poor Families in Kyrgyzstan,” World Food Programme, July 1, 2021, https://www.wfp.org/news/russian-federation-helps-world-food-programme-support-poor-families-kyrgyzstan.

67 “Uzbekistan and Turkey Partner to Launch 400 MW Power Plant in Kashkadarya,” Daryo.UZ, December 14, 2024, https://daryo.uz/en/2024/12/14/uzbekistan-and-turkey-partner-to-launch-400-mw-power-plant-in-kashkadarya.

68 “Turkish Companies Will Build a Shipyard in Kazakhstan,” Transport Corridors, December 31, 2024, https://www.transportcorridors.com/9961?no_cache=1.

69 Sergey Kwan, “Turkish Company to Build Hydropower Plants in Kyrgyzstan and New Heat and Power Plant for Bishkek,” Times of Central Asia, February 28, 2025, https://timesca.com/turkish-company-to-build-hydropower-plants-in-kyrgyzstan-and-new-heat-and-power-plant-for-bishkek/.

70 Petras Katinas, “August 2025 — Monthly analysis of Russian fossil fuel exports and sanctions,” Center for Research on Energy and Clean Air, September 10, 2025. https://energyandcleanair.org/august-2025-monthly-analysis-of-russian-fossil-fuel-exports-and-sanctions/.

71 Max Seddon and Chris Cook, “Russia Fears Over ex-Soviet Nations Laid Bare in Leaked Paper,” Financial Times, February 10, 2025, https://www.ft.com/content/2bb87769-805a-4270-bab2-2382e0b84cec.

72 Nagima Abuova, “Turkic States Revive Latin-Based Alphabet to Preserve Linguistic Heritage,” Astana Times, September 23, 2024, https://astanatimes.com/2024/09/turkic-states-revive-latin-based-alphabet-to-preserve-linguistic-heritage/.

73 “РУССКИЙ ЯЗЫК В КЫРГЫЗСТАНЕ (Russian Language in Kyrgyzstan),” accessed March 2025, https://www.russian.kg/ru.

74 Nightingale Intelligence, “Russia Attempts to Build Its Own Turkic Framework,” LinkedIn, September 28, 2025. https://www.linkedin.com/posts/nightingale-int_russia-attempts-to-build-its-own-turkic-framework-activity-7376897869380804609-MKnK?utm_source=social_share_send&utm_medium=member_desktop_web&rcm=ACoAACGqkNAB5clxQrJMXcVXofibGQG7sBDwDWw.

75 Leo Chiu, “Kazakh Leader Bewilders Russian Delegation with Language ‘Power Move,’ ” Kyiv Post, November 10, 2023, https://www.kyivpost.com/post/23920.

76 “Tajik President’s Demand for ‘Respect’ from Putin Viewed Millions of Times on YouTube,” Radio Free Liberty, October 15, 2022, https://www.rferl.org/a/tajikistan-russia-rahmon-youtube-respect/32084773.html.

77 Author’s interview with former Kyrgyzstani cabinet minister, Bishkek, August 2024.

78 “Turkmenistan Country Commercial Guide,” International Trade Administration, November 30, 2023, https://www.trade.gov/country-commercial-guides/turkmenistan-oil-gas.

79 “Relations between Turkiye and Turkmenistan,” Turkish Ministry of Foreign Affairs, accessed March 2025, https://www.mfa.gov.tr/relations-between-turkiye-and-turkmenistan.en.mfa.

80 2024: Turkish Companies Receive Projects Worth $216 Million in Turkmenistan,” Business Turkmenistan, February 17, 2025, https://www.business.com.tm/post/13112/2024-turkish-companies-receive-projects-worth-216-million-in-turkmenistan.

81 “Turkish Firm Wins Prestigious Engineering Award with Caspian Port Project in Turkmenistan,” Daily Sabah, October 9, 2018, https://www.dailysabah.com/economy/2018/10/09/turkish-firm-wins-prestigious-engineering-award-with-caspian-port-project-in-turkmenistan.

82 “2024: Turkish Companies,” Business Turkmenistan.

83 “Turkiye Seeks New Energy Partnership with Turkmenistan,” Hurriyet Daily News, March 20, 2025, https://www.hurriyetdailynews.com/turkiye-seeks-new-energy-partnerships-with-turkmenistan-207127.

84 Danila Bochkarev, Turkmenistan: The Gas Monetization Challenge, Oxford Institute for Energy Studies, September 2024, https://www.oxfordenergy.org/wpcms/wp-content/uploads/2024/09/Turkmenistan-The-gas-monetization-challenge.pdf.

85 Haji Jadov, “Turkmenistan May Become Full Member of OTS in 2024,” Azeri Press Agency, March 4, 2024, https://en.apa.az/cis-countries/turkmenistan-may-become-a-full-member-of-ots-in-2024-429901.

86 Paul Goble, “Turkmenistan at New Crossroads of North-South and East-West Corridors,” Eurasia Daily Monitor 21, no. 111 (2024), https://jamestown.org/program/turkmenistan-at-new-crossroads-of-north-south-and-east-west-corridors/.

87 Kamol Ismailov, “Uzbekistan, Turkmenistan Roll Out Free Trade Regime,” Trend News Agency, March 7, 2025, https://en.trend.az/casia/uzbekistan/4014990.html.

88 Central Asia Review (@cenasreview), “Туркменистан рассматривает возможность присоединения к Форуму стран-экспортеров газа, что может способствовать укреплению позиций страны на мировом энергетическом рынке (Turkmenistan is considering the possibility of joining the Gas Exporting Countries Forum, which could help strengthen the country’s position in the global energy market),” Telegram, March 21, 2025,https://t.me/cenasreview/8146.

89 Bruce Pannier, “Russia Is Pushing Turkmenistan Out of the Natural Gas Market,” bne IntelliNews, May 24, 2024, https://www.intellinews.com/pannier-russia-is-pushing-turkmenistan-out-of-the-natural-gas-market-326833/.

90 Bochkarev, “Turkmenistan: The Gas Monetization Challenge.”

91 “Kyrgyzstan Complains of Kazakhstan Restricting Border Trade,” Reuters, October 18, 2017, https://www.reuters.com/article/markets/kyrgyzstan-complains-of-kazakhstan-restricting-border-trade-idUSL8N1MT5XP/.

92 Logistan (@logistan), “Казахстан намерен купить 446 локомотивов до 2028 года [Kazakhstan intends to purchase 446 locomotives by 2028],” March 19, 2025, https://t.me/logistan/8312.

93 Elvira Mami, “The Middle Corridor: Trends and Opportunities,” ODI Global, January 22, 2024, https://odi.org/en/insights/the-middle-corridor-trends-and-opportunities/.

94 Dana Omirgazy, “Kazakhstan, Turkmenistan to Build Trans-Afghan Corridor,” Astana Times, October 11, 2024, https://astanatimes.com/2024/10/kazakhstan-turkmenistan-to-build-trans-afghan-corridor/.

95 “Tajikistan Trade,” World Integrated Trade Solution, accessed March 2025, https://wits.worldbank.org/countrysnapshot/en/tjk.

96 “Joint Press Release following the First EU-Central Asia Summit,” European Council, April 4, 2025, https://www.consilium.europa.eu/en/press/press-releases/2025/04/04/joint-press-release-following-the-first-eu-central-asia-summit/.

97 “United States Strategy for Central Asia 2019-2025,” US Department of State, February 2020, https://tj.usembassy.gov/wp-content/uploads/sites/143/United-States-Strategy-for-Central-Asia-2019-2025-1.pdf.

98 Bruce Pannier, “Countering a ‘Great Jihad’ in Central Asia,” Foreign Policy Research Institute, November 19, 2024, https://www.fpri.org/article/2024/11/countering-a-great-jihad-in-central-asia/.

99 Haley Nelson and Natalia Storz, “Central Asia’s Geography Inhibits a Mineral Partnership,” EnergySource, Atlantic Council blog, April 15, 2025, https://www.atlanticcouncil.org/blogs/energysource/central-asias-geography-inhibits-a-us-critical-minerals-partnership/.

100 Joint Statement on the U.S.-Türkiye Syria Working Group,” US Department of State, May 20, 2025, https://www.state.gov/releases/office-of-the-spokesperson/2025/05/joint-statement-on-the-u-s-turkiye-syria-working-group.

101 Nicholas Castillo, “C5+1 in the New Year,” Caspian Policy Center, January 1, 2025, https://caspianpolicy.org/research/security/c51-in-the-new-year.

102 “The Spirit of Camp David: Joint Statement of Japan, the Republic of Korea, and the United States,” US Mission to Korea, August 19, 2023, https://kr.usembassy.gov/081923-the-spirit-of-camp-david-joint-statement-of-japan-the-republic-of-korea-and-the-united-states/.

103 Author’s interview with Tilek Toktogaziev, former minister of agriculture, Kyrgyz Republic, September 2024.

104 Aibarshyn Akhmetkali, “Sustainability Reporting Vital for Kazakh Companies’ ESG Compliance, Says Regional Expert,” Astana Times, April 5, 2024, https://astanatimes.com/2024/04/sustainability-reporting-vital-for-kazakh-companies-esg-compliance-says-regional-expert/.

105 Bruce Pannier, “New Canal Threatens the Peace between the Taliban and Central Asia,” Foreign Policy Research Institute, July 3, 2023, https://www.fpri.org/article/2023/07/new-canal-threatens-the-peace-between-the-taliban-and-central-asia/.

106 “Секретные документы, касающиеся тесного сотрудничества США и Великобритании с Кыргызстаном и Узбекистаном (Secret Documents Concerning Close Cooperation between the US and UK with Kyrgyzstan and Uzbekistan,” original source unknown for this widely circulated item, accessed August 2024, https://telegra.ph/Sekretnye-dokumenty-kasayushchiesya-tesnogo-sotrudnichestva-SSHA-i-Velikobritanii-s-Kyrgyzstanom-i-Uzbekistanom-04-02.

107 Author’s virtual interview with Ajmal Sohail, Founder, A.S. Geopolitics, October 15, 2024.

108 “Tajikistan: Country Overview,” World Bank, accessed May 2025, https://www.worldbank.org/en/country/tajikistan/overview.

The post Why Washington should pay attention to Turkey’s presence in Central Asia appeared first on Atlantic Council.

Ukraine’s drone sanctions are working but don’t expect a Russian revolt

Christopher Isajiw — Thu, 16 Oct 2025 20:06:40 +0000

Since early August 2025, Ukraine has been conducting a long-range bombing campaign targeting the oil and gas industry infrastructure that fuels the Russian war economy. This air offensive has proved highly successful, leading to reduced export revenues and gasoline shortages across Russia. However, while what many Ukrainians refer to as “drone sanctions” are clearly adding to the Kremlin’s economic woes, this is unlikely to spark any kind of meaningful domestic Russian opposition to the ongoing invasion of Ukraine. Instead, progress toward peace will depend on sustained external pressure from Kyiv and its international partners.

While the Kremlin is understandably eager to conceal the scale of the damage caused by Ukraine’s energy sector attacks, there can be little question that the strikes conducted in recent months are bringing Putin’s invasion home to ordinary Russians. In early October, the Paris-based International Energy Agency downgraded its outlook for Russia and assessed that the impact from Ukrainian drone strikes will suppress Russia’s refinery processing rates until at least mid-2026. Meanwhile, car owners across Russia are being forced to queue for gasoline amid supply issues not witnessed since the dark days of the early 1990s.

The current wave of fuel shortages is undermining Kremlin efforts to shield the Russian population from the negative consequences of the war in Ukraine. Putin has been careful to limit the impact of the invasion on ordinary Russians, with military recruitment concentrated on disadvantaged regions of the country, prison populations, and financially motivated volunteers. This approach is very much in line with the unwritten ‘social contract’ that has evolved during the 25 years of Putin’s reign, whereby he offers the Russian public higher living standards in exchange for curtailed personal freedoms and political passivity.

The so-called social contract between Putin and the Russian population had already begun to unravel long before the present wave of Ukrainian attacks on Russia’s energy industry. Over the past three and a half years, the full-scale invasion of Ukraine has resulted in military losses unseen in Europe since World War II. At least one million Russians have been killed or wounded in the conflict, according to Britain’s Ministry of Defense and other international sources.

In parallel, economic growth in all but the defense sector has stagnated, with massive payments to military personnel deepening public dependency on the war. Throughout Russian society, policies of repression have reached unprecedented new levels as Putin has exploited wartime conditions to complete the country’s transition from flawed democracy to authoritarian dictatorship. Despite this deteriorating domestic situation, there is still no sign of any significant anti-war movement in today’s Russia.

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It is probably unrealistic to expect any Russian revolt over Putin’s breach of the social contract. This should not come as a surprise. While opinion polls have often indicated strong public support for the Putin regime, the Kremlin has always relied primarily on coercion rather than consensus. Throughout Putin’s reign, opposition figures have been exiled, imprisoned, or silenced, while the independent media has been muzzled and civil society suppressed. Following the onset of the full-scale invasion, these trends have all intensified. As a result, there is currently little prospect of any grassroots protests.

Opposition from within Russia’s elite looks equally unlikely. With the Russian economy increasingly on a war footing, the full-scale invasion is now a crucial factor determining the wealth and status of the country’s political and business establishment. With most members of the elite personally dependent on Putin and largely locked out of the Western world, the conditions for a Kremlin coup appear to be almost entirely absent. Instead, the invasion of Ukraine has allowed Putin to consolidate his grip on power and has forced those around him to draw closer to the throne.

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This does not mean that Ukraine’s current strategy of long-range strikes against the Russian energy sector is futile. Far from it, in fact. But with Putin firmly entrenched on the home front, only external pressures can realistically force him to abandon his invasion. Ukrainian attacks on Putin’s oil and gas industry are already having a significant impact on the Russian economy. If the current momentum can be maintained into 2026, the economic damage could become far more severe. This will curtail Moscow’s ability to finance and prosecute the war in Ukraine, while also negatively impacting many other aspects of Russian daily life.

Ukrainian efforts to push Putin to the negotiating table can only succeed with stronger Western support. Despite Russia’s claims of resilience, its economy remains heavily dependent on energy exports, with China and India the main clients. Effective Western action should include tightening sanctions on these buyers. Efforts must also continue to end all European purchases of Russian energy exports, either directly or via third parties. Additionally, Western leaders could help end the war by working to bring down global oil prices, thereby starving the Kremlin of much-needed export revenues.

Economic measures alone will not be enough. Military aid to Ukraine should also increase, with an emphasis on the provision of weapons systems capable of strengthening Ukraine’s domestic defenses while allowing Kyiv to expand attacks inside Russia. The objective should be to stabilize the front lines in Ukraine and protect Ukrainian cities from bombardment, while escalating the destruction of Russia’s war economy through a combination of air strikes and sanctions. If these goals can be achieved, Putin may finally be compelled to seek a settlement.

Christopher Isajiw is an international relations commentator and business development consultant to private, governmental, and non-governmental organizations.

This is the gallium dilemma: a small metal with huge consequences for US war readiness. Solving it does not mean new mines or scouring the globe for deposits. Instead, the United States must proactively recover gallium already flowing through the domestic industrial system—before it slips away as waste.

Gallium’s strategic stakes

Gallium is not a bulk commodity like copper or steel. The United States consumes only about 20 tons per year, enough to fit on a single flatbed truck. Yet that small volume anchors the entire US defense industrial base. Gallium is critical for the electronics supply chain and is needed for many advanced US weapon systems and satellites.

The irony is that gallium is both everywhere and nowhere. It exists in trace amounts in US ores processed daily, such as alumina, zinc, and coal residues. However, without a deliberate recovery strategy, gallium vanishes into waste products. China commands nearly 99 percent of primary output not because it discovered richer deposits, but because Beijing made the choice decades ago to recover gallium during aluminum production.

Export limitations should be treated as an opportunity to act before the next crisis. If an adversary can weaponize a couple dozen tons of gallium, then the United States’ economic, military, and technological edge is more at risk than most policymakers realize.

The supply dilemma

The United States cannot mine its way out of the gallium dilemma. Gallium rarely concentrates beyond a few parts per million, substituting invisibly into aluminum and zinc ores. Unlike lithium or copper, no ore deposit has been discovered in high enough grades to anchor a mine. The one historical exception was the Apex Mine in Utah, reopened in the 1980s to extract gallium and germanium from a uniquely enriched deposit. It shuttered within two years due to dipping commodity prices, ore quality issues, and costly metallurgy. Apex showed that primary gallium mining is not sustainable.

Apex’s closure left the United States wholly dependent on imports. Today, nearly all low-purity gallium originates in China, and only a single facility in New York upgrades imported feedstock and semiconductor scrap into high-purity metal. It is a critical capability, but far too limited to insulate war materiel supply chains from shocks. When China imposed export licenses, US buyers had no fallback beyond drawing down what little stock they held.

Other countries manage the risk differently. Japan and South Korea maintain government reserves of gallium as part of their broader critical minerals strategies. China is widely believed to hold state stockpiles, although quantities remain undisclosed. The United States, by contrast, does not include gallium in the Defense Logistics Agency’s Annual Materials Plan, nor is it present in the National Defense Stockpile.

Gallium is abundant in theory but inaccessible in practice. Every ton of alumina or zinc refined in the United States carries trace gallium. Capturing just 1 percent of that byproduct could meet US demand. But without dedicated recovery units, gallium disappears into red mud, slags, or smoke stacks.

US gallium security will not come from new mines; it requires policy choices that treat trace gallium recovery as seriously as any weapons program, especially before the next supply shock strikes.

From trash to treasure

The only path forward is to capture gallium where it already flows: existing industrial processes. A “waste to gallium” approach leverages infrastructure that already processes millions of tons of alumina, zinc, coal residues, and semiconductor scrap. The chemistry is proven. Now Washington must encourage industry to scale, qualify, and sustain output at the purity military materiel requires.

There are five ways for the United States to increase domestic supplies of gallium.

First, alumina refining offers the quickest way to increase the gallium stockpile. In aluminum production, most of the gallium dissolves into the caustic liquor, with the rest bound up in red mud waste. China’s decision to install capture units turned its aluminum refineries into a strategic asset. The United States has no such capacity today, though pilots are emerging. ElementUS, for instance, has 30 million tons of red mud in Louisiana and is testing flowsheets that recover gallium alongside iron, alumina, and scandium. The project underscores that, while gallium recovery rarely makes economic sense alone, it can be viable when folded into multiproduct strategies.

Second, zinc smelters can diversify sources and methods for gallium extraction, improving supply chain resilience. Gallium tends to concentrate in residues like jarosite and goethite, which can be leached and refined. Nyrstar, operating a major facility in Tennessee, has floated plans for a gallium-germanium recovery circuit capable of covering a significant share of US demand. The chemistry process is relatively straightforward and validated by National Laboratory tests, but financing remains elusive. Without targeted support, promising projects like this will never leave the drawing board.

Third, there is a need to secure gallium supplies through allies and partners. In 2025, Rio Tinto and Indium Corporation demonstrated gallium recovery at the Vaudreuil alumina refinery in Quebec, with pilot steps carried out in New York. European pilots like RemovAL are testing red mud leaching, while Japan and South Korea are investing in recovery processes. The pattern is unmistakable; countries that anticipate future scarcity are embedding gallium capture into their industrial ecosystems. US policymakers should encourage gallium recovery integration with allies and partners to maximize options.

Fourth, coal-based waste offers another gallium capture option. Fly ash and acid-mine drainage contain low concentrations of gallium. The Department of Energy has piloted mild-acid leach processes originally designed for rare earth elements that can be adapted to recover gallium. The economics depend on co-recovering other critical minerals, but the prospect of transforming waste piles into strategic feedstock shows the versatility of the approach.

Finally, the most overlooked—yet easiest—gallium recovery pathway is semiconductor scrap. A single US refiner in New York already upgrades scrap into high-purity gallium. While modest in scale, this capability provides military-grade material through shorter supply chains and clear traceability—advantageous for defense buyers who need secure, auditable sources. The United States should seek to increase the number of refineries recycling semiconductor scrap to build a high-purity gallium stockpile.

Three policy levelers for US gallium security

Recovering gallium from waste streams is not a scientific gamble; this chemistry has been proven for decades. What is needed are deliberate policy decisions to turn waste into war-ready gallium. Achieving this will require US financing, qualification, and stockpiling. Absent these choices, America’s industrial base will remain exposed to Beijing’s weaponization.

The first priority is qualification-first funding. For military applications, purity and delivery cadence matter as much as volume. Producing a few kilograms in a lab means little if the material cannot sustain continuous production at 99.999 percent purity or higher. The Department of Energy’s TRACE-Ga initiative, which requires 50 kilograms from a fourteen-day continuous run, is a step in the right direction. This model should be expanded, with defense agencies directly engaged to ensure outputs meet actual military needs.

The second lever is de-risking first-of-a-kind flowsheets. Banks rarely finance recovery circuits that have never operated at scale in the United States. Federal tools can fill the gap, including Loan Programs Office guarantees, cost-sharing through the Office of Clean Energy Demonstrations, and Defense Production Act offtake agreements calibrated in kilograms per month, not speculative tons per year. The Department of Energy has signaled nearly $1 billion in forthcoming funding opportunities across critical minerals, including byproduct recovery and processing. Targeted commitments would give investors confidence while avoiding stranded capacity.

Finally, Washington must establish a modest gallium stockpile. A reserve of at least 1,000 kilograms would buy time during licensing delays or supply shocks. Japan and South Korea already follow this gallium stockpiling playbook; the United States must now do the same.

As strategic competition deepens and global supply chains decouple, national power will hinge on securing the chemicals and materials that keep modern economies and militaries running. China’s export restrictions are a reminder that military success can depend on just a few kilograms of gallium. If Washington lets gallium slip into its waste streams, this hands Beijing more leverage.

The choice is clear. America must turn trash into treasure—or let rivals weaponize scarcity.

Macdonald Amoah is a communications associate at the Payne Institute for Public Policy where he conducts research on topics bordering on critical minerals and general mining issues.

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.

Col. Katrina Schweiker is a US Air Force physicist and military fellow with the Defense and Security Department at the Center for Strategic and International Studies. She has spent a decade working at the intersection of science and technology and military strategy.

The views expressed are those of the authors and do not reflect the official position of the US Naval War College, US Air Force, or Department of Defense.

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Responsible stewardship models can transform Africa’s mineral wealth into prosperity

Mamadou Fall Kane — Tue, 14 Oct 2025 15:00:00 +0000

Bottom lines up front

As the global race for minerals critical to green energy tech heats up, African nations should manage their mineral revenues with sovereign wealth funds applying best practices from funds like Norway’s and Saudi Arabia’s.
Well-structured, credible sovereign wealth funds would lower risk, attract liquid capital markets, and facilitate strategic alliances for African nations.
By aligning resource wealth management with domestic industrial policy, African countries can move beyond extraction and play a greater role in global supply chains.

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Current production of critical minerals is largely insufficient to keep up with rapidly growing global demand for cobalt, nickel, manganese, and other minerals that are essential for new green technologies.

Africa has a significant opportunity to capitalize on the large-scale investments currently unfolding in the global mining sector: Roughly one-third of the world’s metal reserves including copper, cobalt, lithium, and manganese are found there. If the continent can move beyond extraction to maximize value through refining, it has the potential to become a major global hub for the mining industry.

However, the extreme volatility of natural resource revenues leaves African economies vulnerable to external shocks from fluctuating commodity prices, which can lead to substantial economic downturns. Additionally, the capacity limitations and operational bottlenecks within African governments often hinder the effective conversion of resource revenues into productive investments and long-term benefits. Given that minerals are inherently finite resources, there is a risk of declining trade balances as the surge in mineral earnings may be offset by increased imports of goods and services. Concurrently, other sectors of the economy may experience a decline in exports, particularly those disrupted by the rapid expansion of the critical minerals sector, potentially leading to the phenomenon known as “Dutch disease.”

To mitigate these risks, many mineral-rich nations have established sovereign wealth funds as tools for fiscal and financial planning, supporting both short- and long-term policy objectives. The primary purpose of these funds is to manage mineral revenues transparently and sustainably, protecting domestic economies from the volatility of strategic mineral and petroleum revenues while promoting long-term economic stability. Industrialized and developing nations alike have adopted sovereign wealth funds as a mechanism to stabilize government spending, shield against inflationary shocks, and serve as an intergenerational savings tool for finite resources.

In the African context, effective management of natural resource revenues presents a unique opportunity to drive long-term economic development. By adopting best practices, these revenues can be leveraged to invest in human and physical capital, build economic buffers to weather external shocks, and create lasting financial reserves. Transforming mineral resources into financial or physical assets can benefit citizens and foster broad-based economic and social development.

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About the author

Mamadou Fall Kane is a nonresident senior fellow at the Atlantic Council’s Africa Center. He also is the deputy secretary of Senegal’s Strategic Orientation Committee for Oil and Gas, a committee created by the president to strengthen the management of natural resources following Senegal’s accession to the Extractive Industries Transparency Initiatives. He was energy advisor to the Senegalese president from 2016 to 2024. He graduated from Sciences Po Paris before completing his education at the Ecole Polytechnique of Paris in economics and public policy. He also holds an executive master’s degree in management and finance in innovation from the University of California, Berkeley.

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Russian strikes on Ukraine’s energy infrastructure are a European problem

Aura Sabadus — Tue, 14 Oct 2025 11:47:09 +0000

Winter is not yet here but Russia has already intensified missile and drone strikes on Ukraine’s civilian energy installations. A series of powerful bombardments in the first ten days of October hit gas production in eastern Ukraine and left large parts of Kyiv and neighboring regions without electricity and water.

This is nothing new, of course. Since the start of the full-scale invasion, Russia has unleashed thousands of attacks on power lines, substations, pipelines, storage facilities, and processing plants as the Kremlin attempts to plunge Ukraine into darkness and cow the country into submission.

Russian attacks are now being conducted on an unprecedented scale. Targets are pounded by dozens of drones in one go, overwhelming Ukraine’s anti-missile systems. For example, in the early hours of October 9, Russia launched approximately 450 drones and 30 missiles at energy infrastructure, dwarfing the scale of attacks in previous years.

The coming winter is shaping up to be the harshest of the war for Ukraine’s civilian population. Kyiv Mayor Vitali Klitschko described the recent attack on the city’s electricity infrastructure as one of the most devastating since the start of Russia’s full-scale invasion. Meanwhile, officials at Ukraine’s state-owned energy giant Naftogaz say the latest Russian strikes have disabled 60 percent of the country’s gas production.

Ukraine has repeatedly demonstrated remarkable resilience, including in recent days as emergency crews worked to restore electricity to millions of people within hours of Russian strikes. Nevertheless, with the situation set to become more critical in the weeks and months to come, Ukraine’s allies need to consider decisive action.

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Russia’s strikes on Ukrainian energy infrastructure are no longer just a Ukrainian problem. Moscow’s bombing campaign will become a wider European issue unless more support is offered to Kyiv. The threat to European energy markets has been increasingly apparent throughout the current year. A number of Russian attacks on Ukrainian gas production assets in February 2025 led to severe imbalances, with a knock-on impact on most central and eastern European countries.

Between February and September, Ukraine bought close to five billion cubic meters of gas from European markets to plug the gap and prepare for winter, lifting regional demand and prices. If Russia continues its attacks this winter, the impact on Ukraine and the wider region promises to be even more dramatic. To prevent a regional deficit, all neighboring countries should therefore consider lifting existing restrictions on exports to Ukraine.

Europe has options to improve the energy outlook for Ukraine, but this will require quick political decisions. Global supplies of liquefied natural gas are set to rise in the coming months thanks to a surge in production, primarily in the US. While most western European countries will benefit from these additional imports because they have access to sea terminals and functional markets, consumers further to the east are less privileged as most are landlocked or have regional transmission capacity that is either congested or too expensive to use.

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Restrictions on energy logistics networks are having a direct impact on Ukraine. Despite sharing borders with four EU countries, Kyiv has been relying mostly on Poland and Hungary to secure imports and offset the domestic deficit caused by Russian attacks. Although Slovakia could offer ample transmission capacity, most of which is now idle because the country no longer transits Russian gas, its transmission tariffs are prohibitively expensive, limiting Ukraine’s ability to import gas from western Europe.

To compound matters, tariffs could increase by a further 70 percent in January 2026 if a planned hike is approved before the end of the year. Meanwhile, neighboring Romania has no less than four border interconnectors with Ukraine. However, its gas grid operator, Transgaz, allows gas to be shipped only on one of these at less than full capacity.

Romania has significant gas production but currently bans exports to Ukraine, quoting technical differences in gas quality in the two countries. Transgaz also charges some of the most expensive transmission tariffs in the region, which means that even countries which would like to ship gas to Ukraine via Romania may be discouraged from doing so.

Keeping tariffs high or blocking infrastructure is not only bad news for Ukraine. It also poses risks to the entire region, including consumers in Romania and Slovakia, because any congestion creates artificial deficits which lead to higher prices. EU and US policymakers understand the extent of the problem and privately admit that even their own interests may be impacted. For example, blocked capacity could also limit the ability of US companies to sell LNG to clients across central and eastern Europe.

Discussions are ongoing but the clock is ticking. As winter approaches, it is now more pressing than ever for Brussels and Washington to convince countries such as Slovakia and Romania to cooperate.

In an ideal scenario, Western allies would consider radical measures such as establishing a no-fly zone over parts of Ukraine with NATO aircraft patrolling its skies and protecting its people and civilian infrastructure. However, as NATO members remain deeply reluctant to risk a direct clash with the Kremlin, the next best option is to persuade Ukraine’s neighbors to put narrow national interests aside and take concrete steps to support Kyiv.

From now through 2028, Turkey could source up to 36 percent of the gas it imported from Russia in 2024 from new suppliers. This diversification is significant, as Turkey’s twenty-five-year, 16 bcm annual gas agreement with Russia is set to expire in 2026. This step will substantially weaken Russia’s position as a natural gas exporter to Turkey and increase Ankara’s bargaining power. However, in the near term, it does not seem likely that Turkey will completely end its energy relationship with Russia. Thus, the increasing energy and trade cooperation between Turkey and the United States should be read as both a furthering of Turkish-US bilateral relations and an effort to curb Russian influence.

With political leadership in Turkey and the United States doing the groundwork, companies from both countries can explore opportunities to cooperate in the South Caucasus, Iraq, Syria, and Libya, potentially contributing to prosperity and peace in these areas.

Turkey’s efforts to diversify its energy sources

Long before Russia’s full-scale invasion of Ukraine, Turkey realized that Russia wouldn’t hesitate to use energy as a weapon. It learned this lesson when Gazprom cut Turkey’s gas supply by 50 percent during the harsh winter of 2016 in retaliation for the downing of a Russian jet. In response, Turkey took steps to ensure its own energy security while contributing to that of Europe.

Turkey significantly diversified its energy sources and mix by increasing renewables and importing LNG, becoming the second-largest importer of US LNG in Europe in 2017. It also increased its gas storage capacity, ranking second in Europe in terms of LNG regasification capacity in 2024, with three floating storage regasification units and two LNG terminals.

Turkey has also diversified its pipelines, with the Trans-Anatolian Natural Gas Pipeline (TANAP) delivering Azerbaijani Shah Deniz gas to Turkey since 2018 and the Trans-Adriatic Pipeline (TAP), operational since 2020, carrying that gas to Europe. This solidified Turkey’s role as a key transit country, especially after European countries reduced their Russian gas imports following Russia’s full-scale invasion of Ukraine.

Last year, Turkey increased its LNG purchases from the United States, both for domestic consumption and for trade with third countries. A major LNG import and trade deal was signed in 2024 between Turkey’s state-owned BOTAŞ and ExxonMobil, signaling a growing US share in the Turkish market over the next decade. In March of this year, Turkey also signed an agreement with US firms to develop its own shale fields.

During the UNGA meetings last week, the team led by Turkish Energy Minister Alparslan Bayraktar concluded additional energy deals. Turkish state-owned BOTAŞ and Mercuria signed an agreement for the import of approximately 70 billion cubic meters of US LNG over twenty years. This agreement also includes distributing US-sourced LNG to Europe and North Africa, contributing to a gradual shift in Europe from Russian to US gas. Similarly, the Memorandum of Understanding on Strategic Civil Nuclear Cooperation, signed during Erdoğan’s Washington visit, will contribute to Turkey’s energy security and reduce its dependence on Russian energy through the transfer of US small modular reactors and nuclear technology.

Lingering dependence on Russia

Despite Turkey’s efforts to reduce dependence on Russian gas, imports from Russia increased after 2022. According to Turkey’s Energy Market Regulatory Authority (EPDK), Russian gas accounted for 39.5 percent of total gas imports in 2022, 42.27 percent in 2023, and 41.3 percent in 2024.

After halting crude oil and petroleum product imports from Iran in 2019, Turkey has increasingly relied on Russia for oil. According to EPDK data, the shares of imports from the top two suppliers, Russia and Iraq, were respectively: 40.75 percent and 26.39 percent in 2022, 51 percent and 20 percent in 2023, and 66 percent and 9.8 percent in 2024. This increase is likely due to two reasons: First, European countries purchased Russian oil indirectly through Turkey. Second, the Kurdistan Regional Government of Iraq (KRG) halted oil exports over the past two-and-a-half years due to a revenue-sharing dispute between the central Iraqi government and the KRG that resulted in an arbitration case in the International Criminal Court between Turkey and Iraq. Now that this issue has been resolved, oil exports through Turkey’s Ceyhan port have resumed. Combined with the EU’s commitment to halt imports of Russian fossil fuels by the end of 2027, this could lead to a significant decline in Turkey’s oil imports from Russia in a few years.

US-Turkey cooperation in challenging regions

The United States’ efforts to support US business interests in regions where US military presence has declined provide opportunities for energy cooperation with Turkey in third countries. Trump’s fossil fuel-friendly policies are encouraging US oil and gas companies to enter new markets, creating an opportunity to collaborate with Turkish firms.

Turkey played a key role in Azerbaijan’s victory over Armenia in 2020 and the return of Nagorno-Karabakh to rule from Baku in 2023, providing critical military and strategic support. Turkey advocated the opening of the so-called “Zangezur Corridor,” which it sees as part of the Middle Corridor, linking Azerbaijan to Nakhichevan and ultimately to Turkey—thereby connecting Europe to Central Asia and eventually to China. However, Armenia delayed implementation of the corridor provision from the 2020 deal, likely due to concerns from Russia and Iran, as well as due to Azerbaijan’s insistence that it get the control of the road without Armenian border or customs checks on Armenian territory. After US mediation, the corridor was rebranded the Trump Route for International Peace and Prosperity, which could check Russian and Iranian influence in the region. If the project succeeds, the US and Turkish companies which have already played a significant role in regional infrastructure projects are expected to collaborate in building and operating the route.

Turkey also played a major role in the overthrow of the Bashar al-Assad regime in Syria. Throughout the Syrian civil war, Turkey secured a key region near its border in cooperation with Syrian opposition forces and is expected to play a critical role in strengthening the new regime’s military and administrative capacities. If successful, a US-mediated agreement between the Syrian Democratic Forces (SDF) and Syria’s interim government, as well as efforts to broker an agreement between Israel and Syria, would reduce tensions in the country. Turkey and Gulf countries are expected to contribute significantly to Syria’s reconstruction, including via energy projects. In May, Turkish, US, and Qatari companies signed a $7 billion agreement to build natural gas and solar power plants in Syria, aiming to meet much of the country’s energy needs with a combined 5,000 megawatts over the next three years.

In Iraq, with the mission of the US-led Global Coalition to Defeat ISIS nearing its end, US troops are shifting from Baghdad and western Iraq to Erbil. In 2024, Turkey deepened ties with Baghdad by providing military training and capacity-building, conducting joint exercises, and lending support in areas such as electronic warfare and cybersecurity. Given its long fight against the Kurdistan Workers’ Party (PKK), and its support for the KRG’s Peshmerga during ISIS’s occupation of Iraq from 2014 to 2017, Turkey has over one hundred military installations in the KRG as of 2024.

Both Turkey and the United States played a critical role in resolving the oil revenue dispute between Baghdad and the KRG, thus enabling the resumption of operations for US and Turkish companies in Iraq. In May, the KRG signed major oil and gas deals with two US companies during their visit to Washington.

Turkish and US companies are expected to work more closely with both the KRG and the Iraqi federal government on new energy and infrastructure projects. Given Turkey’s extensive military presence in the KRG and its recent diplomatic initiatives—including Foreign Minister Hakan Fidan’s meeting with Iran-backed militias in Iraq last month—Turkey seems poised to play a leading role in ensuring security and stability in the region, in partnership with the United States.

Recent developments suggest that Libya is emerging as another area of potential energy cooperation between Turkish and US companies. Turkey has shifted from solely supporting the Tripoli-based Government of National Unity to also engaging with the Benghazi-based administration in eastern Libya led by Khalifa Haftar. The first sign of this shift came in April, when Haftar’s son Saddam visited Turkey and met with the Turkish defense minister and senior military officials. This engagement has made it more likely that Benghazi’s parliament will approve Turkey’s 2019 exclusive economic zone agreement with Tripoli. This would mark a milestone for Turkey’s sovereign rights and energy exploration efforts in the Eastern Mediterranean. Following Turkish intelligence chief İbrahim Kalın’s meeting with Haftar in Libya in early September, there are growing rumors that Haftar may soon visit Turkey.

Through its maritime and defense cooperation agreements with the Tripoli government, Turkey has established itself as a key political and military actor in Libya, operating from two military bases—a naval and land base at Misrata and an air base at Al-Watiya —since May 2020. It currently supports the Tripoli-based government’s forces, including by providing unmanned aerial vehicles, troops, military advisors, electronic warfare systems, air defense units, and tactical missiles. Turkey’s broader goal is to leverage this military footprint to support the reconstruction of Libyan state institutions, facilitate national reconciliation—a policy promoted by the Turkish Defense Ministry under the slogan “One Libya, one Army”—and ensure Turkey’s economic rights in the Eastern Mediterranean.

In August, Libya’s National Oil Corporation (NOC) signed a memorandum of understanding with ExxonMobil. Given ExxonMobil’s prominent role in Eastern Mediterranean gas exploration, cooperation between the NOC, ExxonMobil, and Turkey’s BOTAŞ appears increasingly likely.

***

Looking across all these regions of cooperation, a clear pattern emerges: In areas of past or ongoing conflict where US companies are looking to establish or expand their presence, Turkey is playing a crucial role in ensuring the security and stability necessary for trade and investment. Moreover, Turkey is expected to collaborate with US firms in these regions. As Turkey increases energy collaboration with Washington, diversifies its energy imports away from Russia, and increases its military presence in regions where the United States is reducing its footprint, a new model of US–Turkey cooperation is emerging. This model is based on shared commercial interests, strategic regional presence, and burden-sharing that leverages the United States’ and Turkey’s complementary soft and hard power capabilities.

Pınar Dost is a nonresident fellow at Atlantic Council Turkey Program and a historian of international relations. She is also the former deputy director of Atlantic Council Turkey Program. She is an associated researcher with the French Institute for Anatolian Studies.

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

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EU enlargement could redefine its energy geopolitics

Andrei Covatariu — Thu, 09 Oct 2025 15:54:44 +0000

Russia’s full-scale invasion exposed fundamental weaknesses in Europe’s energy infrastructure, especially within Central and Eastern Europe (CEE). Yet, after these vulnerabilities were exposed, CEE leveraged its strengths—building new liquefied natural gas (LNG) infrastructure, boosting renewable deployment, and expanding cross-border interconnections—to enhance energy security and reduce Europe’s dependence on Russia. These steps placed CEE at the center of Europe’s energy metamorphosis.

Now, as the European Union (EU) prepares for its next enlargement wave, involving several CEE candidate countries, it must carefully consider how to incorporate energy security and energy transition priorities in the process. Enlargement could either become a catalyst for competitiveness, energy security, and geopolitical influence, or it could deepen internal divisions and create geopolitical vulnerabilities.

Enlargement should drive energy and industrial strategy

The upcoming seven-year EU budget, the Multiannual Financial Framework (MFF), provides Brussels a rare opportunity to strategically fund additional cross-border energy infrastructure, including with EU membership candidates. These investments—interconnections, transmission grids, and storage facilities—are prerequisites for a resilient, integrated European energy market that can ensure secure and affordable energy, enhance competitiveness, and better absorb market or geopolitical shocks. In the current budget cycle, the EU has already channeled some funds through instruments such as the Connecting Europe Facility (CEF) and the Recovery and Resilience Facility (RRF) to upgrade grids, expand LNG capacity, and strengthen cross-border links. Yet, despite these steps, it remains unclear whether the next MFF will place an increased strategic emphasis on energy security investments, particularly in CEE and candidate countries, given the heightened challenges of recent years.

By prioritizing energy security in the MFF, Brussels could create a positive spillover effect that strengthens supply chains, accelerates market integration, and lowers systemic risks for candidate economies. Without such dedicated focus, candidate countries will remain structurally vulnerable to energy disruptions, supply shortages, and geopolitical shocks.

Supporting energy security infrastructure in candidate countries isn’t just about resilience—it’s about revitalizing EU competitiveness, especially in CEE. That is because high energy costs—compared to the United States and other global competitors—combined with limited grid interconnections and aging infrastructure undermine CEE competitiveness and keep regional prices persistently above the EU average.

Additionally, as the EU plans for Ukraine’s accession in particular, it must accelerate the country’s energy integration, which will support broader energy security and competitiveness imperatives. The war has destroyed much of Ukraine’s energy infrastructure, but rebuilding it offers the chance to embed clean technologies, decentralized grids, and critical interconnections from the outset. Ukraine’s gas storage infrastructure can bolster regional energy security, while rebuilding its systems and adding new components—manufactured in Europe with US partners—offers a chance to create jobs and drive innovation, with benefits extending across the CEE region.

This process must be transatlantic by design. US innovation in nuclear technologies—especially small modular reactors—as well as financing mechanisms for potential critical raw material or geothermal projects, could accelerate Ukraine’s integration into the EU’s energy architecture. Moreover, anchoring Ukraine’s accession within a broader energy reconstruction framework aligns geopolitical and economic incentives for both Brussels and Washington.

The 2040 test

In parallel with energy integration of candidate countries, EU enlargement also warrants consideration for how this integration will impact its emissions-reduction strategy. The EU’s recently proposed 2040 climate target to reduce emissions 90 percent from 1990 levels will reshape Europe’s energy sector and economy over the next two decades. This target, however, will be finalized before candidate countries join, leaving candidates to face a “take it or leave it” scenario: They will have to adopt highly ambitious, resource-intensive commitments without the ability to negotiate.

This approach risks undermining cohesion and creating political backlash in both candidate and current member states. To avoid this outcome, prospective members must be brought into these negotiations early to ensure that 2040 targets are achievable.

The diverse energy starting points of prospective member states—many still heavily reliant on fossil fuels or constrained by outdated infrastructure—raise critical questions about the EU’s ability to meet its 2040 targets while ensuring fair transitions that do not compromise either these countries’ economic development or the bloc’s collective climate goals.

The EU must consider the role of enlargement in shaping its climate and energy objectives—both internally and externally. Integrating new members into target-setting processes not only strengthens policy credibility internally, it also signals externally that Europe is pursuing a coordinated, continent-wide transformation.

Brussels’ geopolitical moment

In August, former Italian prime minister Mario Draghi issued a stark warning that Europe’s illusion that its economic size brings geopolitical influence has “evaporated.” Without coordinated action, he argued, Europe risks falling behind in industrial competitiveness, energy security, and global influence.

EU enlargement, if strategically tied to CEE energy security, offers Brussels a way back into the geopolitical game. By integrating candidate countries into its energy systems, investing in their infrastructure, and aligning transatlantic objectives, the EU can turn vulnerability into strength.

Europe stands at a crossroads. CEE has already proven its resilience in the face of historic energy shocks, but its future—and Europe’s geopolitical relevance—depends on how enlargement is managed. Investing in candidate countries’ energy security, embedding transatlantic partnerships, and negotiating fair climate commitments are not side issues; they are the foundation of Europe’s competitive, secure, and sustainable future.

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

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Critical minerals in crisis: Stress testing US supply chains against shocks

Reed Blakemore, Alexis Harmon, Peter Engelke — Thu, 09 Oct 2025 13:00:00 +0000

This issue brief was updated on November 19, 2025.

Introduction

Critical minerals are foundational to the modern economy and state power via their centrality to advanced technologies across energy, military, and commercial applications. From permanent magnets in fighter jets and submarines to the batteries in electric vehicles and grid-scale storage, these inputs underpin the defense, energy, and technology bases of the United States and its partners. Yet critical mineral supply chains have become increasingly brittle: concentrated in a handful of countries, overwhelmingly refined in China, and increasingly exposed to extreme weather disruption.

China has demonstrated its willingness to weaponize its dominance over mineral markets, tightening export restrictions on graphite, antimony, and certain rare earths in retaliation for US trade and technology controls. Meanwhile, extreme droughts and heat waves are already disrupting mining and processing in regions the United States hopes to rely on for diversification. Policymakers are thus confronted with a stark question: How prepared is the United States to withstand a sudden, sustained disruption in access to critical minerals?

Policymakers in Washington are increasingly focused on mapping US critical mineral needs and boosting domestic production capacity to manage dependency risks. Given the long lead times for the development of critical mineral mining, processing, and manufacturing assets, even aggressive expansion of new, derisked supply chain activity may not yet bear fruit in time to protect the United States from a severe supply chain disruption.

To explore this challenge, the Atlantic Council, in partnership with TMP Public, convened a scenario workshop in July 2025, bringing together experts from government, industry, and academia.¹ Through two stress tests—one geopolitical, one extreme weather-driven—participants mapped the likely impacts of severe mineral disruptions, the limits of the current US response tool kit, and the role that allies, markets, and industry could play in bridging vulnerabilities.

This paper distills the insights of that exercise. It first outlines the scenarios presented, then explores the policy toolbox available to the US government and companies, before concluding with the key lessons and policy recommendations that emerged. This report’s focus is not on providing comprehensive policy recommendations to fix the structural challenges facing minerals development but rather on the US ability to respond to a major supply chain disruption.

All of this analysis is framed against a risk framework for critical mineral supply chains crafted by the Atlantic Council Scowcroft Center and Global Energy Center in June 2025. The findings highlight a concerning challenge: While the United States government and industry have some tools to manage a mineral crisis in the short term, their abilities to sustain resilience in the face of protracted disruption remain dangerously underdeveloped.

Workshop: A two-stage scenario exploring supply chain disruptions

Given widespread industry and policymaker concerns about China’s market dominance across a wide variety of critical mineral markets, the workshop covered a two-stage scenario. The first stage, Scenario A1, centers geopolitics when a de facto ban on Chinese export licenses sets off severe supply constraints. The second stage, Scenario A2, adds an extreme weather-driven crisis that compounds the challenge arising in Scenario A1. This two-stage workshop model was designed to map the public- and private-sector tool kits that could be employed as supply becomes increasingly constrained. In both stages, participants underscored that the United States would need to rapidly activate emergency tools (e.g., Defense Production Act, stockpiles, allied sourcing) while confronting the reality that scaling alternative production or processing capacity would take years.

Table 1: Scenarios A1 and A2 overview

Scenario A1: China imposes an effective ban on certain mineral exports

Context: US-China tensions escalate amid trade wars and technology rivalry.

Challenge: China implements an effective export ban on three strategically vital minerals: neodymium (Nd), dysprosium (Dy), and refined manganese (Mn). In this scenario, China chooses these three minerals because of the severe impacts of their shortages across energy, defense, and other spaces on the United States and its allies and partners. China instructs firms not to issue export licenses for Nd, Dy, and Mn to US companies. Negotiations between the United States and China on this issue have stalled. China’s deep dissatisfaction with the talks suggests that the export ban is a strategic, long-term move by the Chinese rather than a short-term negotiation tactic. The licensing regime takes full effect one month from the start date of the exercise.

Rationale:
– Dual-use applications provide diplomatic cover.
– Aimed at undercutting the US defense sector, in addition to US competitiveness – in AI, semiconductors, electric vehicles (EVs), and clean energy.
– Relatively low cost to China; high strategic impact on US security, economy, and politics. A one-year disruption of Nd, Dy, and Mn (sulfate and dioxide) supply would result in a $154 million, $1.6 billion, and $96 million reduction in US gross domestic product, respectively.

Immediate consequences:
– US public and private stockpiles will be depleted within weeks to months.
– Defense and civilian industries face hard trade-offs over allocation.
– Prices spike globally as markets scramble for alternative suppliers.

Scenario A2: Extreme weather-induced supply shock across source countries

Context: As the United States turns increasingly to other partners to mitigate the effects of Scenario A1’s export restrictions, the world faces severe drought and extreme heat over several years in a number of critical mineral-producing regions, including China, Southeast Asia, Australia, and southern Africa. These weather-driven impacts are compound shocks that worsen the Chinese export restrictions that remain in effect in Scenario A1, impacting Chinese processing facilities, as well as mining operations in Australia, South Africa, and Burma.

Challenge: Extreme weather reduces mining output, limits hydropower for processing, increases equipment failure and operational downtime, and intensifies competition for water with local communities. Supply chain interruptions ripple across production timelines for rare earths and Mn.

Rationale:
– Extreme weather-induced hazards exacerbate the strategic vulnerabilities already highlighted in Scenario A1.
– Extreme weather is increasingly frequent and unpredictable, creating a chronic risk to mineral supply chains.
– Even without Chinese export restrictions, these natural events could critically constrain global supply.

Immediate consequences:
– Production delays in affected areas reduce potential alternative supply and increase prices, leaving the United States and allies with limited options.
– Options for diplomatic work-arounds narrow as each country protects their domestic supply.

Table 2: Impact timelines

While the impact timelines in Table 2 show how disruption unfolds, the toolbox in Table 3 reveals what tools the United States can use to respond. These assessments reflect the authors’ analysis of how each tool would function in practice across both short-term crisis management and longer-term resilience building. Here, “short-term impact” refers to how effectively a tool can buffer immediate disruption and ease pressures within months, while “long-term impact” captures a tool’s ability to reshape market structures or expand supply over years.

Table 3: US response tool kit

Discussion: Scenario A1: US response to Chinese mineral export curtailment

Rapid curtailments of Chinese exports of Nd, Dy, and Mn would have immediate and cascading consequences across United States supply chains.

Both US manufacturers and government agencies have limited stockpiles to buffer disruption. The main US mineral stockpile, the National Defense Stockpile, is intentionally small as it is designed to meet critical defense needs in crisis situations, not sustain broader industry during shortages. Public data on mineral stockpiles have been limited since 2022, but data on potential acquisitions show that supplies of Nd, Dy, and, even more importantly, their derivative products that are closer to end use (like neodymium-praseodymium [NdPr] oxide and neodymium magnets, most commonly NdFeB magnets) likely have vanishingly small reserves. Many manufacturers keep small working inventories, but these generally last only a few months before shutdowns begin. In their current form, rare earths stockpiles can keep defense and manufacturing afloat for a brief disruption but offer little resilience overall.

For Mn, the National Defense Stockpile had 291,000 metric tons (t) and 114,000 t of metallurgical-grade Mn ore and high-carbon ferromanganese, respectively, as of 2021, numbers that have likely held steady. Both are helpful for keeping steel production for perhaps a year; neither has any impact on the industries affected by the Chinese ban on Mn sulfate and dioxide, such as the battery industry.

Within weeks, firms would be forced to draw down private inventories for all targeted minerals. Smaller tier 2 and tier 3 suppliers, especially those in the defense supply chains, would feel the pinch first, with production delays compounding up to OEMs and defense prime contractors within three months. At the same time, speculative buying and transshipment through third countries would drive market volatility and rapid price escalation, making it even harder for firms to secure stable supply.

During the workshop discussion regarding Scenario A1, the policy interventions to limit the damage of the first three months after China’s ban vary in reach and effectiveness. The Defense Production Act (DPA) Title I, which authorizes the government to require US companies to prioritize contracts and allocate materials for national defense, can be used as an immediate bridge to reallocate existing supplies toward defense and other security priorities, but it cannot expand supply in the near term. Ultimately, the DPA is useful for emergency coordination, but obviously cannot conjure a resource that is not there.

DPA Title III, which provides financial incentives to expand domestic industrial capacity, could accelerate investment in alternative mining or refining, but actual production would take months or years to materialize. Moreover, its impact differs across the three minerals in our scenario. Domestic Mn and Nd production could grow, but Dy is challenging to source outside of China; the DPA also can do nothing to address which minerals are or are not in the ground in the United States. As a result, while the DPA can ensure the embargo’s effects are delayed for critical national security needs, its effectiveness as a short-term tool is constrained by what materials are currently stockpiled and available on the market.

The Export Administration Regulations (EAR) provide tools to ensure there is no leakage of minerals already in the United States, but with only sparse US production, impacts are limited. For example, the United States could invoke short-supply controls (EAR Part 754) to restrict exports of Mn, Nd, and Dy already in the US market, preserving availability for domestic industry. Export controls on key US exports, like semiconductors, could also serve as leverage in negotiations with China, signaling reciprocal action or broader retaliation.

Beyond regulatory measures, financial tools are critical across the near-, medium-, and long-term under Scenario A1. Loans, guarantees, and tax credits could derisk new refining and magnet production projects outside China, while underwriting short-term diversification of Mn processing. Other key interventions with longer time horizons include permitting reform, which could accelerate approval for domestic refining, processing, and recycling projects, though the benefits would be realized only after several years.

In parallel, diplomacy would be an indispensable tool under Scenario A1. Stockpiles could temporarily cushion defense-critical uses, but consumer industries would remain highly exposed. Coordination with allies—such as Japan and South Korea, which have notably robust stockpiles—could help mitigate impacts. This is based on two assumptions: first, that allies would be willing to expose themselves to Chinese retaliation; and second, that allies would not be protective of their stock even as prices surge. Trust and coordination do not tend to surge during commodity crises.

Even if allies are still willing to proceed, the United States would have to prove itself to be the best buyer in a globally constrained market. To prepare, the US could organize prenegotiated crisis-coordination agreements to harmonize stockpile releases and reallocate scarce supplies. This would not counter a global shortage since countries would prioritize their own supply security, but it could help undermine targeted adversarial actions or localized shortages, such as the one outlined in our scenario.

The US could also turn to emergency procurement and contracting, pursuing direct arrangements, for example, with suppliers in Australia and Vietnam for rare earths or Japan and Belgium for Mn. However, volumes outside China are extremely limited, and the risk of fragmented, inflationary bidding wars is high. To counter this, the government could encourage OEMs and defense prime contractors to form purchasing consortia, consolidating buying power and reducing competition among US firms.

Even with these stopgaps, in the first year the United States would likely only recover a fraction of lost supply. Optimistically, alternative sources might replace only about 10 percent of US demand—even less for Dy—that was previously fulfilled by China for each embargoed mineral. The disruption would thus remain severe, shaping both production capacity and market dynamics for years to come.

Key lessons under Scenario A1

The United States has a severely limited tool kit to manage the immediate consequences of a Chinese embargo on Nd, Dy, and Mn. The discussion of this scenario reinforced some of these limitations, while highlighting several key lessons.

The US government needs a clearer cross-agency map for crisis management

Contrary to other national emergencies, significant institutional gaps challenge the speed and effectiveness of the US response in this scenario. This includes a dangerously limited awareness of the United States’ own true exposure, particularly in the private sector where mineral and precursor inventories are largely unknown, clouding any assessment of where vulnerabilities lie or how significant they may be.

This is further complicated by the lack of an interagency response playbook. Though interagency participation in addressing US dependency on these minerals has increased in recent years, these efforts remain highly siloed, limiting the United States’ ability to mitigate the immediate consequences of the embargo. One such example is the Department of Defense: Though it is currently the most capable of distributing stockpiles and leveraging the DPA, its mandate requires it to prioritize disbursements toward national security-related customers. Without clear signals or a policy change to develop more robust support for the commercial sector or alleviate price pressure, exposed sectors could face severe shortages while relying on slower, longer-term supply chain interventions like asset development.
Stockpiling is necessary but insufficient

Available US stockpiles sit almost entirely within the National Defense Stockpile (NDS), which by statute is narrowly designed to support defense needs and lacks the flexibility and scale to buffer the wider civilian economy. Even with rapid acquisitions in the thirty days remaining before a full embargo (as outlined in the scenario), the US government and private sector would only be able to build a partial inventory.

Stockpiling is also uniquely difficult in the mineral sector. Many existing stockpiles are ore heavy, meaning they cannot directly support manufacturing without parallel investments in refining and magnet-making capacity. Even a “sufficient” stockpile of raw inputs may be ineffective if midstream bottlenecks persist, limiting the buffer that stockpiles can offer. In practice, stockpiles are often more useful for derisking new mineral projects by countering price manipulation than for filling market gaps during a crisis.
Engaging allies is critical—and challenging

Given domestic limitations, US crisis response would require engagement with trusted partners on several fronts. First, purchasing existing stockpiled resources from partners and allies such as Japan and South Korea, which possess much healthier stockpiling programs than the United States, could provide some relief. Second, the use of partner groupings could help US firms navigate market volatility, either through the establishment of buying consortia or trade tools to establish US firms in a more competitive position.

This, however, is complicated on several fronts. Not only might allies not have sufficient supplies to buffer US supply, but many potential partners are also themselves highly dependent on Chinese flows in one way or another, potentially constraining their willingness to participate. Past supply crises, from the 1973 oil embargo to the scramble for COVID-19 vaccines, show that even close allies often default to self-preservation when critical resources are scarce.
Longer-term resilience requires whole-of-supply-chain investment

Tools like DPA resource allocation, export controls, or emergency procurement help cushion national security needs, but none fundamentally resolve shortages and dependency. Diversifying sources and expanding domestic processing capabilities are multiyear or even multidecade endeavors. Without sustained, coordinated investments across mining, refining, and manufacturing, the United States remains highly exposed to prolonged embargoes and similar disruptions in critical mineral supply chains.

Discussion: Scenario A2: Extreme weather disruptions in key-producer countries deepen the crisis

Scenario A2 builds directly on the conditions of Scenario A1. Chinese export restrictions remain in place, but the challenge deepens as extreme weather events—in this case, drought and heat—further disrupt neodymium, dysprosium, and manganese processing and refining. In Scenario A2, drought and heat halt operations in mineral-producing countries such as China, South Africa, and Australia, cutting off access to raw materials that underlie global energy and defense supply chains. This scenario was designed to highlight how natural disasters can trigger acute critical mineral shortfalls and drive chronic instability.

Number of annual hours at or above the strong heat stress threshold under the Universal Thermal Climate Index (UTCI), a measurement that assesses the human body’s reaction to environmental conditions, as projected for a mine and processing facility in Australia in 2027. Source: TMP Public

Natural disasters, including extreme drought, heat, and flooding, are most acute in the upstream segment of the value chain, where operations are tied to physical geography, water availability, and energy infrastructure. For example, extreme heat may restrict workforce availability due to safety concerns and damage power systems. Midstream and downstream industries feel the effects later, but shortages in refined inputs ripple outward to global manufacturers of batteries, magnets, and other critical technologies. Unlike Scenario A1, where lost Chinese volumes might be partially offset by alternative sources, underlying production capacity itself is constrained in this scenario, removing physical capacity from global supply chains and making substitution far more limited.

The timeline of disruption under Scenario A2 differs from the rapid cascade modeled in A1. In the immediate term, extreme weather may halt operations at specific mines or smelters, causing localized shortages but not necessarily triggering a global supply crunch. Within one to six months, if alternative sources are unavailable, these outages compound into tightness in global markets, with prices spiking and downstream consumers forced to draw down inventories. Over six months to two years, repeated or prolonged shocks reduce confidence in the reliability of specific supply regions, deterring investors locally while accelerating efforts to diversify sources.

Governments and firms retain access to the same emergency tool kit—DPA authorities, stockpiles, export controls, and financial incentives—but in this scenario those levers are even less effective. Unlike an export ban where supply still exists somewhere in the system, extreme weather-driven production losses reduce the global pie. Stockpiles, already modest and dwindling, would offer little comfort and may be completely depleted. The DPA could still reallocate minerals for defense needs, but new production contracts would still take years to bear fruit. Financial support and permitting reform likewise remain slow-burn solutions.

Two features distinguish this scenario from a geopolitical shock. First, the cumulative nature of disaster risk elevates the role of adaptation and resilience. Forward-looking firms are already beginning to price such disruption into their business models, investing in diversified water sources, backup power systems, and more flexible logistics. However, these practices remain uneven and underdeveloped, with only a select few of the larger players having the capital to consider absorbing higher upfront costs. Without a stronger policy framework to incentivize and scale climate adaptation, smaller firms and entire supply chains will remain vulnerable, unable to respond beyond cutting production.

Second, diplomacy takes on a new shape. In this scenario, the United States would have less ability to rely on allies for stockpiled minerals or backdoor access to Chinese materials. Allied producers may themselves face shortfalls related to extreme weather and are even more likely to prioritize domestic demand. Instead, engagement would focus on negotiating with producers like Australia and South Africa to prioritize US flows and investing jointly in natural disaster-resilient infrastructure around mine sites. These steps could not eliminate the shortfall, but they would help build a foundation for future resilience.

Key lessons under Scenario A2

As under Scenario A1, the United States has a limited tool kit to manage the consequences of extreme weather-driven limitations of global production of Nd, Dy, and Mn. The workshop discussion revealed several insights that both US government and allied policymakers should take more fully into account.

Diversification must account for shocks driven by extreme weather and natural disasters, not just geopolitics. Unlike a politically motivated embargo where trade can be rerouted, extreme weather events can temporarily or permanently remove production capacity from even trusted foreign or domestic sources. Therefore, resilience cannot just focus on nearshoring or friendshoring supply chains but rather must be redundant and geographically distributed so they can absorb shocks from natural disasters as well as geopolitical action. Furthermore, uneven exposure to extreme weather means that while resource quality and cost remain paramount, sourcing decisions may increasingly prioritize regions with lower disaster risk, even if the resources are otherwise less attractive. Recycling and circularity also offer parallel sources of supply that are more insulated from disaster-driven shocks. Expanded magnet recycling, for example, could help stabilize Nd and Dy availability, providing a buffer against both short-term shocks and chronic scarcity.
Adaptation is inseparable from mineral security. Disaster risks are not a distant concern but a material, immediate factor shaping global mineral flows. Larger companies increasingly recognize this and are investing accordingly by integrating weather-related risk into their operations and financing. For example, for Mn producers in water-scarce regions, ignoring drought or heat is not an option. While some leading firms are working to internalize these risks, many others are completely unprepared. Companies can pursue comprehensive, system-level shifts, such as market-based approaches that price in such disruption risk and help incentivize resilience and resource allocation. Smaller firms, however, often lack the capital to invest in adaptation at scale, leaving them disproportionately exposed. Zooming in to site-level adaptation, many companies already have localized measures in place, such as water management, community partnerships, and diversification of energy supply, but these are rarely sufficient as disasters increase in frequency and intensity. Meanwhile, governments have largely failed to plan, often treating a mineral strategy as divorced from disaster resilience. Without a policy framework that incentivizes and supports adaptation across the whole supply chain, national security and industrial priorities remain at the mercy of disaster-driven shocks.
Institutional readiness for nonadversarial supply shocks is underdeveloped. The scenario underscored the absence of clear government processes for responding to disruptions caused by extreme weather events rather than hostile actions. Agencies could struggle to decide whether trade, energy, or defense authorities were in the lead, obfuscating agencies’ sense of ownership and slowing response. The United States needs a coherent interagency framework that treats climate-linked disruptions as a strategic risk category, complete with predefined authorities and operational playbooks, rather than assuming only adversarial actions will threaten supply.
Short-term emergency tools cannot replace preemptive resilience. Emergency tools offer short-term relief but cannot substitute for supply chains resilient to multiyear disruptions such as long-term drought. This scenario underscores the importance of preemptive investment in resilience, be it diversifying the energy inputs that power mining and refining or embedding redundancy through alternative suppliers and recycling. Such shocks will not wait for permitting reform or procurement contracts; resilience must be in place before the disruption arrives.

Conclusion: Preparing for crisis

Whether triggered by deliberate policy in Beijing or extreme weather around the world, the United States and its allies are just one disruption away from insecure supply chains for the minerals most critical for defense readiness and energy build-out.

Across both scenarios, a core set of emergency policy tools recurred: the DPA, the National Defense Stockpile and private stockpiles, emergency procurement authorities, and diplomacy. These instruments can help soften the immediate blow and reallocate scarce resources to mission-critical sectors. However, the exercise revealed that their effectiveness is uneven in crisis scenarios. Some tools, such as stockpiles and DPA prioritization, can only redistribute or smooth supply; they cannot generate new production and, by design, remain poorly calibrated to the scale and duration of potential crises. Other tools, such as permitting reform and financial incentives, are inherently long-term plays, essential for resilience, but irrelevant to short-term crisis management. Diplomacy’s ability to counter emergency shortages, meanwhile, is contingent on circumstances: Scenario A1 creates conditions where third-country suppliers can still channel volumes toward allies, but in Scenario A2, partners face similar supply constraints, limiting diplomacy’s utility as a stopgap. In the longer term, coordination on diversification remains a particularly powerful tool, though robust multilateralism has been slow to manifest in practice.

Diversification emerged as the single most important theme, but the scenarios showed that not all diversification strategies are created equal. In a geopolitical shock like Scenario A1, diversification is about reducing reliance on China by cultivating alternative partners and trade routes. In an extreme weather shock like Scenario A2, diversification must be about physical redundancy: ensuring supply chains are geographically distributed enough that a drought, flood, or cyclone cannot take out a large share of global capacity in one stroke. Recycling and circularity take on greater weight here, offering supply streams that are less vulnerable to both political and physical disruption.

When both scenarios are layered on top of each other, it becomes clear that US and allied supply chains would be hard-pressed to absorb just one of the above shocks, let alone both compounded. Existing mitigation and diversification strategies fall far short of what would be needed to maintain supply under these conditions. A key question for policymakers is whether current strategies are robust across both pathways or whether they remain overly skewed to geopolitical contingencies at the expense of disaster resilience.

The lesson of the scenarios is clear: Mineral security must be approached as a continuum of risks, where short-term tools and long-term strategies are designed in tandem and where geopolitical and disaster-related contingencies are addressed with equal seriousness.

About the authors

Staff

Reed Blakemore

Geopolitics & Energy Security Energy Transitions

Staff

Alexis Harmon

Senior Fellow, GeoStrategy Initiative

Critical Minerals Geopolitics & Energy Security

Staff

Peter Engelke

GeoStrategy Initiative Global Energy Center

Technology & Innovation

Acknowledgements

The Atlantic Council would like to thank TMP for its support of this project.

This report is written and published in accordance with the Atlantic Council’s policy on intellectual independence. The authors are solely responsible for its analysis and recommendations. The Atlantic Council and its donors do not determine, nor do they necessarily endorse or advocate for, any of this report’s conclusions.

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1 This workshop was held under the Chatham House Rule. The contents of this paper and its conclusions, though built from the workshop discussion and complemented by additional research from the Atlantic Council, are not endorsed by and do not necessarily reflect the views of the workshop participants.

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Is the Baghdad-Erbil oil deal a blueprint for settlement—or a stopgap?

Victoria J. Taylor , Yerevan Saeed — Tue, 30 Sep 2025 15:29:52 +0000

After nearly two and a half years, a fragile but consequential agreement between Iraq’s federal government in Baghdad, the Kurdistan Regional Government (KRG) in Erbil, the seven major Oil Companies (IOC), and a local Kurdish oil company has resumed oil exports through the Iraqi-Turkey Pipeline (ITP) to the international market.

At one level, the deal is a technical and legal arrangement to restart flows through the ITP. At another, it is a political experiment in reconciling federal sovereignty, regional autonomy, and contract sanctity in one of the world’s most complex political landscapes.

Ultimately, it is the politics surrounding the deal that made its negotiation so complicated—and its survival even more precarious. Oil remains a hyper-sensitive political issue in Iraq, and the agreement is already under strain.

Whether the framework will be a tactical stopgap or the first credible blueprint for a permanent settlement will likely become clear as Iraq enters the election and the budget year comes to an end in three months.

Details of the deal

The pipeline has been closed since March 2023, when the International Chamber of Commerce ruled that Turkey had violated the 1972 treaty between Iraq and Turkey that governs the pipeline. The court ordered Ankara to pay Baghdad $1.5 billion for unauthorized exports as the pipeline allowed the Iraqi Kurdistan Region to independently export its crude. While it was Turkey that closed the pipeline in response to the ruling, the primary obstacles to reopening the pipeline have been centered around the disputes over sovereignty and natural resources between Erbil and Baghdad, the powers of the federal government versus regional autonomy in Iraq, the sanctity of the contracts of the IOCs in the Kurdistan Region, the competing financial and political interests of the KRG, and contending political forces in Baghdad. The Association of the Petroleum Industry of Kurdistan estimates that more than $35 billion has been lost in revenues to the Kurdistan Region due to the shutdown.

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The technical and legal mechanics of the current agreement are highly complex, reflecting the balance between multiple competing constitutional, historical, political, commercial, and even geopolitical interests. The deal obliges the KRG to hand over a minimum of 230,000 barrels of oil per day to the federal government’s Ministry of Oil, while allowing the KRG to retain fifty thousand barrels per day for domestic use. The Iraqi government has accepted in-kind compensation from oil operators in the Kurdistan Region, shoulders pipeline transit fees, and agreed to international arbitration with a waiver of sovereign immunity. Erbil has relinquished its claim over oil exportation, curtailed its independent marketing, and the oil produced from the Kurdistan Region’s fields will be lifted as “Kirkuk oil crude, not Kurdish oil.” The IOCs have gained a guarantee of payments for production and transportation costs, with the production costs to be appraised later by an international consulting firm hired by the Ministry of Oil.

Politically, the arrangement represents both a victory and a concession for each side. The deal also notably represents a victory for the US government and its bid to bring more oil to the global market. Washington has been pressing to reopen the pipeline since its closure—and with US investors among the IOCs, the deal has removed a significant bilateral irritant.

With legislative elections slated for November, Shia political factions opposed to Prime Minister Mohammed Shia al-Sudani are likely to weaponize the agreement against him just as they worked against its conclusion. Al-Sudani invested significant political capital to reach this deal, which is a reflection of intense advocacy for it by the US government and his desire to maintain strong relations with the United States.

For those politicians opposed to al-Sudani, the Baghdad–Erbil oil arrangement offers a potent narrative: that the government has conceded too much to the KRG, or compromised national sovereignty to secure short-term fiscal stability. If the agreement becomes a campaign issue, al-Sudani will face pressure to revisit—or even repudiate—elements of it, regardless of its technical merits. In this sense, the upcoming November 11 parliamentary election represents as much of a threat to the deal as any operational or legal dispute. The overlap between the election cycle and the end of the budget year further compounds the risk, creating a moment when the government’s ability to shield the deal from partisan attacks will be at its weakest.

Baghdad has regained oversight of exports and embedded Erbil’s barrels within the federal budget law, satisfying a long-standing objective. The KRG has held on to its energy sector domestically, secured recognition of its production costs, and retained the ability to sell oil abroad at least for now, albeit under the State Organization for Marketing of Oil’s umbrella. Oil companies are seeing partial relief with the resumption of exports, and will receive their entitlements and costs reimbursed after a long hiatus.

However, uncertainty abounds—the deal is renewable every thirty days until December 31, 2025, underlining an absence of trust and leaving it exposed to vulnerabilities from potential political turnover, operational disruptions, and external shocks. In fact, the chains are tied together in a way that any technical issue or political hiccup could have a cascading impact, undermining months of negotiations. Although parties cannot back out unilaterally until the fixed end date in December 2025, the deal is more of a transitional truce rather than a final settlement.

Enduring challenges

Moreover, the agreement is unlikely to guarantee an uninterrupted flow of budget to the KRG. The Iraqi Ministry of Finance will continue to scrutinize KRG financial records, revenues, and audits. While Erbil hoped the deal would prevent Baghdad from withholding or delaying budget transfers under the pretext of oil-related disputes, challenges remain ahead. A senior Kurdish official noted to the author that the KRG tried to meet Baghdad’s terms to eliminate all excuses pertaining to budget delays, but emphasized that there are still fears regarding budget issues. This means that the unresolved budgetary issue could become a spike down the road.

The expiration of the ITP also poses an external threat to the agreement. Turkey has already indicated that a new treaty to govern the ITP must be negotiated by July 2026 for oil to continue to flow. Thus, even if the trio agreement holds, the looming expiry of the ITP could raise serious questions about the medium-term future of northern exports. Turkey may be seeking a broader energy arrangement that includes both gas and electricity, as well as demanding greater flexibility to contract other users, such as the KRG. This could mean that technical and/or financial disputes between Baghdad and Erbil may be overshadowed by negotiations with Ankara in the near future. Therefore, summer’s deadline is a hard stop: without a new treaty, the entire system risks a complete halt.

Will the deal survive the winter?

The coming months will illuminate the long-term viability of the agreement. On the one hand, the monthly renewals and the end date suggest a temporal nature of the deal. On the other hand, the structure introduces mechanisms that could endure. In-kind compensation avoids political disputes and reduces trust deficit. International arbitration with immunity waiver provides enforceability and a level of confidence not just to the IOCs, but to the whole Iraqi investment landscape.

Regardless, the stakes extend far beyond the mechanics of the agreement. The Kurdistan Region, and in fact the entire country, has already lost billions of dollars in revenue during the suspension of northern exports, and investor confidence in Kurdistan has plummeted. The resumption of flows could stabilize the federal budget and provide Erbil with some measure of fiscal stability. Yet the fragility of the deal should not be underestimated. A production shortfall, technical and legal issues, political turnover in either Baghdad or Erbil, or disputes between Iraq and Turkey over the arbitral award could quickly unravel the agreement. And even if those challenges are managed, the end of the ITP treaty in 2026 could emerge a structural cliff. Yet, If Baghdad and Erbil use this breathing space to negotiate a broader constitutional settlement on hydrocarbons and revenue sharing beyond these three months, this agreement may be seen as a turning point. If not, it will join the long list of short-lived oil bargains in Iraq’s turbulent history.

Victoria J. Taylor is the director of the Iraq Initiative in the Atlantic Council’s Middle East program. She served most recently as deputy assistant secretary for Iraq and Iran in the State Department’s Bureau of Near Eastern Affairs, where she advised senior State Department leaders on Iraq and Iran in the aftermath of the Gaza conflict.

Yerevan Saeed is a nonresident senior fellow with the Iraq Initiative in the Atlantic Council’s Middle East programs. Saeed is the Barzani scholar-in-residence in the Department of Politics, Governance & Economics at American University’s School of International Service, where he also serves as director of the Global Kurdish Initiative for Peace.

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Jet fuel, China, and lanthanum: a hidden risk to US military power projection

Macdonald Amoah, Morgan Bazilian, and Jahara Matisek — Mon, 15 Sep 2025 17:31:50 +0000

The US military runs on JP-8 jet fuel. Besides powering bombers, fighters, and helicopters it also fuels most US Army vehicles like M1 Abrams tanks and even the tactical generators that keep forward operating bases alive. Most engines on US Navy vessels can also use JP-8, if needed. All of NATO uses the same fuel for its aviation assets, meaning JP-8 is the lifeblood of modern military power.

What few realize is that producing jet fuel at scale depends on a little-known rare earth element: lanthanum. It does not go into jet fuel itself, but lanthanum enables the refining process that creates JP-8. In Fluid Catalytic Cracking (FCC) units—the workhorse of a refinery—lanthanum stabilizes catalysts, keeps them from breaking down under high heat, enabling refineries to make jet fuel efficiently and flexibly. Without lanthanum, surging American jet fuel production becomes slower, costlier, and riskier.

Unfortunately, China controls most of the supply of this rare earth. Beijing has already weaponized minerals and materials, restricting exports of rare earths, critical metals, and chemicals to the United States. In a future crisis, China could easily restrict the flow of lanthanum into global supply chains, constraining America’s ability to make the fuel its armed forces need for warfighting.

If Washington is serious about tackling strategic mineral chokepoints, then lanthanum must be treated with the same urgency as semiconductors, batteries, and munitions. The questions are clear: Why does this obscure mineral matter so much for JP-8 production? And what steps can the United States take now to reduce its vulnerability and secure a reliable supply?

Why lanthanum matters

Producing jet fuel is more than just pumping crude oil into a refinery to get JP-8. Refineries depend on a series of high-temperature processes to break heavy hydrocarbons into lighter products like gasoline, diesel, and jet fuel. Lanthanum does not enter the fuel itself, but is embedded in a catalyst called zeolite Y to allow FCC units to run hotter, longer, and more efficiently. Thus, lanthanum gives refineries the flexibility to shift output toward jet-fuel range specifications when demand rises.

Without lanthanum, refineries can still make jet fuel, but there is a major trade-off: Catalysts wear out faster, output quality drops, and costs rise. Without lanthanum, it means less hydrocracking flexibility when the Pentagon or NATO allies need to surge JP-8 production. This may look like a minor chemistry problem, but it becomes a major upstream supply chain problem in a crisis, with economic and military readiness ramifications.

A supply chain exposed

Think of the lanthanum supply chain as four basic links: (1) lanthanum salts (usually carbonate or chloride), (2) catalyst producers who incorporate lanthanum-stabilized zeolite Y into finished FCC catalysts, (3) US refineries that run FCC units, and (4) the resulting product slate, including jet-fuel blending components. Recent industrial progress has added a domestic node at the first link: rare earths company MP Materials now produces lanthanum carbonate designed for FCC catalysts, with technical data showing its circuits meet FCC specifications. This is welcome progress because it diversifies supply inside the United States.

Yet the bigger picture remains sobering. Even with new US capacity, a large share of FCC-grade lanthanum is still imported, including Chinese-origin streams. If US–China tensions flare over tariffs, Taiwan, or the South China Sea, lanthanum could easily be added to Beijing’s export-control list.

The flexibility channel

A lanthanum shortage would not ground US military operations overnight. Refineries and catalyst vendors have various workarounds. But the effect would be insidious: it would erode operational flexibility and raise costs precisely when fuel markets are already tight.

One lever is to reduce rare-earth zeolite content or shift to lanthanum-lean formulations. Industry guidance is clear about the trade-off: reducing rare earth on the zeolite tends to reduce activity (at a given zeolite content and matrix activity) and can shift product qualities (i.e., octane/gasoline olefinicity on the gasoline side). These effects must be compensated by refiners through operating changes or additives, but those adjustments cost money, sacrifice performance, and take time.

The immediate impact of a lanthanum squeeze would show up as higher catalyst costs, shorter catalyst lifetimes, and modest penalties in efficiency—especially in FCC units run at high severity. The broader refinery can still meet jet and distillate targets by leaning more on hydrocracking and hydrotreating, but at the cost of hydrogen, severity, and potentially throughput changes. Accordingly, lanthanum exposure is more appropriately conceptualized not as a singular point of failure but as a parameter of operational flexibility and cost, marginal at the unit level yet consequential in aggregate across platforms.

A US plan for mitigation

The good news is that the United States is not powerless against this jet fuel production vulnerability. Unlike some rare earths used in advanced electronics, lanthanum’s role is concentrated in bulk catalyst production. That means three steps must be taken by US policymakers to improve economic and military resilience.

First, treat lanthanum as a strategic input. Just as the military pre-positions fuel and munitions, refineries supplying JP-8 should maintain small but reliable buffers of lanthanum-bearing catalysts. Catalyst change-outs can be aligned with supply visibility, so units are never caught short during a crisis.

Second, pre-qualify catalyst alternatives. Refiners can and should work with catalyst vendors to test lanthanum-lean or substitute formulations now. Research grants should also be provided to scientists trying to identify more efficient FCC processes with cheaper and better alternative materials. If those options become feasible, switching becomes an administrative choice instead of an improvised experiment when China imposes a stress test.

Third, expand domestic production. Companies like MP Materials are bringing new lanthanum products to market, but scale matters. Clear demand signals from the Pentagon—whether through the Defense Production Act, long-term contracts, or National Defense Stockpile purchases—can encourage investment and ensure at least two suppliers can meet US needs.

Lanthanum may be obscure, but it is a pressure point in the United States’ fuel lifeline. Without it, refineries lose the flexibility to surge JP-8 production—the single fuel that powers weapons systems across the joint force. China’s control over most of the world’s supply makes this a vulnerability that cannot be ignored.

Strategic competition is not only about missiles, ships, and bases. It is also about the hidden enablers that make joint warfighting effective. US leaders must scrutinize every step of its supply chains, from minerals to munitions, and ask where adversaries could exploit a dependency. Lanthanum is one such chokepoint. Addressing it now is far cheaper than discovering in a crisis that China holds the key to America’s fuel supply.

Macdonald Amoah is a communications associate at the Payne Institute for Public Policy at the Colorado School of Mines.

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

Jahara “FRANKY” Matisek is a US Air Force command pilot, a fellow at the US Naval War College, and a fellow at the Payne Institute for Public Policy at the Colorado School of Mines. The views in this article are his own and not the official position of the US Naval War College, US Air Force, Department of Defense, or any part of the US government.

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Geoffrey Pyatt: Europe’s ‘independence moment’: a strong signal for continued transatlantic energy cooperation

The post Jet fuel, China, and lanthanum: a hidden risk to US military power projection appeared first on Atlantic Council.

What von der Leyen’s call to ‘fight’ means for European energy and climate goals

Atlantic Council experts — Thu, 11 Sep 2025 18:33:38 +0000

European Commission President Ursula von der Leyen’s 2025 State of the Union speech called for Europe to fight for its security and economic prosperity. At the center of this “fight” is reliable, affordable, and resilient energy. The president explicitly tied energy access and security to quality of life, defense capabilities, and geopolitical standing.

Will this speech—aimed to set the political priorities for the year ahead—inspire European nations to align country policies and investments towards a unified energy front? Will they work toward completing energy market and infrastructure integration across borders, forging investment-friendly markets and political certainty? Ordo the competing applause and cackles signal deepening fragmentation in vision and priorities across Europe?

Atlantic Council experts provide their takes:

Click to jump to experts analysis:

Michal Kurtyka: The right message must be followed by real action

András Simonyi: What von der Leyen’s speech did—and did not—say

Andrei Covatariu: Europe’s energy balancing act: nuclear power recognition, softer climate rhetoric

Joseph Webster: Boosting European batteries is a start

Uliana Certan: Europe’s call for greater energy security could be met through the Black Sea region

Lisa Basquel: The road ahead for European energy security

Elena Benaim: ‘Made in Europe’ approach will strengthen both EU energy security and its alliance with the US

Europe’s ‘independence moment’: a strong signal for continued transatlantic energy cooperation

Reading President Ursula von der Leyen’s State of the Union amid the biggest wave of air strikes since the start of Russia’s full-scale invasion of Ukraine, it’s deeply inspiring to hear her description of Europe’s “independence moment.”

Importantly, she highlights dependence on Russian fossil fuels as a central element of this campaign. This European determination to end Russian energy imports and embrace reliable and much cleaner American LNG represents a success for several decades of transatlantic energy diplomacy.

Also notable is her focus on Europe’s commitment to energy transition, including a 30 percent reduction in emissions by 2030. At a moment when both Europe and the United States are focused on reducing China’s domination of clean energy supply chains, this is an obvious area for continuing transatlantic commercial cooperation. For instance, von der Leyen’s battery booster initiative should build naturally on what the United States has already been doing through the Minerals Security Partnership. Similarly, her strong endorsement of nuclear power as part of Europe’s strategy for energy independence suggests this as a priority focus for American companies working on next-generation nuclear and small modular reactor technologies.

– Geoffrey Pyatt is a distinguished fellow with the Atlantic Council Global Energy Center.

The right message must be followed by real action

European sovereignty. Greater unity. Strategic autonomy. Yes, yes, and yes. These were the key—if recycled—lines adopted by European Commission President Ursula von der Leyen in her “State of the Union” annual speech at the European Parliament yesterday. Europe is encircled and needs to take care of itself—that is the message…again. But will the words be followed with action?

This time, they truly must, as every day brings worrisome proof that the global context is deteriorating. The same morning von der Leyen was delivering her speech, Russian drones for the first time penetrated the European Union—in this case, across the Polish border. Internal social maneuverability and political leadership are worsening across the continent. Also on this 10th of September, French trade unions engaged in a general strike, which coincides with a motion of no-confidence for the François Bayrou government.

And in terms of energy sovereignty, which has become increasingly critical, there has been not much progress but quite a lot of deception. Northvolt, the only European hope to match Asian batteries, has collapsed. The Iberian blackout exposed a major weakness in grid management and, by necessity, led to a ramp up of dispatchable sources. Neither Enrico Letta’s nor Mario Draghi’s report recommendations from 2024 were implemented even though everybody largely agreed with them. The past year only proved once again a hard truth: wishing for different outcomes without imagining different inputs is doomed to fail.

Europe continues to be squeezed between the necessity of importing hydrocarbons and the desire to move forward the energy transition that fuels Asian manufacturing. It now not only depends on Chinese panels and batteries, but also its wind turbines and cars—both electric and conventional. These industries, of which Europeans were once proud, are now subject to a dangerous slowdown. High energy prices and their volatility discourage new investment and harm the profitability of existing industries. If Europe wants to pass from words to action, it needs to develop an independent vision of energy sovereignty and make it an operational issue not only subject to majestic speeches.

– Michal Kurtyka is a distinguished fellow with the Atlantic Council Global Energy Center.

What von der Leyen’s speech did—and did not—say

Von der Leyen’s State of the Union speech was an attempt to appease diverse political audiences, a goal that had her walking a very fine line. It was a wartime speech, which was powerful on the front end, focusing on continued support for Ukraine and surrendering to pressure from the left on Gaza. But the speech became muddled toward the end, as it morphed into a mere checklist and lost track of priorities.

To von der Leyen’s credit, she made an effort to again warn about the challenges Europe faces in an increasingly competitive and hostile global environment, while acknowledging that the Commission has been slow to act.

On energy, her statement that “it’s time to get rid of dirty Russian fossil fuels completely” was a clear rebuke to those who have been advocating a return to cheap Russian oil and gas. Also remarkable was her mention of nuclear as baseload power for more homegrown renewables, breaking with the past Commission consensus that it remain neutral on nuclear energy.

Her strong statement defending the trade agreement with the United States reflects growing criticism of the deal.

The speech, although valiantly delivered, still does not reflect a sense of urgency for Europe, but it does reflect the limits of the power of the Commission president in the face of a very divided Europe. While von der Leyen raised the famous Draghi report, European analyses timed for the speech note that only a small portion of the proposals in the Draghi report has been implemented.

– Andras Simonyi is a nonresident senior fellow with the Atlantic Council Global Energy Center.

Europe’s energy balancing act: nuclear power recognition, softer climate rhetoric

In her State of the Union address, President Ursula von der Leyen struck a notably pragmatic tone, prioritizing Europe’s competitiveness, defense, and strategic autonomy over major new climate announcements.

Transatlantic cooperation remained central to her message. Von der Leyen highlighted the EU-US deal, underlining its importance for protecting European jobs and portraying it as a stronger outcome than what others managed to secure—signaling both the strategic and economic weight of this partnership.

Nuclear power was explicitly acknowledged as part of Europe’s clean energy pathway, reflecting Brussels’ growing openness, influenced by France’s demands for greater recognition in the 2040 climate targets or by the US interest in nuclear projects, particularly in Central and Eastern Europe. Enlargement, too, was emphasized, reaffirming the European future of the Western Balkans, Moldova, and Ukraine—a development that must drive a deeper debate on energy security in these regions.

Notably, “green” and “climate” were mentioned only five times, compared to eighteen mentions in the last State of the Union in 2023, with the 2040 targets briefly referenced amid ongoing heated negotiations in Brussels. Energy affordability, however, remained a central theme of the address.

Despite drawing clear lines between friends and foes, von der Leyen underscored that Europe must remain “open to the world and choose partnerships with allies—old and new,” a statement that may reflect an evolving view of a multipolar global order.

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

Boosting European batteries is a start

President von der Leyen’s “battery booster package” is a start, but the €1.8 billion for equity to boost production in Europe pales in comparison to over $230 billion in subsidies China lavished on electric vehicles (EVs) and batteries from 2009 to 2023—and even the United States continues to invest tens of billions of dollars in its battery/EV complex despite a less favorable policy environment. Europe risks being left behind in this cutting-edge technology.

It doesn’t have to be this way. Germany’s removal of the debt brake could prioritize battery and EV investment, while other northern European countries enjoy fiscal space that must be balanced against inflation risks. There’s also an urgent need to build on embryonic Europe-US cooperation in advanced batteries.

Finally, advanced batteries hold important security implications for European countries—especially Ukraine. Next-generation, Western-made batteries, with greater energy density, would enable Western forces to outrange Russian drones powered by Chinese batteries. With battery-powered, first-person view (FPV) drones changing battlefield tactics in Ukraine, the EU should prioritize battery investment.

Given batteries’ relevancy for Europe’s military, economic, and climate objectives, the Commission and Member States must build on the battery booster package.

– 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. This analysis represents his own personal opinion.

Europe’s call for greater energy security could be met through the Black Sea region

Von der Leyen’s urgent call to rewire Europe’s energy map positions the Black Sea region as a key element in reducing dependence on Russian fossil fuels faster and advancing European energy independence. The “Energy Highways” initiative and upcoming Grids Package target persistent gaps in cross-border infrastructure in Central Europe. By prioritizing grid upgrades, new interconnectors, and faster permitting, the Commission signals that Black Sea offshore wind, nuclear capacity, and other clean energy projects can be integrated quickly if they are backed by committed investment and political will.

Von der Leyen’s reference to “crucial stability in our relations with the US” also has implications for regional energy security. Stable EU-US trade relations prevent tariff shocks that could disrupt important infrastructure development. The planned Vertical Gas Corridor would channel US and other non-Russian LNG into the Black Sea region, diversifying essential natural gas routes. In addition, US partnerships on nuclear energy, especially small modular reactors and Cernavodă modernization in Romania, would provide long-term, low-emissions power. These transatlantic links and EU initiatives collectively support the Black Sea’s development into an energy hub that is critical to Europe’s clean energy transition and strategic independence.

– Uliana Certan is a program assistant with AC Romania.

The road ahead for European energy security

Von der Leyen’s emphasis on energy infrastructure in the State of the European Union marks a positive step forward for European energy security and competitiveness. This suggests the Commission is responding to last year’s Draghi report warnings about permitting delays and grid constraints.

However, the slow pace so far in advancing European competitiveness raises doubts about how much this agenda will be acted upon. The Commission’s pledge earlier this year to phase out Russian fossil fuels by 2028 was long overdue, albeit a welcome rhetorical shift. But without proper diversification of energy sources, the EU risks replacing one dependency with another, shifting from Russian gas to increased US liquefied natural gas imports, and ultimately falling short of delivering the strategic autonomy that von der Leyen emphasized throughout her address.

Her call to double down on homegrown renewables, with nuclear as a baseload, and to modernize and invest in infrastructure and interconnectors is a promising step forward. For Central and Eastern Europe in particular, this could further accelerate progress toward meeting the EU’s 2030 climate targets while enhancing long-term energy security. Yet without national buy-in—as seen in Hungary and Slovakia’s resistance to the fossil fuel phase-out, and Austria’s recent legal opposition to nuclear settled by the court this week—these proposals risk becoming at best, slow moving, and at worst, more rhetoric than reality.

– Lisa Basquel is a program assistant with the Atlantic Council Global Energy Center.

‘Made in Europe’ approach will strengthen both EU energy security and its alliance with the US

Europe has learned the hard way that dependency can be weaponized. Ursula von der Leyen’s speech made this point clear by placing competitiveness at the heart of the European agenda. Safeguarding Europe’s economy and future requires urgent action.

From equity support for battery production to ensuring startups can scale with European—not foreign—investments, the State of the Union highlighted long-overdue measures that many in Brussels have been championing for years. If Europe wants to secure industrial leadership, its businesses need to flourish. For this reason, the introduction of Made in Europe criteria in public procurement—although considered controversial by many—should be considered an important tool to create the market signals needed to incentivize investments in domestic strategic clean technologies.

But building a stronger, more independent Europe does not mean building a protectionist one. Europe cannot afford ideology; pragmatism must prevail. The Trump administration forced this reality check upon the bloc.

Under a transatlantic lens, a more competitive Europe is not a US rival but a stronger ally. That should be the spirit guiding the EU and United States as they build on the recently announced trade deal. Von der Leyen is right: It’s not great, but it is the best deal possible, as Europe could not risk a trade war with its most important partner in a moment of deep geopolitical turmoil. Washington should welcome a Europe determined to stand on its own feet, because a resilient, autonomous partner for the United States means a transatlantic alliance capable of driving change together.

– Elena Benaim is a nonresident fellow with the Atlantic Council Global Energy Center

About the authors

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Geoffrey Pyatt

Energy & Environment Europe & Eurasia

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Michał Kurtyka

Eastern Europe Energy & Environment

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András Simonyi

Energy & Environment Europe & Eurasia

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Andrei Covatariu

Senior Fellow, Global Energy Center

Eastern Europe Energy & Environment

Staff

Joseph Webster

Global Energy Center Indo-Pacific Security Initiative

Central Asia China

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Uliana Certan

Assistant Director, European Engagement

Democratic Transitions Energy & Environment

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Olga Khakova

Geopolitics & Energy Security Europe & Eurasia

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Elena Benaim

Energy & Environment

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Why China and Russia are unlikely to move the Power of Siberia-2 pipeline forward

Joseph Webster, Landon Derentz — Fri, 05 Sep 2025 14:44:59 +0000

While Russian President Vladimir Putin traveled to Beijing this week to meet with Chinese President Xi Jinping, Russia’s energy giant Gazprom sought to establish a cross-border connection of a different kind. In Beijing on September 2, Gazprom CEO Alexei Miller announced that a “legally binding memorandum” had been signed for the Power of Siberia 2 (PoS-2) natural gas pipeline, according to Interfax, a Russian news agency. It would be easy to see this as a major step forward in the relationship between Moscow and Beijing, but there are reasons to caution against this interpretation. For starters, the Chinese side has not yet confirmed this news, suggesting that the pipeline is not, in fact, finalized.

If Russia and China both threw their weight behind completing the PoS-2, then Western capitals would not be wrong to perceive it as evidence of Putin and Xi deepening their countries’ economic, political, and perhaps even military cooperation. But the pipeline is unlikely to advance—at least not with great urgency. Moscow’s enthusiasm for the project is not matched by Beijing.

Still, the Gazprom announcement is significant. While media attention is understandably fixated on the potential 50 billion cubic meters per year (bcm/yr) from PoS-2, Miller also announced capacity expansions on the first Power of Siberia (PoS-1) pipeline and the Far Eastern Route totaling 8 bcm/yr. If true, these incremental volumes from capacity expansions would supplement other Russian natural gas exports to China already occurring directly via pipeline connections and Arctic LNG 2 and indirectly via Central Asia. Altogether, these smaller expansions approach the scale of another PoS-1 pipeline over time, even if not in a single megaproject.

Either strategically or inadvertently, Beijing and Moscow may be adopting a “Moneyball approach” to natural gas cooperation: while they may not be able to build a megaproject, they may be re-creating the volumes in the aggregate via several smaller projects.

Why Russia wants the pipeline

Three-and-a-half years into Russia’s war on Ukraine, the Russian economy is proving more resilient than many expected, but a megaproject pipeline could mitigate looming post-war challenges.

The 50 bcm/yr of new export flows from PoS-2 (58 bcm/yr, if the PoS-1 and Far Eastern Route deals also move forward) would reshape global gas markets, undercut liquefied natural gas (LNG) exporters—especially the United States, the world’s largest exporter—and lock Beijing and Moscow into a thirty-year economic commitment.

Moscow can draw on nonliquid assets and more than $200 billion of central bank reserves to keep the economy afloat, as the Atlantic Council’s Charles Lichfield recently noted. Still, Russia’s long-term economic liabilities may become more pronounced in the post-war period, even if it enters into a cease-fire in the coming months: World oil prices are expected to soften. The Russian labor force has permanently shrunk due to the sustainment of more than one million casualties in the war. And shifting from a war economy will prove wrenching for whole sectors and regions, especially as Chinese firms that expanded into wartime Russia will complicate the transition.

While the PoS-2 and the other gas agreements won’t solve Russia’s fundamental challenges, it could make them more manageable. Significantly, Gazprom may believe that even announcing headway in PoS-2 negotiations may grant it more leverage in postwar negotiations with European buyers.

Why China may be more hesitant

While Russia is eager, perhaps even desperate, to sell gas to China, there appears to be considerable ambivalence in Beijing. While China increasingly requires more energy, and there is still plenty of appetite for coal-to-gas switching in northern China, it’s unclear that the pipeline will move forward for several reasons.

To date, there have not been any authoritative statements from the Chinese government or Chinese media regarding what it calls the “Western natural gas pipeline.” While Russian media has promoted the purported deal, and Western media outlets have reported these findings, authoritative Chinese government organs and state media outlets have been quiet so far, suggesting negotiations are still ongoing.

Additionally, there is no public information about contract terms—and the devil is in the details. While the original Power of Siberia’s terms have never been publicized, the Carnegie Endowment for International Peace’s Sergey Vakulenko’s imputation of prices suggests Russia secured the worst terms out of all Chinese pipeline partners. Furthermore, Russia’s negotiating leverage has deteriorated starkly since PoS-1 was inked in 2014. Global LNG supply is much more competitive vis-à-vis pipeline natural gas. Russia’s full-scale invasion of Ukraine severely damaged its ability to sell to Europe, its other major overland export market. And new technologies—many of them made in China—are increasingly viable alternatives to Russian natural gas.

But the most significant reporting omission may be financing, which was a key sticking point in the negotiations over the first Power of Siberia pipeline: Gazprom initially pushed for a large Chinese prepayment to help fund the Russian section, but Beijing resisted. As a result, Gazprom was left to finance the domestic portion itself, while the state-owned China National Petroleum Corporation backed the Chinese section.

Although the Chinese economy is much larger than in 2014, financing PoS-2 will likely prove much more difficult. To start with, the pipeline is much longer (1,400 km) and larger (50 bcm/yr) than its predecessor, implying higher capital expenditures, financing costs, and longer payback periods, especially as the project is unlikely to open any time before 2030. If the project moves forward, Russia will likely shoulder most of the financing risk, as China has little reason to accept worse terms than before. Finally, the pipeline could become a stranded asset due to uncertainties in Sino-Russian relations or technological advances.

Indeed, if Beijing inks PoS-2, then it will effectively bet against developing two technologies it seeks to dominate: heat pumps and batteries.

PoS-2 would mainly serve northern China, where demand is concentrated in industry and heating, not power generation. Chinese provincial-level gas demand data is sparse, but China’s National Energy Administration reports industry, city gas (heating), and power account for 41 percent, 34 percent, and 18 percent of consumption, respectively, nationwide—and China’s natural gas-fired power plants are overwhelmingly concentrated in the south and east.

China has already installed more than 250 gigawatts of electricity-driven heat pumps, while the central government has issued plans to expand the industry. Coal-to-electricity switching (and even gas-to-electricity switching) will limit the growth prospects of natural gas for heating.

Chinese natural gas demand in industry is also likely to face pressure, as recent analyses show battery electric vehicles making headway even in the heavy-duty vehicle sector. This could limit future demand for LNG-powered trucks, which have become an increasingly important driver of Chinese natural gas demand. Given that China will very likely see additional advances in next-generation battery chemistries, vehicles powered by electricity—not LNG—may increasingly replace diesel-fired heavy-duty vehicles in northern Chinese cities.

Implications for US and European policymakers

The PoS-2 faces significant, perhaps even insurmountable economic, financial, and political challenges. Miller’s announcement this week should largely be read as a signal of Gazprom’s increasing desperation, not that the pipeline will move forward.

Still, the deal is significant—even if only the smaller projects totaling 8 bcm/yr move forward. That volume, the equivalent of 6 million tons per year, or 0.8 billion cubic feet per day, is roughly the size of a small LNG project. Furthermore, China and Russia have established a pattern of inking smaller oil and gas deals that can be cumulatively significant.

Such smaller arrangements include a 10 bcm/yr contract signed in February 2022 for the Russia-to-China Far Eastern Route. But some exports are taking place indirectly and under the radar, including the 2023 agreement between Russia and Uzbekistan to intake 2.8 bcm/yr of imports that could scale up to 10 bcm/yr by 2030. Indeed, Russian net exports to Commonwealth of Independent States countries—which include Belarus and Central Asian states—have more than doubled since the start of Russia’s full-scale war in Ukraine, growing by 13 bcm/yr. Importantly, Russia’s exports to Central Asia may support the region’s shipments to China, although this relationship is not one-for-one. Turning to oil, China signed an agreement for 100 million tons of Russian crude oil over ten years in February 2022; it also bought an additional 2.5 million tons per year this week.

In sum, while it is an open question of how far the Power of Siberia-2 project will go, Russia has already secured significant oil and gas export volumes via smaller projects, largely from Chinese buyers.

So, how should Washington and Brussels view these developments?

A portion of the Trump administration seems to believe that it can effectuate a “reverse Kissinger” and peel Moscow away from Beijing. This development is evidence against that approach succeeding. Even if China and Russia have “only” agreed to a slimmed-down agreement of 8 bcm/yr, it will harm US interests by constricting LNG exports and making Beijing less reliant on US energy.

Similarly, the gas announcement could be an attempt by Russia to signal to Europe that it can sell to other markets. Moscow likely hopes that the prospects of a megadeal with China, however slim, will give it more leverage in any postwar negotiations with European gas buyers.

Washington and Brussels now have an opportunity to advance their shared goals at the expense of Beijing and Moscow. China is Russia’s most important trade partner and provides indispensable defense industrial base support to Moscow. Any further natural gas tie-in risks prolonging the war in Ukraine by sustaining Russia’s economy and bolstering Putin politically. The United States and its European allies should jointly consider targeted secondary sanctions against Russian energy companies, Chinese firms aiding the Russian war effort, or both.

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

Landon Derentz is 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 and director for Middle Eastern and African affairs at the US Department of Energy.

The post Why China and Russia are unlikely to move the Power of Siberia-2 pipeline forward appeared first on Atlantic Council.

Ukrainian bombing campaign turns Russia’s sheer size into a weakness

David Kirichenko — Thu, 04 Sep 2025 21:09:42 +0000

For centuries, Russia’s sheer size has been its greatest asset, making the country virtually unconquerable and guaranteeing an almost limitless supply of human and material resources that have helped secure generations of superpower status. However, there are signs that this may now be changing. Ukraine is currently conducting a long-range bombing campaign across Russia that turns the country’s vastness into a weakness and exploits the Kremlin’s inability to defend every inch of the endless Russian skies.

Ukrainian bombing raids on Russian oil refineries have been underway since the early stages of the war but have gained significant momentum over the past month. While the Kremlin remains tight-lipped over the impact of these attacks, evidence of significant damage is mounting. By late August, Ukraine had succeeded in disrupting at least 17 percent of Russia’s refining capacity, according to Reuters. Britain’s Economist magazine says that the figure may be as high as 20 percent.

Ukraine’s attacks have sparked a fuel crisis in Russia, with queues reported at gas stations throughout the country amid a surge in prices. By early September, Russia’s wholesale gasoline price had climbed to record highs. This combination of shortages and rising costs is already creating unwelcome social pressures that the Kremlin cannot afford to ignore. If Kyiv is able to maintain the current pace of attacks, this could begin to seriously constrain Putin’s ability to fund the invasion of Ukraine.

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Russia depends heavily on oil and gas revenues to maintain the war effort and cover the rising cost of enticing new military recruits. The Kremlin requires a steady flow of manpower as it seeks to overwhelm Ukraine’s defenses, but the Russian army’s reliance on frontal assaults virtually guarantees heavy losses. In order to sustain current troop levels, Russia is therefore forced to offer exceptionally high salaries and generous enlistment bonus payments.

Disruption within the oil and gas industry will not immediately impact Russia’s war economy, but it could force Putin to make difficult decisions. Since the start of the full-scale invasion more than three years ago, the Kremlin dictator has made it a priority to shield ordinary Russians from the impact of the war. If Ukrainian attacks on oil refineries continue, the Kremlin may have to cut spending elsewhere in order to finance the military, creating the potential for destabilization on the home front.

So far, Moscow is attempting to downplay the significance of Ukraine’s airstrikes, with Kremlin officials attributing fuel problems to other causes and blaming any obvious damage to refineries on falling drone debris. However, efforts are also underway to suppress news of successful Ukrainian attacks. This has reportedly included Orwellian announcements broadcast in public spaces informing Russians not to post footage of drone strikes on social media.

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Ukraine’s increased capacity to strike deep inside Russia reflects the progress made by Kyiv since 2022 in developing its own arsenal of long-range drones and missiles. During the initial stages of the full-scale invasion, the Ukrainians had only a handful of drones capable of conducting strikes across the border. The country is now reportedly producing thousands of long-range drones every month, and has recently unveiled a number of domestically produced cruise missiles with far greater payloads that could allow Ukraine to significantly escalate the current bombing campaign in the coming months.

The Ukrainian military is learning and improving with each new strike. Key refineries and weak points in Russia’s energy infrastructure are now being struck again and again in order to hinder repair works and compound the burden on Moscow’s energy logistics. When selecting targets, Ukrainian planners are also well aware of the Russian energy industry’s dependency on Western components, with sanctions often making it difficult for Moscow to source replacements.

Crucially, Ukraine’s bombing campaign is exploiting Russia’s size and taking advantage of the country’s already overstretched air defenses. Much of Russia’s existing air defense capacity is currently deployed in occupied regions of Ukraine and along the front lines of the invasion. This leaves a limited number of available systems to defend Russian cities and other high value targets such as the palaces of Putin and the Kremlin elite. By increasing the geographical range of its bombing raids, Ukraine is forcing Russia to further disperse its air defenses. This creates inviting gaps and leaves some targets undefended.

Even with dramatically enhanced air cover, it is likely that the Kremlin would still struggle to entirely nullify the threat of further airstrikes on the oil and gas sector. With dozens of refineries, storage facilities, and port terminals, together with thousands of kilometers of pipelines spread over eleven times zones, Russia’s energy industry may simply be too large to be adequately protected against aerial attack.

Officials in Kyiv recognize that the current air offensive will not prove decisive. Nevertheless, they hope Ukraine’s increasing ability to inflict serious damage on Russia’s energy sector can help persuade Putin to finally engage in peace talks. The Russian ruler seems completely unconcerned by the catastrophic casualties his army is suffering in Ukraine, but he may not find it so easy to ignore growing threats to the economic stability of Russia itself.

Many Ukrainians also see enhanced long-range strike capabilities as crucial for efforts to deter future Russian aggression. Russia’s size makes it a formidable foe but this scale also leaves the colossal country exposed to counterattack by a smaller opponent with an arsenal of weapons tailored to the task of giant-killing. As former Ukrainian defense minister Oleksiy Reznikov noted recently, “Ukraine is a David that tries to find Goliath’s weaknesses.”

David Kirichenko is an associate research fellow at the Henry Jackson Society.

The Power of Siberia 2 won’t outpower economics

The potential economic benefits Russia aims to achieve through the gas deal remain highly uncertain. China’s gas demand is tapering, and long-term pipeline contracts lack the fungibility of LNG, which can be shipped globally. Most importantly, Russia’s war spending has drained its capacity to fund large non-military projects. Moscow needs this deal far more than Beijing, giving China the ultimate upper hand in dictating terms. Unsurprisingly, the MOU omitted timelines, budgets, and details on who would finance the pipeline. Moreover, even if Power of Siberia 2 comes online, Its full 50 bcm capacity would cover less than half of the piped exports Russia has lost through its self-inflicted gas cutoff to Europe.

That said, these are unprecedented times in energy security, and projects have advanced at record speed when fueled by geopolitical ambition. Should China pursue an aggressive energy-hungry artificial intelligence (AI) strategy, discounted Russian fuel could balance and complement robust renewable energy growth. For Beijing, this “optionality bonus” comes at little cost; for Moscow, however, the financial upside would remain meager—undercut by steep discounts, unfavorable loans, and flexible purchase terms shaped by China’s tough negotiating position. The only viable path forward would be if the project proved overwhelmingly beneficial for Beijing, with Russia motivated simply to avoid flaring or venting stranded gas.

This Pyrrhic MOU posturing is strategically timed: a challenge to the West’s resolve to apply additional pressure on Russia amid US efforts to broker a lasting peace, ongoing US–China trade negotiations, and the North Korea-China-Russia meeting.

New gas pipelines: A mirage while Russian LNG ships across the world

While this public relations stunt grabbed headlines, Russian liquefied natural gas and Russia’s efforts to triple exports in the next five years—not another empty pipeline—remains the financial lever for aggression and geopolitical leverage that calls for urgent measures. The Arctic LNG 2 sanctions have been a case study in effective sanctions statecraft: slowing development, delaying exports by at least a year, and adding significant costs to Russia’s ambitions to expand its LNG market. But sanctions are only as strong as their enforcement. History makes clear that Russia will inevitably resort to evasion, which is why every sanctions package must be followed by a crackdown and, if necessary, escalation through secondary sanctions.

Response from the West is crucial

China and Russia aim to sell the deal—and the alliance of aggressors it represents—as a decline of Western relevance and power; however, the United States and Europe have smart options on how to respond. The immediate potency of sanctions on Russia’s crumbling economy don’t require $400 billion in investments and decades to complete, unlike Power of Siberia 2. Sanctioning the Arctic 2 LNG exports to China and enforcing existing vessel and project sanctions, sanctioning Russian oil, and cracking down on parts and chemicals essential for the industry is precisely the kind of response China and Russia are hoping the United States will not deploy. Such a bold response would create leverage in establishing a just peace in Ukraine by choking off already dwindling funding for Russia’s aggression and forge transparency around global LNG trade, whether it’s for carbon accounting, maritime safety, or sanction compliance.

The United States and Europe hold the economic leverage. The question is: will they deploy the full pressure campaign needed to forge a safer, more energy-secure, and resilient world—or allow the China-Russia authoritarian narrative of Western decline to prevail?

Olga Khakova is a deputy director at the Global Energy Center

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Hungary has alternative energy options but chooses to rely on Russia

Aura Sabadus — Tue, 02 Sep 2025 19:42:11 +0000

Hungarian officials have responded angrily in recent weeks to repeated Ukrainian attacks on the Kremlin’s Druzhba pipeline, which supplies Hungary with Russian oil. Ukraine hit the pipeline on three occasions during August, provoking protests from Budapest and warnings from Hungarian Foreign Minister Peter Szijjarto that Ukraine “must expect consequences.”

Hungary’s first act of retaliation was to ban Ukraine’s drone force commander Robert Brovdi from entering the country. Brovdi, who is of Hungarian descent, responded defiantly. In a strongly-worded social media post, he branded Hungary’s pro-Kremlin authorities “dancers on bones” and accused them of being complicit in Russian war crimes by funding Moscow’s invasion. “Your hands are soaked in blood up to the elbows, and we will not forget it,” he commented.

Brovdi’s reply may not have been very diplomatic, but it reflected the painful truth. Moscow’s invasion of Ukraine is being financed primarily by the export of Russian oil and gas. As one of the Kremlin’s last remaining European customers along with neighboring Slovakia, Hungary is feeding Putin’s war machine.

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Since the start of Russia’s full-scale invasion of Ukraine in February 2022, Hungary and Slovakia are believed to have paid Moscow close to $6 billion in tax revenues for crude oil deliveries alone. This contribution is enough to finance thousands of the cruise missiles that are used to bomb Ukrainian towns and cities on a daily basis.

Following Russia’s invasion, the EU announced plans to completely phase out Russian fossil fuel imports. However, rather than diversify away from Moscow, Budapest and Bratislava have actually increased their dependency on Russian energy deliveries. Hungary has expanded its reliance on Russian oil from 61 percent on the eve of the invasion to the current figure of 86 percent, while Slovakia is now thought to be almost entirely dependent on Moscow for oil. Similar trends are evident in terms of Russian gas exports to both countries.

This continued reliance on Russia is a choice rather than a necessity. A report published earlier this year by the Center for the Study of Democracy (CSD) and the Center for Research on Energy and Clean Air (CREA) found that Hungary and Slovakia could both potentially diversify their energy supply strategies by importing non-Russian oil via alternative sources such as Croatia’s Adria pipeline.

Opportunities for diversification also exist in relation to natural gas. For example, the two countries could secure non-Russian gas deliveries in the form of liquefied natural gas from global suppliers via existing LNG terminals located in Germany, Poland, Italy, or Greece.

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Hungary and Slovakia argue that their reliance on the Kremlin is motivated by cost, with imports from Russia cheaper than purchasing energy resources elsewhere. While wholesale prices paid by Hungarian and Slovakian buyers are not officially released, data published by the European Commission indicates that natural gas prices for end consumers in Hungary and Slovakia are among the highest in the EU. In other words, Hungarian and Slovakian consumers do not appear to be any better off than their EU peers as a result of ongoing Russian oil and gas deliveries.

A key long-term oil export contract between Hungarian and Russian companies was due to expire at the end of June 2025, thus potentially freeing the Hungarian side of contractual obligations and empowering it to seek alternatives elsewhere. It is unclear whether the agreement has been renewed or if Hungary is now simply buying Russian oil on the spot market, but continued imports point to the fact that the Hungarian government has no plans to turn away from Russian fossil fuels.

Hungary has known for more than three years that the EU is aiming to end energy imports from Russia. Budapest also has alternative options available that would allow the country to reduce its reliance on Russian oil and gas supplies. Instead of diversifying, however, the Hungarian government has chosen to deepen its dependence on the Kremlin. They have done so despite knowing that they are helping to finance the largest European war since World War II.

Ukraine’s recent strikes on the Druzhba pipeline are not only an attack on Russia’s war economy. They are also a wake-up call for Hungarians highlighting the role being played by their country in the funding of Russia’s invasion.

This October, the mandate for one of the US government’s most effective tools in its global competition with China is set to expire. The International Development Finance Corporation (DFC) was created under the first Trump administration with the goal of mobilizing private capital to promote economic development in low-income countries (LICs) and lower-middle-income countries (LMICs) while advancing US foreign policy interests.

In the Better Utilization of Investments Leading to Development (BUILD) Act, the bill that first established DFC, China is never mentioned by name. But China’s shadow looms large over references to “debt sustainability” and providing countries with an “alternative to state-directed investments.” When the BUILD Act was written seven years ago, US policymakers were just starting to take note of China’s growing presence in LICs and LMICs. Since then, China has become the top trading partner of 145 countries, making up roughly 70 percent of the world’s population. Between 146 and 150 countries have joined the Belt and Road Initiative (BRI), Xi Jinping’s $1 trillion flagship lending program. China is the world’s largest official creditor, and its lending initiatives have won Beijing significant geopolitical influence.

However, in the last seven years, DFC has turned the United States from a passive observer of China’s meteoric rise as a development lender into a serious contender in an intensifying front of competition with Beijing. DFC is making good on its mandates: advancing development objectives in LICs and LMICs, furthering US foreign policy goals, and winning deals that China wanted. Its lending has exceeded $50 billion to 114 countries, impacting more than 200 million people and businesses worldwide. This includes multiple cases in which DFC stepped in to provide financing that outcompeted Beijing, from the Elefsina Shipyard in Greece to the acquisition of a telecommunications company in the Pacific Islands and the Lobito Corridor railway in Zambia, Angola, and the Democratic Republic of the Congo (DRC).

DFC is one of the United States’ few remaining tools of positive economic statecraft to compete with China in global development—and it must be protected. Congress has an opportunity to fine-tune DFC’s operations and set it up for even greater success before the reauthorization deadline on October 6. In that spirit, this brief explores three case studies in Chinese development lending, what they teach us about why China’s lending programs succeed—and fail—and how Congress can make DFC an even sharper tool.

Case study 1: Jakarta-Bandung railway

China’s approach: Flexible mandates, high risk tolerance

When Beijing is asked to participate in multilateral debt relief initiatives, there is an insistence that one of its two state-owned policy banks, the China Development Bank (CDB), is a commercial lender, and not an official creditor. As a state-owned bank acting purely in its own commercial interests, Beijing argues, CDB is not furthering the PRC’s foreign policy goals, and it should not be subject to the same transparency requirements as other official lenders.

As revealed in an AidData analysis of CDB lending practices, the bank often behaves like a commercial institution adhering to standard commercial lending practices such as lending at floating market interest rates. However, when Beijing deems a project strategically important, CDB will suddenly change its practices, offering unusually concessional lending terms.

CDB came across one such strategically important project in 2014, when the Indonesian government announced a bid to finance a high-speed rail line connecting two of its largest cities, Jakarta and Bandung. Just a few months earlier, during a trip to Indonesia, Xi had announced his intention to build a “21st Century Maritime Silk Road” to enhance connectivity throughout Southeast Asia. This proposed maritime silk road became the “road” in “One Belt, One Road,” the lending program now known as the Belt and Road Initiative. The Indonesian government’s newly announced rail project presented an opportunity to develop a strong early example to showcase Xi’s new initiative in action.
From January 2014 to May 2017, CDB and the Japan International Cooperation Agency (JICA) submitted competing bids to bankroll the Jakarta-Bandung High Speed Rail project. JICA offered to finance 75 percent of the project at a 0.1 percent interest rate, contingent on the Indonesian government providing a sovereign repayment guarantee. CDB’s counteroffer was to finance 100 percent of the project at a 2 percent interest rate, with a lower overall cost and shorter construction timeline, provided the Indonesian government guaranteed repayment.

Indonesian President Joko Widodo surprised observers by rejecting both offers, citing a desire to avoid taking on substantial sovereign debt. JICA responded with a 50 percent reduction in the debt that the government would need to back with a sovereign guarantee. But CDB offered the winning bid: an arrangement that would require Indonesia to take on no debt whatsoever. Instead, the bank would create an off-government balance sheet by lending to a special purpose vehicle, a separate legal entity jointly owned by Chinese and Indonesian state-owned enterprises, created solely for the purpose of financing and building the Jakarta-Bandung High Speed Railway. This would allow CDB and Widodo to work around the Indonesian government’s debt ceiling. The final loan was far more concessional than CDB’s typical offers, and far more concessional than the minimum standards the Organisation for Economic Co-operation and Development uses to define concessionality.

CDB blurs the lines between its commercial, developmental, and geostrategic purposes and, as a result, Beijing gets to have it both ways. CDB protects its balance sheet, evades its responsibility to participate in multilateral debt relief initiatives, and lends at far below-market rates when an opportunity arises to advance the government’s policy objectives.

Lessons for the United States

Flexibility can be a strength. DFC has a dual mandate: support sustainable development in LICs and LMICs and advance US foreign policy interests. This has implications for where DFC operates, and there is currently widespread disagreement among experts on this front.

The conversation around DFC’s reauthorization is bifurcated between two camps. In one corner, development practitioners voice frustration with DFC’s gradual shift toward lending to richer countries. These observers rightly argue that US foreign policy interests have led DFC to stray from its original mandate to prioritize LICs and LMICs. In the other corner, national security analysts advocate harnessing DFC’s demonstrated effectiveness to respond to the short-term foreign policy challenges of the day.

Dealing with China means swimming in murky waters. Beijing blurs the lines between the commercial, the developmental, and the geostrategic, and a heavily siloed US system will not meet the multifaceted and overlapping challenges that the United States must address. While DFC should not neglect its development mandate, it should also have the flexibility to respond to challenges where they occur.

High risk tolerance is critical. Risk tolerance is an oft-cited advantage for Chinese lenders, and an oft-cited disadvantage for DFC. DFC’s cautiousness limits its ability to move quickly and lean into opportunities where the returns are nonmarket geostrategic wins.

Case study 2: DRC Sicomines copper-cobalt deal

China’s approach: Extreme high-volume financing

In 2007, the Export-Import Bank of China and two Chinese state-owned construction firms signed an agreement with the government of the DRC for the nation’s largest resources-for-infrastructure (RFI) deal. RFI deals, in which loans for infrastructure development are repaid with natural resources, are commonplace for China.

Under this deal, the Chinese parties would provide a staggering $9 billion of loans—more than three times the DRC’s annual government budget of $2.7 billion. The deal included $3 billion earmarked for developing and operating the Sicomines copper-cobalt mine, with the Chinese consortium owning 68 percent, and $6 billion earmarked for postwar rebuilding projects following the Second Congo War.

Ultimately, the deal was renegotiated several times. In 2009, the International Monetary Fund (IMF) called for a renegotiation due to concern over the DRC’s capacity to repay the loan. In 2021, the deal faced renewed public scrutiny, and DRC President Félix Tshisekedi launched an audit that found that the agreement presented “an unprecedented harm in the history of the DRC.” China had only spent a fraction of the amount promised for postwar reconstruction projects—reaping $10 billion in profits and giving the DRC only $822 million in return. Last year, this gave the country leverage to renegotiate the deal once more and secure an agreement that increased the infrastructure budget by $4 billion and gave the DRC a greater share of mining revenues.

In this case, Beijing was willing to commit an astounding volume of capital to a highly risky endeavor, but China has lent far greater amounts to critical minerals over the last two decades, nearly $57 billion from 2000 to 2021.

It is difficult to overstate the geopolitical gains that have resulted from high-volume financing deals like this one, which have enabled Beijing to capture over 70 percent of the world’s rare earths extraction and almost 90 percent of processing capacity. Beijing has unparalleled dominance over the essential inputs underpinning the construction of the modern world. To build everything from fighter jets to consumer electronics, MRI machines, and electric vehicles, the rest of the world is now, to some extent, dependent on Beijing’s good graces.

Lessons for the United States

The United States cannot compete with China on a dollar-for-dollar basis, but current resources are insufficient. The United States does not have to close the gap between what it and China can offer globally. US lenders can be strategic, focus on key sectors and countries, and double down on areas in which the United States has a competitive advantage. Narrow the gap it must, though. Small, strategic investments could not have won China supply chain dominance in critical minerals. The current level of resources dedicated to this challenge are not proportionate to the severity of the threat

Invest with foresight. China’s dominance in critical minerals was built over decades of placing strategic bets on resource rich countries with assets that have national security implications. Beijing pledged $9 billion for the Sicomines copper-cobalt deal in 2007, many years before terms like “critical minerals,” “electric vehicles” or “5G” entered the public lexicon. DFC should similarly aim to make strategic investments in the supply chains of the future.

Case study 3: 2025 Sino Metals Zambia dam disaster

China’s approach: Move fast, break things

This February, a dam built by Sino-Metals Leach Zambia, a Chinese state-owned mining firm, burst, spilling toxic mining waste into the Kafue River in Zambia. The damage was catastrophic and unprecedented. The river, now an acid-leached wasteland, had supplied drinking water for roughly 5 million people and supported the livelihood of roughly 20 million farmers, fishermen, and industrial workers.

The dam held waste from nearby mines that were slated to serve a critical role in meeting an ambitious development goal: triple Zambia’s copper output by 2033. As the Zambian government raced forward in pursuit of this objective, the country became increasingly reliant on the only international partner who could meet the speed and scale they required: China.

Over the last several months, Zambian civil society has demanded greater transparency and accountability in the government’s mining deals. Thanks to public pressure to disclose further information, we now have a detailed record of the negligence behind this disaster.

It’s clear now that prioritizing speed led the parties involved to overlook negligence in terms of environmental, social, and governance (ESG) standards. Sino Metals operated within the Zambia-China Economic and Trade Cooperation Zone, Africa’s first special economic zone designed to attract international investment through incentives like tax breaks and streamlined approvals, including environmental approvals. In 2014, a Zambian auditor warned that tailings dams, large embankments used to store mining waste, were being systemically mismanaged in Zambia’s Copperbelt. Nevertheless, Sino Metals decided to rely on a tailings dam to store copper mining waste from its Chambishi Leach Plant. Rather than building a new dam, it was faster for the company to raise the wall of an existing dam built many years earlier.

Once built, the company repeatedly failed to conduct routine inspections, and there is no evidence to suggest that the dam was managed by licensed engineers. Sino Metals’ sister company, NFCA Africa Mining, admitted to disregarding safety and environmental standards in an internal report. Zambian regulators and the Chinese project managers had many chances to prevent the disaster from happening. A 2017 study found that the groundwater near the Sino Mines facility was already contaminated. In 2022, Sino Mines expanded the dam once again.

Lessons for the United States

ESG standards and transparency are important competitive advantages for US-backed deals. The Sino Metals dam disaster was not a one-time occurrence. Beijing routinely scores own goals in the form of flagrant disregard for host countries’ environmental, labor, and anti-corruption standards. The Jakarta-Bandung high speed railway project managers sped through an environmental impact assessment that should have taken twelve to eighteen months in only seven days. The consequence: a fatal accident, flooded roads, ruined homes and farms, improper waste dumping, mass protests, and $1.49 billion in cost overruns.

Particularly in democracies sensitive to public opinion and countries facing civil society backlash against opaque Chinese deals, the United States should lean into this strategic edge.

Moving fast makes a difference. Paradoxically, speed is a commonly cited factor contributing to host countries’ preference for Chinese loans. While the United States should not save time by cutting regulatory corners, US-backed deals cannot afford to be burdened by needlessly lengthy bureaucratic timelines.

Policy recommendations

To promote thoughtful versatility:

Rethink the guidelines on where DFC operates. The BUILD Act mandates that DFC prioritize the provision of support to countries that meet the World Bank classifications for LICs and LMICs. The resulting arrangement excludes many countries with significant development needs that are classified as upper-middle-income countries (UMICs), often because of socioeconomic disparities or remittances. Examples include Mexico, Brazil, Tuvalu, Thailand, and Malaysia. Rather than relying on the World Bank’s rigid income classifications, DFC should revisit its lending criteria, borrowing from other official lenders’ practices.
Clarify the key terms of DFC’s dual mandate. The BUILD Act instructs DFC to “pursue highly developmental projects” and assess their “strategic value,” but does not put forward standard criteria to determine what is developmental or strategic. A Center for Strategic and International Studies analysis, which collected insights directly from US government development practitioners, found that different agencies apply varying standards for what qualifies as “highly developmental.” Setting standard definitions for these key terms will begin to bridge the divide between the two camps of development practitioners and national security analysts who have different visions for where DFC should operate.

To strengthen risk tolerance:

Establish an internal advisory council to provide guidance on projects that have the potential to generate nonmarket returns. The advisory council can weigh the project’s commercial viability against its implications for US strategic interests and judge whether the risk is acceptable to DFC’s balance sheet.
Transfer the responsibility to approve exceptions to the LIC and LMIC preference from the president of the United States to the DFC’s Board of Directors. Under current law, exceptions to this rule—41.6 percent of investments made in DFC’s first five years—must go up a lengthy approval chain to the highest authority in the United States, who is then expected to parse through highly technical financial terms to evaluate the project’s risk-return profile and repayment terms. Instead, LIC and LMIC preference exceptions should be approved by DFC’s board, a group of development finance and foreign policy experts from across federal agencies. Particularly amid heightened political scrutiny of US government spending, professional oversight may empower DFC to take calculated risks with greater assurance.
Evaluate investments at the portfolio level, not the individual project level. This creates space for DFC to take on, for example, a high-risk, high-reward mining project, provided the aggregate critical minerals portfolio is generating returns.
Authorize DFC—permanently. The life cycles of many current DFC projects extend well beyond another seven-year reauthorization period. In contrast, BRI loans have been steady, providing highly concessional, long-term financing that complements LIC and LMIC governments’ long-term economic development plans. Repeated reauthorization cycles disincentivize DFC from pursuing partnerships that require a long-term steady commitment. DFC has built credibility that warrants a longer leash. Despite weathering a global pandemic, significant leadership turnover, and two highly tumultuous presidential transitions, DFC is delivering on its mandates: investing in LICs and LMICs, generating returns, and outcompeting China for key deals.

To boost finance volume:

Triple DFC’s portfolio cap, from $60 billion to $180 billion. While this may sound like a hefty increase, $180 billion will only make up 12 percent of the $1.5 trillion infrastructure finance gap in LICs and LMICs. A larger portfolio cap will increase the total value of outstanding commitments that DFC can have at any given time and enable DFC to back bigger deals.
Fix the budget rule accounting for DFC’s equity investments. The BUILD Act granted DFC the authority to make direct equity investments, an arrangement that grants the United States unique influence by giving DFC partial ownership in individual companies and projects. Oftentimes, this means DFC earns a voice in management decisions, enabling DFC to ensure projects align with development and US policy goals. Unfortunately, this authority has been underutilized due to an administrative rule with an outsized impact. Under current federal budget rules, DFC’s equity investments are treated as grants, assuming a total loss on 100 percent of DFC’s equity investments. Instead, DFC’s equity investments should be reflected using net present value scoring, which accounts for the likelihood of financial return over time to determine the true cost to taxpayers.
Emphasize the importance of collaboration. The United States should pool funding with allies and partners’ development finance institutions to meet the scale and speed needed to match Chinese state-backed capital. DFC already has partnerships with Australia, Japan, and the Inter-American Development Bank; these partnerships should cut the burden of dealmaking in half, not double it. DFC should work with US partners to create standard due diligence requirements, term sheets, and agreements. This will create opportunities for more effective collaboration across institutions and help joint projects move forward faster.

To streamline operations:

Increase the threshold of investments subject to congressional notification. While the notification process allows for additional oversight and gives Congress the opportunity to raise concerns, this bar is currently set at $10 million, an extremely low threshold that imposes a significant administrative burden for roughly 60 percent of DFC transactions.
Improve staffing. DFC was built to be a lean and dynamic entity akin to a private corporation, but in practice, it has not been given the personnel and resources it needs to work efficiently. The Office of the Inspector General’s most recent report on DFC found that staffing was insufficient to perform robust site visits. DFC has been steadily growing its workforce and had a total of 675 employees in 2024, but the corporation has not released updated staffing figures since the US government terminated all probationary employees earlier this year. The World Bank has more than thirteen times as many employees managing a portfolio less than twice the size of DFC’s. Furthermore, the salaries of DFC’s investment professionals with prior deal experience are roughly a quarter of their private-sector peers’. Having more staff on board—and compensating them fairly—will help to move transactions through DFC’s project preparation workflows more efficiently.

Conclusion

The most common refrain in commentary on US-China competition in LICs and LMICs is that “don’t take China’s money” is not a policy. It is not tenable to beg host governments not to make deals with China, especially when China is the only option for meeting urgent development needs. For many years, experts have repeated the same recommendation to the US government: show up. Offer a US-led alternative to Chinese capital. DFC represents a major step in the right direction. The last seven years have been proof of concept. Now, Congress must scale it and commit resources that will allow DFC to live up to its full potential.

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US military readiness in the Pacific requires strengthening Guam’s power grid

Emma Sampson — Thu, 14 Aug 2025 19:28:35 +0000

Guam is a key logistics hub for US military posture in the Pacific. Located 4,000 miles west of Hawaii, Guam is twice as close to Beijing as Honolulu. As a US territory, Guam provides forward positioning from which the military can organize and launch missions without requiring host-nation approval, a distinct advantage over other overseas bases. This makes Guam vital to US defense strategy in a region shaped by rising tensions in the South China Sea and Taiwan Strait.

As five thousand Marines relocate from Okinawa to Guam, the island’s energy infrastructure, already strained from frequent outages and limited redundancy, faces increased load requirements due to new operational demands. To maintain uninterrupted power and ensure mission readiness, the Department of Defense (DOD) must fortify Guam’s energy infrastructure against cyber, natural, and kinetic threats.

The DOD in Guam

Guam hosts several vital military assets across all service branches. Naval Base Guam hosts Submarine Squadron 15’s five nuclear-powered fast-attack submarines and the Navy’s only two forward-deployed submarine tenders, which support vessels in the 5th and 7th Fleet areas. Guam’s Navy Munitions Command plays a critical role as a Tomahawk missile loading site, enabling submarine strike capabilities in the Pacific.

Andersen Air Force base hosts key resupply efforts, boosting the largest munitions stockpile in the Air Force and refueling aircraft like B2s and F-35s. Andersen also serves as a primary site for joint exercises with Pacific allies, including the annual Cope North trilateral exercise with Japan and Australia.

These mission-critical operations depend on a secure energy supply. A disruption of power on Guam’s military bases could delay fueling and maintenance operations, interfere with DOD cargo unloading on the island, and inhibit communications and radar.

Guam’s energy portfolio

Guam’s military installations rely primarily on Guam Power Authority (GPA), a public utility and the island’s only power company. While the military maintains some backup generation capacity such as the Navy’s 18 megawatt (MW) Orote Point plant, the DOD depends on GPA assets in Guam. Ninety percent (395 MW) of Guam’s energy generation comes from petroleum-fired power plants, which Guam is fully import reliant on. The rest of GPA’s power comes from renewables, primarily its two solar farms.

GPA describes a “critical shortfall” of power generation supply in Guam due to aging infrastructure and setbacks in opening a new power plant due to typhoon damage. GPA’s two largest capacity generator units, Cabras 1 and 2, are fifty years old. Concerns about Guam’s energy security were cited in a report accompanying the National Defense Authorization Act for fiscal year (FY) 2025, in which Congress noted concerns about weekly outages at Navy submarine piers. In addition to shortfalls in power generation, Guam’s energy infrastructure is prone to cyber, natural disaster, and physical threats.

Threats to Guam’s energy infrastructure

Cyberattacks

Guam’s geostrategic location makes its infrastructure a prime target for adversarial threats. Chinese state-sponsored cyber groups known as Volt Typhoon and Salt Typhoon have already demonstrated they can access military and critical infrastructure systems in Guam and the continental United States.

In 2023, Microsoft disclosed that Volt Typhoon had targeted critical infrastructure organizations in Guam through stealthy “living-off-the-land” techniques that aim to disguise malicious activity as routine network traffic. These attacks allowed Volt Typhoon to potentially disrupt key water and energy controls, and in some cases, the hackers were able to access camera surveillance systems at facilities. Chinese cyber groups were also responsible for breaches of California’s grid operator and a small Massachusetts power utility.

The director of the National Security Agency’s Cybersecurity Collaboration Center confirmed that Volt Typhoon focuses on targets in the Indo-Pacific region, indicating that cyber threats to Guam’s infrastructure are likely to continue as part of a broader attempt to weaken the United States’ ability to respond to potential conflict in the Pacific.

Natural disasters

Guam’s location in the Pacific’s “typhoon alley” makes its energy system vulnerable to natural disasters. In 2023, Typhoon Marwar struck the island, leaving 98 percent of the island without power, including at Andersen Air Force Base. Restoring power to the entire island—including repairing damaged transmission lines, substations, and other infrastructure—cost GPA $33 million and took nearly two months to complete.

Guam’s infrastructure remains insufficiently hardened against severe weather. Although GPA has made efforts to replace wooden utility poles with concrete and steel, overhead lines continue to be vulnerable. With only 22 percent of transmission lines and 19 percent of distribution lines buried underground, most of Guam’s grid remains exposed to high winds and storm debris, increasing the risk of outages.

Physical attacks

Power infrastructure is increasingly being targeted with physical sabotage, a vulnerability that could be exploited to disrupt power supply to key military installations. Attacks in the mainland United States, such as the 2022 substation shooting in North Carolina, demonstrate how low-tech methods can cause significant disruptions. Modified commercial drones have also been used to attack substations in Pennsylvania and Tennessee.

As emerging physical threats continue to evolve, Guam’s energy infrastructure must adapt to address them. Most of GPA’s substations are secured by chain-link fencing instead of concrete barriers, a vulnerability that could be exploited by threat actors to damage substations or the grid. Key facilities like the Piti power plant are located near major public roads, creating additional sabotage risk.

How to secure Guam’s energy system

The DOD, in partnership with GPA, should focus not only on increasing generation capacity, but also on protecting current assets from cyberattacks, natural disasters, and physical sabotage threats.

In 2024, GPA submitted a request for federal funding through the Federal Emergency Management Agency to support the One Guam Comprehensive Infrastructure Resiliency Plan, which would bury transmission lines and harden substations. Full funding has not yet been provided in FY 2025. Considering the importance of GPA’s resilience to US military operations, the DOD should coordinate with GPA to implement high-priority components of the One Guam plan, particularly those serving military installations. This includes reinforcing perimeter security by replacing standard fencing with concrete barriers to guard against physical threats, putting remaining overhead transmission lines underground, and relocating key substations to hardened indoor facilities to minimize exposure to storm damage and sabotage.

Given the persistent threats to Guam’s energy infrastructure, hardening cyber and physical defenses must go hand in hand with transforming the DOD-GPA relationship into a more integrated contingency response framework. Joint response and coordination plans from GPA and DOD for a cyberattack breach can be tested during regular coordination meetings or embedded into larger military training exercises. Military training such as the Air Force’s Resolute Force Pacific (REFORPAC) logistics and contingency response exercise could be expanded to include simulated cyberattacks on civilian infrastructure, such as GPA’s grid.

Similar training exercises have taken place at bases in the continental United States. Colorado’s Fort Carson partners with the local power utility to conduct an annual “black start” drill, simulating a power outage affecting both the base and the surrounding grid. Implementing similar field-based training exercises in Guam would allow DOD units and GPA to practice real-time coordination and refine response procedures before an actual incident occurs.

As Guam’s role in Indo-Pacific defense continues to evolve, the security of its energy infrastructure must keep pace to effectively counter emerging threats. In a region marked by rising geopolitical competition, the island’s ability to support forward-deployed forces gives the US a critical strategic advantage. Failure to secure the island’s energy infrastructure could prevent US forces from responding to military threats rapidly and decisively—undermining one of the key advantages Guam offers to defense strategy.

Emma Sampson is a former intern with the Atlantic Council Global Energy Center and a graduate student at Johns Hopkins University School of Advanced International Studies.

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Energy is key to Romania’s trade resilience

Uliana Certan — Wed, 06 Aug 2025 13:51:59 +0000

The recent US-European Union (EU) trade agreement will not have a uniform impact across Europe. In Paris and Berlin, the accord received a lukewarm reception, and, in some instances, sharp criticism. For Romania, in particular, the picture is more complex. It is an industrialized economy with significant technological advancement and economic complexity, but it is particularly vulnerable to external shocks. While the deal poses certain risks, however, this moment of disruption creates an opportunity for Romania to leverage its unique energy profile to increase competitiveness, advance its industrial development and defense sector, and grow its regional influence.

Details of the deal

The deal, which succeeded in easing trade tensions and averted a tariff war, places a 15 percent base tariff on most EU goods entering the United States, while select goods that Romania trades in (including aircraft, chemicals, pharmaceuticals, and semiconductor equipment) fall under a zero-for-zero tariff agreement or revert to pre-January tariff levels. In return, the EU has agreed to buy US products—including $750 billion worth of energy—and invest $600 billion in the United States. The terms have led many in Europe to worry that they disproportionately favor US interests, disadvantage EU industry, and expose member states to economic risks from reduced export competitiveness, price pressures, and increased US competition within the EU market.

For Romania, the risks from the deal lie less in the direct exposure of its firms to the US market and more from the country’s deep integration within European supply chains. The United States accounts for less than 2 percent of Romania’s total trade, while over 70 percent is with EU partners. Key Romanian exports, including electrical and electronic equipment, vehicles and machinery, depend heavily on close ties with major Western European manufacturers. If increased US tariffs cause EU exporters lose ground in the US market, Western European firms may be forced to cut back production or rethink their sourcing strategies, and Romanian inputs could be displaced from regional networks. Moreover, EU firms could face additional pressure if US producers outcompete them in the single market due to fewer tariffs and regulatory hurdles.

To make matters trickier, EU producers are still grappling with high energy prices, which impact their ability to remain competitive in energy-intensive industries. Liquefied natural gas (LNG) costs significantly more than pipeline gas, and it now accounts for over 50 percent of total EU gas imports, compared to just 23 percent in 2021. Moreover, US LNG, which is generally more expensive than LNG from any other supplier, accounts for 55 percent of EU LNG imports. Energy-intensive sectors in the EU face a clear competitive disadvantage against their US counterparts, which benefit from access to cheaper domestically produced natural gas.

However, Romania can turn these challenges into advantages to stabilize and protect its economy and capitalize on growing demand for new opportunities in transatlantic trade.

Leveraging Romanian energy

With Romanian supply chains vulnerable to shifting global trade dynamics, Romania has a clear incentive to double down on developing its energy sector to buffer its economy against potential disruptions.

The EU’s $750 billion energy commitment under the trade deal underscores the importance of energy for both sides, as well as the urgent need for reliable and affordable energy in Europe as it moves away from Russian supply. The various zero-for-zero tariffs also encourage restructuring supply chains in energy-intensive industries, such as semiconductors, defense, aerospace, and critical minerals, which are central to strategic competition in the 21st century. These sectors will rely on both more efficient and modernized fossil fuel systems as well as domestically generated clean energy to enhance long-term competitiveness and resilience and meet EU climate and diversification goals.

Romania is well positioned to meet these needs and to protect its own economic stability with its unique mix of energy assets and its location at the crossroads of key European energy routes. Its significant access to Black Sea gas reserves can complement US-sourced LNG imports from the United States and other suppliers that could link to EU markets through the Vertical Gas Corridor. Even as clean energy technology is developed to support the long-term goal of net-zero emissions, natural gas will continue to serve as a transition fuel that supports hard-to-abate heavy industry, strengthens energy security, and maintains industrial competitiveness. By investing in efficiency upgrades and affordable solutions for the supply, transportation, and infrastructure development of natural gas, Romania can expand its role in the energy market and stabilize its economy in the process.

Moreover, Romania is expanding its nuclear capacity with new conventional and small modular reactors, with support from US Export-Import Bank financing, US Trade and Development Agency grants, and partnerships with US firms. This approach aligns closely with the trade deal’s focus on nuclear technology within the EU energy purchase pledge and signals significant opportunities for Romania to deepen transatlantic cooperation and accelerate its nuclear development moving forward.

Further capitalizing on its energy resources, Romania is expanding its renewable capacity in hydropower, solar, wind, and green hydrogen, positioning itself to access EU financial support through the Green Deal and REPowerEU. This approach, which aims to surpass the EU target of 40 percent renewable energy consumption by 2030, promotes economic growth and job creation, modernizes its energy infrastructure, and develops integrated grids to support future electrification.

By leveraging its abundant energy resources and potential, Romania can play a critical role both domestically and within the EU, with far reaching impacts. By driving energy access, development, and security, Romania can boost overall production capacity and strengthen regional supply chains. It can also provide a sustainable foundation for growing its domestic energy-intensive sectors, especially its defense industry, a strategic priority given Romania’s role on NATO’s eastern flank. This would attract additional US and EU investment in Romanian military production, modernization, and mobility, which would further sustain the country’s economic stability.

Romania as a strategic energy hub

The US-EU trade deal reshapes the transatlantic economic playing field, and Romania must act decisively to turn expected challenges into long-term advantages. Increased competition and shifting supply chains within the EU present real risks. In response, Romania, with the EU’s support, should leverage its unique energy assets and strategic location, which offer a way to stabilize and grow its economy at a time of increased demand for reliable, regionally sourced, and clean energy. With a focused and proactive hybrid strategy for advancing nuclear, fossil, and renewable energy, Romania can transform this moment of uncertainty into a catalyst for sustainable growth as a multisource energy producer and exporter as well as a strategic energy transit hub.

Uliana Certan is a Program Assistant at the Atlantic Council Global Energy Center

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A tale of two supply chains: Comparing Trump’s new copper tariffs and rare earth investments

Alexis Harmon, Reed Blakemore — Tue, 05 Aug 2025 22:14:09 +0000

The United States wants to secure its supply chains and revitalize domestic manufacturing, but when it comes to minerals, it’s still playing catch up—and not always with the right playbook. On August 1, the Trump administration launched sweeping new copper policies, including steep tariffs on semi-finished copper products and a domestic sales requirement. The announcement came just weeks after the US Department of Defense finalized a multibillion-dollar deal supporting the US-based rare earth company MP Materials—a targeted move to strengthen an important link in US mineral supply chains. Together, the two decisions reveal divergent approaches to mineral policy—but only one tackles the United States’ most acute supply chain vulnerabilities.

The United States remains heavily dependent on imports for both raw materials and the capacity to process them. Not all supply chains are equally vulnerable, however, and not all interventions are equally helpful. A policy that works for rare earths may be counterproductive when applied to copper, and vice versa.

The Trump administration’s two recent policy interventions highlight the importance of tailoring mineral policy on a case-by-case basis. The copper tariff, though less dramatic than feared, uses a mismatched tool to address a minor part of the problem by tariffing trade in finished goods while leaving core processing gaps unaddressed. By comparison, the administration’s public-private partnership with MP Materials strikes at the heart of midstream supply chain challenges for rare earths (though it also raises real concerns about creating new forms of market distortion given its overly generous price floor).

Together, they highlight a core truth in minerals policy: Success is dependent on correctly diagnosing the problem and picking the right tool for the right part of the supply chain. Getting that wrong doesn’t just waste public money and raise prices. It risks making US supply chains less resilient.

Different minerals, different markets, different challenges

Copper and rare earths policies need to navigate fundamentally different market challenges. Copper is a globally traded commodity with a competitive, liquid market and diverse suppliers. The US supply chain’s main vulnerability for copper lies in the poor economics of domestic smelting and refining, though stable trade with diverse partners helps bridge this gap. Rare earths, by contrast, are a niche market dominated by China at every stage. Due to the market’s immaturity, it is marked by high price volatility and opaque dynamics.

These differences mean copper policies need to focus on bolstering midstream economics and reinforcing stable trade partnerships. Rare earths policy, in contrast, should focus on de-risking private investment to help build a domestic supply chain from the ground up.

Copper: Right diagnosis, wrong medicine

The administration’s new copper policy is less sweeping than some analysts initially feared. The final rule imposes a 50 percent tariff on semi-finished and copper-intensive derivative products, while sparing imports of copper concentrates, cathodes, and other raw or intermediate inputs that US industry relies on. It also introduces a domestic sales requirement for all stages of the supply chain spared from tariffs and tightens export controls on high-quality copper scrap.

While this moderation is helpful and likely reflects industry feedback, the approach still misses the mark. The central constraint in the US copper supply chain isn’t semi-finished products; it’s the midstream. The United States produces almost as much copper ore as it consumes, but it lacks the capacity to process it. More than half of domestically mined copper is currently shipped abroad for smelting and refining. Once processed, generally by allies, it often returns as cathodes or wire rod for US manufacturers to fabricate into semi-finished products like pipes, tubes, and cables. The new 50 percent tariff targets these semi-finished copper products.

The 50 percent tariff, by contrast, targets semi-finished copper products such as pipes, tubes, and wires. These are already produced competitively in the United States, and the domestic industry is in relatively strong shape. Effectively, these new measures protect a segment of the copper supply chain that is already relatively healthy, while leaving the system’s weakest link—smelting and refining—largely untouched. To be fair, the tariffs will likely be effective in boosting some US manufacturers that make these products and in keeping more of the supply chain at home, but it is unlikely to spur new investment in smelting infrastructure to address the real strategic vulnerability. Worse, it may raise costs for downstream sectors, such as automotive manufacturing and construction.

The new domestic sales requirement for copper products (starting at 25 percent and rising to 40 percent by 2029) and export controls on copper scrap signal a worthy ambition to retain more copper for domestic use. But without addressing the economic barriers to expanding US smelting capacity, such as high operational costs and thin processing margins, these policies are likely an insufficient signal to incentivize more domestic smelting capacity. Without increased capacity, much of this feedstock has nowhere to go. The result could be a glut of unsellable material or rising costs for miners if export pathways shrink faster than new processing comes online.

In short, none of these measures tackle the real gap in the copper supply chain: midstream infrastructure. The United States has wisely realized that it can’t tariff its way out of its smelting deficit. However, it needs to widen its toolbox, focusing on financial incentives for domestic processing, permitting streamlining, and strategic partnerships with allies who help bridge midstream capacity gaps.

Rare earths: A more targeted approach—but just the beginning

In contrast, the Department of Defense’s multibillion-dollar partnership with MP Materials—a company that operates the only active US rare earths mine and is leading efforts to scale domestic magnet production—represents a more targeted attempt to shore up a deeply fragile supply chain. The United States is almost entirely dependent on China for rare earth separation and magnet production—two critical midstream stages that are vital for defense systems, automotive manufacturing, and advanced technologies.

To address this, the July 10 MP Materials deal ambitiously bundles a series of tools that go beyond traditional grants or procurement:

A ten-year offtake agreement for permanent magnet purchase from MP’s announced “10x Facility,” a second manufacturing plant that will bring MP’s total permanent magnet manufacturing capacity to an estimated ten thousand metric tons in 2028
A ten-year price floor ($110 per kilogram for neodymium-praseodymium [NdPr] oxide) to help de-risk market volatility
A $150 million loan to expand MP’s heavy rare earth separation capabilities
Acquisition of $400 million in preferred stock to boost rare earths separation and processing capabilities, as well as magnet production capacity
Enough guaranteed demand to unlock $1 billion in commercial debt and a $500 million additional agreement with Apple

This is not just subsidy for subsidy’s sake; it’s a structured market-making intervention that tackles the clear chokepoints. MP Materials’ magnet facilities are expected to exceed defense demand by the end of the decade, helping to backfill commercial markets as well.

But the design isn’t without risk. First, anchoring a rare earths strategy around an intervention this large in a single company, MP Materials, could crowd out competitors and reduce the innovation pressure that comes with competition, slowing technical progress and driving inefficiencies over time. Encouragingly, recent White House meetings with a broader group of rare earths firms signal an intent to replicate key elements of the deal with a more diverse pool of domestic players. Only time will tell if the administration can foster enough competition to maximize the value of its investment, but if additional deals quickly materialize then it’s headed in the right direction.

Second, the price floor itself is strikingly high. At $110 per kilogram for NdPr oxide, it’s well above current market levels. Price supports are critical to launch a US rare earths industry (as we’ve written about here, suggesting a price floor tariff), but overgenerous price supports can create unhealthy dependencies. The United States might end up overpaying for supply or sustaining an artificial market that fails to mature.

Still, rare earths remain an exceptional case: The industry is small enough in dollar terms to justify large-scale intervention and concentrated enough that a well-structured group of domestic players can quickly shift the market. If successful, similar niche markets could benefit from a similar approach. However, scaling similar tools across more commoditized minerals would generally be prohibitively expensive and hard to justify.

Lessons for a smarter critical minerals strategy

These two cases lead to one resounding conclusion: The United States needs a mineral-by-mineral strategy that aligns policy tools with real-world constraints.

More niche materials, such as rare earths, require substantial government intervention because of acute geopolitical exposure, few global suppliers, and an extraordinarily volatile market. Smart policy here means managing demand risk, catalyzing capital, and stabilizing prices to nurture a strategic ecosystem.

For more commoditized minerals such as copper, supply chains would benefit more from regulatory reform, targeted infrastructure support, and diversified trade partnerships with allies who have more competitive smelting capacity.

As the US government continues its Section 232 investigations into tariffing other minerals, it must embrace differentiated, bold, and measured policy design. Even well-meaning interventions can misfire if they target the wrong supply chain segment. Tariffs are often a blunt instrument, and effective industrial policy requires precision.

What’s needed is a broader, more flexible playbook that can scale what works—strategic offtakes, fast tracking priority permits, supporting innovation—without locking the United States into rigid or inefficient solutions. Above all, policymakers must tailor the tool to the mineral.

Alexis Harmon is an assistant director at the Atlantic Council’s Global Energy Center.

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

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What a new nuclear deal with Hungary means for US influence in Europe

Jennifer T. Gordon — Mon, 04 Aug 2025 15:31:48 +0000

Last week, Hunatom (Hungary’s nuclear energy development firm) and Synthos Green Energy (a private project developer in Poland) signed a letter of intent to support the construction of up to ten BWRX-300 small modular nuclear reactors, or SMRs. The BWRX-300 is a 300-megawatt SMR designed by US company GE Vernova, which has an agreement with Synthos Green Energy to sell reactors throughout the Central and Eastern European region.* Hungary joins a list of European countries that have indicated their intent to deploy these reactors, including Poland and Estonia.

Beyond its boost to the region’s energy production, the deal could have broader geopolitical effects. For one, it sets the stage for the European Union (EU) to spend more money on US energy imports, helping Europe fulfill the terms of the trade deal struck with President Donald Trump last week. It may also open the door to a closer relationship between Hungary and the United States, which could in turn strengthen transatlantic unity against Vladimir Putin’s Russia.

Until now, Hungary has shown little interest in US nuclear energy technologies. Although an EU member state, Hungary has also grown closer to Russia in recent years. This civil nuclear cooperation agreement might signal a policy shift, suggesting Hungary is looking away from Russia and toward the EU and United States. Nuclear energy agreements set up a one-hundred-year relationship between the countries involved, assuming ten years for project construction, eighty years for the life of the reactor, and another ten years for decommissioning.

The timing of Hungary’s SMR announcement coincided with news of the US-EU trade agreement, under which the EU pledged to buy $750 billion in US oil and gas by the end of Trump’s presidential term. The terms of the agreement also include “key US energy technology investments . . . notably in the nuclear sector for conventional and small modular reactors.” Although some experts have argued that the EU will have a hard time purchasing $750 billion in oil and gas from the United States, Hungary’s intent to buy up to ten GE reactors could represent a significant step toward fulfilling the EU’s trade pledge.

It’s important to note that Hungary still has a civil nuclear partnership with Russia. Hungary operates four VVER-440 reactors at its Paks nuclear power plant, which are Russian-origin technology, and which currently generate nearly half of Hungary’s electricity. Construction has started recently on VVER-1200 reactors, of which two units will be built at Paks II. Hungary and other EU member states, including Germany and Austria, have sparred over Hungary’s plans to build the two VVER-1200 reactors. In contrast, the Trump administration recently lifted US sanctions on the Hungarian project to upgrade the Paks nuclear power plant. Hungary’s apparent intention to continue its dependence on Russian technologies may indicate that it is merely hedging its bets and walking a fine line between its EU membership on the one hand, and Russia’s influence on the other.

The US Government has signaled its openness to increasing cooperation with Hungary in fields beyond nuclear energy, including defense, commerce, space, and other energy sources. Efforts in these fields will likely build on the nuclear energy deal and may encourage Hungary to build a closer relationship with the US and possibly move away from Russia’s influence.

Ultimately, whether this letter of intent indicates that Hungary is seeking a closer relationship with the United States—and perhaps even starting to turn away from Russian influence and energy dependence—remains to be seen. Regardless, this announcement is a step toward bringing Hungary closer to Poland and the EU more broadly.

Jennifer T. Gordon is the director of the Nuclear Energy Policy Initiative at the Atlantic Council Global Energy Center.

*GE Vernova and Orlen Synthos Green Energy are donors to the Atlantic Council Global Energy Center. The views expressed in this article are the author’s own.

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Experts react: What Trump’s new AI Action Plan means for tech, energy, the economy, and more

Atlantic Council experts — Wed, 23 Jul 2025 23:20:23 +0000

“An industrial revolution, an information revolution, and a renaissance—all at once.” That’s how the Trump administration describes artificial intelligence (AI) in its new “AI Action Plan.” Released on Wednesday, the plan calls for cutting regulations to spur AI innovation and adoption, speeding up the buildout of AI data centers, exporting AI “full technology stacks” to US allies and partners, and ridding AI systems of what the White House calls “ideological bias.” How does the plan’s approach to AI policy differ from past US policy? What impacts will it have on the US AI industry and global AI governance? What are the implications for energy and the global economy? Our experts share their human-generated responses to these burning AI questions below.

Click to jump to an expert analysis:

Trey Herr: If the US is in an AI race, where is it going? 

Trisha Ray: On international partnerships, the AI Action Plan is all sticks, few carrots

Nitansha Bansal: The plan is a step forward for the AI supply chain

Raul Brens: The US can’t lead the way on AI through dominance alone

Mark Scott: The US and EU see eye-to-eye on AI, up to a point

Ananya Kumar and Nitansha Bansal: The US plan may sound like those of the UK and EU—but the differences are critical

Esteban Ponce de Leon: The plan accelerates the tension between proprietary and open-source models

Joseph Webster: On energy, watch what the plan could do for the grid and batteries

A deliberative and thorough plan—but three questions arise about its implementation

We are in an era of increasing geopolitical competition, increased interdependence, and rapid technological change. No single issue demonstrates the convergence of all three better than AI. The AI Action Plan released today reflects this reality. Throughout the first six months of the Trump administration, officials have run a thorough and deliberative policy process—which White House officials say incorporated more than ten thousand public comments from various stakeholders, especially US industry. The resulting product provides a clear articulation of AI in terms of the tech stack that underpins it and an increasingly vast ecosystem of industry segments, stakeholders, applications, and implications.

The policy recommendations laid out in the action plan are well-organized and draw connections between scientific, domestic, and international priorities. Despite the rhetoric, there is more continuity than it may appear from the first Trump administration to the Biden administration to this action plan—especially in areas such as increasing investment in infrastructure, hardware fabrication, and outcompeting foreign adversaries in innovation and the human talent that underpins it. The AI Action Plan will continue to scale investment and growth in these areas. The key divergence is in governance and guardrails.

Three outstanding questions stick out regarding effective implementation of the Action Plan.

First, in an era of budget and staff cuts across the federal government, will there be enough government expertise and funding to realize much of the ambition of this plan? For example, cutting State Department staff focused on tech diplomacy or global norms could undercut parts of the international strategy. Budget cuts to the National Science Foundation could impact AI priorities from workforce to research and development.

Second, how will the administration wield consolidated power with frameworks to reward states it views as aligned and cut funding to states it sees as unaligned?

Third, beyond selling US technology, how will the United States not just compete against Chinese frameworks in global bodies, but also work collaboratively with allies and partners on AI norms?

Given the pace of change, the United States’ success will be based on continuing to grow the AI ecosystem as a collective whole and for the ecosystem to iterate faster to compete more effectively.

—Graham Brookie is the Atlantic Council’s vice president for technology programs and strategy.

If the US is in an AI race, where is it going? 

The arms race is a funny concept to apply to AI, and not just because the history of arms races is replete with countries bankrupting themselves trying to keep up with a perceived threat from abroad. The repeated emphasis on an AI “race” is still ambiguous on a crucial point—what are we racing toward? 

Consider this useful insight on arms racing in national security: “Over and over again, a promising new idea proved far more expensive than it first appeared would be the case; yet to halt midstream or refuse to try something new until its feasibility had been thoroughly tested meant handing over technical leadership to someone else.”   

 Was this written about AI? No, this comes from historian William H. McNeill writing about the British-German maritime arms race at the turn of the twentieth century. The United Kingdom and Germany raced to build ever bigger armored Dreadnoughts in an attempt to win naval supremacy based on the theory that the economic survival of seagoing countries would be determined by the ability to win a large, decisive naval battle. Industry played a key role in encouraging the competition and setting the terms of the debate, increasingly disconnected from the needs of national security 

 So, to take things back to the present, what are we racing toward when it comes to AI? The White House’s AI Action Plan hasn’t resolved this question. The plan’s Pillar 1 offers a swath of policy ideas grounded more in AI as a normal technology. Pillar 2 is more narrowly focused on infrastructure but still thin on the details of implementation. Tasking the National Institute of Standards and Technology is a common refrain and some of the previous administration’s policy priorities, such as the CHIPS Act and Secure by Design program have been essentially rebranded and relaunched. Pillar 3 calls for a renewed commitment to countering China in multilateral tech standards forums, a cruel irony as the State Department office responsible for this was just shuttered in wide-ranging layoffs announced earlier this month. 

The national security of the United States and its allies is composed of more than the capability of a single cutting-edge technology. Without knowing where this race is going, it will be hard to say when we’ve won, or if it’s worth what we lose to get there.   

—Trey Herr is senior director of the Cyber Statecraft Initiative (CSI), part of the Atlantic Council Technology Programs, and assistant professor of global security and policy at American University’s School of International Service. 

On international partnerships, the AI Action Plan is all sticks, few carrots

The AI Action Plan’s strongest message is that the United States should meet, not curb, global demand for AI. To achieve this, the plan suggests a novel and ambitious approach: full-stack AI export packages through industry consortia.

What is the AI stack? Most definitions include five layers: infrastructure, data, development, deployment, and application. Arguably, monitoring and governance is a critical sixth layer. US companies dominate components of different layers (e.g. chips, talent, cloud services, and models). But the United States’ ability to export full-stack AI solutions, the carrot in this scenario, is limited by a rather large stick: its broad export control regime, which includes the Foreign Director Product Rule and Export Administration Regulations.

Governance remains the layer the United States is weakest on. The AI Action Plan does emphasize countering adversarial influence in international governance bodies, such as the Organisation for Economic Co-operation and Development, the Internet Corporation for Assigned Names and Numbers, the Group of Seven (G7), the Group of Twenty (G20), and the International Telecommunication Union. However, the plan undermines the consensus-based AI governance efforts within these bodies, including an apparent jibe at the G7 Code of Conduct. If it seeks real alignment with allies and partners, the White House must outline an affirmative vision for values-based global AI governance.

—Trisha Ray is an associate director and resident fellow at the Atlantic Council’s GeoTech Center, part of the Atlantic Council Technology Programs.

The plan is a step forward for the AI supply chain

The AI Action Plan’s focus on the full AI stack—from energy infrastructure, data centers, semiconductors, and the talent pipeline to acknowledging associated risks and cybersecurity concerns—is welcome. The plan has adopted an optimistic view of the open source and open weight AI models, and it has built in provisions to create a healthy innovation ecosystem for open source AI models along with strengthening the access to compute—which is another positive policy realization on the part of the administration.

The administration appears to be cognizant that competitiveness in AI will not be achieved solely by domesticating the AI supply chain. Competitiveness in this ecosystem needs to be a multi-pronged strategy of translating domestic AI capabilities into national power faster, more efficiently, more effectively, and more economically than adversaries—driven by faster chips, smarter and more trustworthy models, a more resilient electricity grid, a robust investment infrastructure, and collaboration with allies.

This emphasis on securing the full stack means that the near-term policy will target not just innovation, but the location, sourcing, and trustworthiness of every component in the AI pipeline. The owners and users of AI supply chain components have much to look forward to. The new permitting reform could reshape the location of AI infrastructure; recognition of workforce and talent bottlenecks can lead to renewed focus on skill development and training programs; and emphasis on AI-related vulnerabilities in critical infrastructure could translate into more regular and robust information sharing apparatuses and incident response requirements for private sector executives.

In all, achieving AI competitiveness is an ambitious goal, and the plan sets the government’s agenda straight.

—Nitansha Bansal is the assistant director of the Cyber Statecraft Initiative.

The US can’t lead the way on AI through dominance alone

The AI Action Plan makes one thing clear: the United States isn’t just trying to win the AI race—it’s trying to engineer the track unilaterally. With sweeping ambitions to export US-made chips, models, and standards, the plan signals a cutting-edge strategy to rally allies and counter China. But it also takes a big gamble. Rather than co-design AI governance with democratic allies and partners, it pushes a “buy American, trust American” model. This will likely ring hollow for countries across Europe and the Indo-Pacific that have invested heavily in building their own AI rules around transparency, climate action, and digital equity.

There’s a lot to like in the plan’s push for infrastructure investment and workforce development, which is a necessary step toward building serious AI capacity. But its sidelining of critical safeguards and its dismissal of issues like misinformation, climate change, and diversity, equity, and inclusion continues to have a sandpaper effect on traditional partners and institutions that have invested heavily in aligning AI with public values. If US developers are pressured to walk away from those same principles, the alliance could fray and the social license to operate in these domains will inevitably suffer.

The United States can lead the way—but not through dominance alone. An alliance is built on the stabilizing forces of trust, not tech stack supply chains or destabilizing attempts to force partners to follow one country’s standards. Building this trust will require working together to respond to the ways that AI shapes our societies, not just unilaterally fixating on its growth.

—Raul Brens Jr. is the director of the GeoTech Center.

On energy, watch what the plan could do for the grid and batteries

Two energy elements in the AI Action Plan hold bipartisan promise:

Expanding the electricity grid. The action plan notes the United States should “explore solutions like advanced grid management technologies and upgrades to power lines that can increase the amount of electricity transmitted along existing routes.” In other words, advanced conductors, reconductoring, and dynamic line ratings (and more) are on the table. Both Republicans and Democrats likely agree that transmission and the grid received inadequate investment in the Biden years: The United States built only fifty-five miles of high-voltage lines in 2023, down from the average of 925 miles per year between 2015 and 2019. The University of Pennsylvania estimated that the Inflation Reduction Act’s energy provisions would cost $1.045 trillion from 2023 to 2032, but the bill included only $2.9 billion in direct funding for transmission.

Funding “leapfrog” dual-use batteries. Next-generation battery chemistries, such as solid-state or lithium-sulfur, could enhance the capabilities of autonomous vehicles and other platforms requiring on-board inference. Virtually all autonomous passenger vehicles run on batteries, and the action plan mentions self-driving cars and logistics applications. Additionally, batteries are a critical military enabler: They are deployed in drones, electronic warfare systems, robots, diesel-electric submarines, directed energy weapons, and more. Given the bipartisan interest in autonomous vehicles and US military competition with Beijing, there may be scope for bipartisan agreement on funding “leapfrog,” dual-use battery chemistries.

—Joseph Webster is a senior fellow at the Atlantic Council’s Global Energy Center and the Indo-Pacific Security Initiative.

The US and EU see eye-to-eye on AI, up to a point

Despite the ongoing transatlantic friction between Washington and Brussels, much of what was outlined by the White House aligns with much what EU officials have similarly announced in recent months. That includes efforts to reduce bureaucratic red tape to foster AI-enabled industries, the promotion of scientific research to outline a democracy-led approach to the emerging technology, and efforts to understand AI’s impact on the labor force and to upskill workers nationwide.

Yet where problems likely will arise is how Washington seeks to promote a “Make America Great Again” approach to the export of US AI technologies to allies and the wider world. Much of that focuses on prioritizing US interests, primarily against the rise of China and its indigenous AI industry, in multinational standards bodies and other global fora—at a time when the White House has significantly pulled back from previously bipartisan issues like the maintenance of an open and interoperable internet.

This dichotomy—where the United States and EU agree on separate domestic-focused AI industrial policy agendas but disagree on how those approaches are scaled internationally—will likely be a central pain point in the ongoing transatlantic relationship on technology. Finding a path forward between Washington and Brussels must now become a short-term priority at a time when both EU and US officials are threatening tariffs against each other.

—Mark Scott is a senior resident fellow at the Digital Forensic Research Lab’s Democracy + Tech Initiative within the Atlantic Council Technology Programs.

The US plan may sound like those of the UK and EU—but the differences are critical

The new AI Action Plan—like its peers from the European Union (EU) and the United Kingdom—is focused on “winning the AI race” through regulatory actions to direct and promote innovation, new investments to create and advance access to crucial AI inputs, and frameworks for international engagement and leadership. Winning the AI race is, in effect, the top priority of all three AI plans, albeit in different ways. While the EU’s AI Act wants to be the first to create regulatory guardrails, the United States’ AI plan has a strong deregulation agenda. In a significant break from other policy measures from this administration to ensure US dominance, this action plan moves away from a purely domestic orientation to the international sphere, flexing the reach of traditional US notions of power. This includes international leadership in frontier technology research and development and adoption, as well as creating global governance standards. It’s a testament to the scarcity, quality, and sizable nature of the inputs needed for global AI dominance that even the Trump administration is thinking through its strategy on AI in terms of global alignment.

Even as each jurisdiction, including the United States, seeks to position itself as the dominant player in the AI race, there is no common scoreboard for deciding a winner for the game. Each player has devised an ambitious but distinct understanding of this “competition,” and each competition will play out through harnessing a unique combination of industrial, trade, investment, and regulatory policy tools. As the race unfolds in real time, the challenge for US policymakers is to simultaneously create the rules of the game while playing it effectively. A broad range of stakeholders, including AI companies, investors, venture capitalists, safety institutes, and allied governments seek clarity and stability. They all will watch the implementation of the US plan closely to determine their next moves.

There are two encouraging signs in this action plan when it comes to strengthening US competitiveness:

First, by prioritizing international diplomacy and security, the United States is positioning itself to influence the global AI playbook that will ultimately determine who reaps economic benefits from AI systems. Leading multilateral coordination on AI positions the United States to secure open markets for AI inputs, shape global adoption pathways, and protect its private sector from regulatory fragmentation and protectionism.

Second, the plan creates a roadmap for ensuring that the United States and its allies assimilate AI capabilities faster than their adversaries. In this vein, the plan emphasizes the importance of coordinating with allies to implement and strengthen the enforcement of coordinating export controls.

—Ananya Kumar is the deputy director for Future of Money at the GeoEconomics Center.

—Nitansha Bansal is the assistant director of the Cyber Statecraft Initiative.

The plan accelerates the tension between proprietary and open-source models

The White House’s AI Action Plan explicitly frames model superiority as essential to US dominance, but this creates profound tensions within the US ecosystem itself. As better models attract more users—who, in turn, generate training data for future improvements—we may see a self-reinforcing concentration of power among a few firms.

This dynamic creates opportunities for leading firms to set safety standards that elevate the entire industry. A clear example is Anthropic’s “race to the top,” where competitive incentives are directly channeled into solving safety problems. When frontier labs adopt rigorous development protocols, market pressures force competitors to match or exceed these standards. However, the darker side of innovation may emerge through benchmark gaming, where pressure to demonstrate superiority incentivizes optimizing for benchmarks rather than genuine capability, risking misleadingly capable systems that excel at tests while lacking true innovation.

Yet the AI Action Plan’s emphasis on open-source models highlights a more complex competitive landscape than market concentration alone suggests. Open-source strategies are not just defensive moves against domestic monopolization; they also represent offensive tactics in the global AI race, particularly as Chinese open-source models gain traction and threaten to establish alternative standards with millions of users worldwide.

This dual-track competition between concentrated proprietary excellence and distributed open-source influence fundamentally redefines how firms must compete.

Success now requires not only racing for capability supremacy but also strategically deciding what to keep proprietary and what to release in order to shape global standards. The plan’s call to “export American AI to allies and partners” through “full-stack deployment packages” suggests that the ultimate competitive advantage may lie not in the superiority of a single model, but in the ability to build dependent ecosystems where US AI becomes the essential infrastructure for global innovation.

—Esteban Ponce de León is a resident fellow at the DFRLab of the Atlantic Council.

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Defne Arslan quoted in a Bloomberg piece on Turkey’s foreign energy relations: Turkey’s Hunt for Energy and Influence Sparks Global Deal Drive

aozen — Wed, 23 Jul 2025 12:03:53 +0000

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The post Defne Arslan quoted in a Bloomberg piece on Turkey’s foreign energy relations: Turkey’s Hunt for Energy and Influence Sparks Global Deal Drive appeared first on Atlantic Council.

Two US policy options for Venezuela: Shaping reform vs. ‘maximum pressure’ toward regime collapse

Venezuela Solutions Group — Thu, 10 Jul 2025 12:00:00 +0000

Bottom lines up front

The first Trump administration drafted a framework for encouraging a democratic transition in Venezuela; with a few updates, it represents one policy path the second Trump administration could take.
Nicolas Maduro’s recent promotion of a longtime rival may be a sign of how few friends he has left, raising the possibility that he may be more susceptible to the second option: a “maximum pressure” campaign.
Whether Washington opts for incentives or a hard line, the goal should be to keep presenting dilemmas that make a democratic transition more appealing than the status quo.

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US policy toward Venezuela is at a crossroads, with a degree of uncertainty still hanging over the new administration’s approach. The White House faces a choice: Should the United States try to use sanctions leverage to obtain limited concessions from Maduro on energy security, migration, and democratic reforms? Or should it bet on a return to “maximum pressure” in the hope of deepening existing fissures among Venezuela’s ruling elites and hastening a more immediate transition?

This issue brief, informed by the Adrienne Arsht Latin America Center’s Venezuela Solutions Group, explores two options through which the Trump administration could adopt an “America First” policy towards Venezuela.

Option I: Shaping incentives for an economic and democratic opening

The Trump administration could leverage sanctions on individuals and the energy sector to attempt to push Maduro toward political and economic reforms that advance the administration’s stated interest in Venezuela accepting deportees from the United States. This would involve shaping incentives for Maduro and his inner circle to extract concessions that could move Venezuela toward a gradual opening.

Policy recommendations:

Adapt the first Trump administration’s Democratic Transition Framework to lay the foundations for creative power-sharing arrangements.
Advance migration policy cooperation and refrain from exacerbating outbound migration.
Issue conditional sanctions licenses in exchange for economic and political benchmarks.
Expand the footprint for US and Western-aligned energy firms in Venezuela while displacing Russia, China, and Iran.

Option II: Broad pressure to advance regime collapse

Alternatively, the Trump administration could revise its previous policy of maximum pressure, especially if Maduro does not cooperate with policies to reduce outbound migration and the influence of US geopolitical rivals. This involves using pressure mechanisms including sanctions, indictments, and law enforcement to attempt to provoke a fissure in Maduro’s inner circle. Divisions in Caracas could break the government’s hold on power and incentivize a democratic transition in which a new coalition in power is more willing to work with the United States on migration and security interests.

Policy recommendations:

Remove all licenses allowing oil companies to operate in Venezuela.
Pursue investigations and prosecutions against government officials tied to money laundering, drug trafficking, and other criminal activities.
Tighten enforcement of secondary sanctions on Beijing, Moscow, and Tehran- based organizations.
Ramp up individual sanctions.
Bolster the Venezuelan democratic opposition and civil society.

View the full report

About the Venezuela Solutions Group

The Adrienne Arsht Latin America Center’s (AALAC) Venezuela Solutions Group focuses on advancing a peaceful, democratic solution to Venezuela’s crisis as well as furthering policy coordination between the United States and allies in Europe and across the Americas.

Explore the program

The Adrienne Arsht Latin America Center broadens understanding of regional transformations and delivers constructive, results-oriented solutions to inform how the public and private sectors can advance hemispheric prosperity.

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Balancing acts and breaking points: Iraq’s US-Iran dilemma

C. Anthony Pfaff — Mon, 30 Jun 2025 20:11:01 +0000

Even without the current conflict between Israel and Iran, the prospects for future US-Iraq relations have often appeared dim.

Due in part to the reduced threat from the Islamic State in Iraq and al-Sham (ISIS), and also to public opposition to US military presence under Operation Inherent Resolve (OIR), Washington and Baghdad agreed to reduce the role of US forces in combating ISIS and transition to a new security relationship.

Moreover, Iran-backed militias had renewed attacks against US forces over Washington’s support for Israel’s military operations in Gaza in the aftermath of October 7, 2023. Making matters worse, popular expressions of anti-US sentiment, due to Iraqis’ long-held animosity towards Israel, led to attacks on US-linked businesses, limiting already low interest in expanding economic ties. Thus, with a diminishing security cooperation footprint and little room to expand into other sectors, it is difficult to envision where US-Iraq relations could go, except for termination or a status quo that does not adequately serve the interests of either party.

Appearances, however, can be deceiving. In April 2024, with the war in Gaza in full swing, Iraqi Prime Minister Mohamed Shia al-Sudani visited the United States to encourage improved security and economic cooperation. He even traveled to Houston, Texas, where he signed agreements with major US oil companies promising them preferential treatment, especially over Chinese companies that are looking to exploit Iraq’s oil resources. In addition to affirming his commitment to security cooperation with the United States, he also signed agreements with US defense contractors for training and equipment. Perhaps more importantly, he had already initiated a comprehensive security sector reform program that brings together all of Iraq’s security sector stakeholders, in which US advisors play a prominent role.

As a result of these conditions, US-Iraq relations appear to be at a crossroads. Baghdad could side with Tehran and expel the remaining US advisors, severely limiting, if not effectively ending, its relationship with the United States. It could also maintain its neutrality and perhaps play a role in de-escalating the conflict. However, there may also be an opportunity for the United States to facilitate Iraq’s efforts to reduce its economic and energy dependence on Iran, while building its resilience to Tehran’s disruption of Baghdad’s attempts at establishing full sovereignty.

The “dilemmas” of US-Iraq relations

Both the United States and Iraq have long had to balance their relations, with each other, with their respective relations with Iran. In Washington’s case, that balance entailed building closer relations with Iraq, while maintaining deterrence with Iran. For Iraq, that meant finding a balance between two partners in conflict, which required space for them to engage Baghdad without engaging each other. Not satisfied with separate corners, Iran has continually used its Iraqi proxies to limit the space in which the United States can engage, ultimately seeking to expel US forces and extend its control over the Iraqi government. In doing so, Tehran’s interference has disrupted Iraq’s recovery and stunted political reconciliation and economic growth.

The resulting “three-body problem” has generated dilemmas for both Iraq and the United States, where progress with one relationship undermines the other. Militia attacks on US forces, for example, place the United States in a position where it must choose between responding and generating public opposition to its presence or doing nothing, thus allowing Iran and its proxies to attack US troops with impunity. When the United States chooses to respond, the Iraqi government must then choose between sanctioning Washington in some way, risking valuable security assistance, or dealing with significant public backlash, often mobilized by the militias.

After the 2019 strikes against Iran-backed militias that had attacked US forces, killing one and wounding several others, for example, militias and pro-Iran political parties organized large protests that culminated in the storming of the US embassy. Under such conditions, the United States has only been able to engage Iraq where it has a comparative advantage, namely in the security and energy sectors.

Iran, for its part, may be the only party that does not face a dilemma in its relationship with either the United States or Iraq. Overtly interfering in Iraqi politics might invite protest, as it did in October 2019. That said, when nationalists associated with Iraqi cleric Muqtada al-Sadr won a majority of seats in parliament in 2021, the Iran-aligned Fatah movement was able to prevent government formation, leading al-Sadr to withdraw all his representatives from the legislature. This withdrawal left Fatah, a coalition of Iran-backed political parties, largely in control. This demonstrates the resilience of Iran’s influence in Iraq—and how Baghdad’s interests pose little threat to Tehran’s.

Despite this resilience, Iran’s inability to defend its airspace, its ongoing losses of key military leaders and nuclear scientists, and the threat of popular resistance have undoubtedly made Tehran feel a sense of urgency to disrupt US-Iraq engagement and convince Baghdad to abandon neutrality.

For example, pressure on Iraq from both Tehran and domestic sources could prompt an armed response to Israeli violations of Iraqi airspace. While the response would not likely be effective, it could prompt militias to overcome their current inertia and strike at Israeli and US targets, this time in defense of Iraqi sovereignty, which would garner much more political support than defending Iran. This could either pressure Baghdad into taking an even harder line toward Washington or face collapse, as parliament and the public question its legitimacy. Should Baghdad, for whatever reason, choose the harder line, the United States would have little choice but to abandon most, if not all, of its security cooperation programs, effectively ending the relationship.

Even if Baghdad resists Iranian pressure, renewed attacks by militias on US forces would again place the United States in a tit-for-tat exchange, a losing prospect for Washington. Each incremental strike or counter‑strike risks escalating a spiral of retaliation without gaining any strategic advantage. On the other hand, Iraq’s Iran-backed militias gain a strategic advantage simply by their challenge. Every provocation undermines US credibility, strains its relationship with Baghdad, and reinforces the militias’ narrative of resistance and legitimacy.

Resolving the dilemmas

Given the choices Baghdad faces, it is unlikely that it will choose to abandon its neutrality to support Iran against Israel.

While some Iran-linked militias, like Harakat Hezbollah al-Nujaba, have threatened to attack US persons and interests, they condition it on Washington or its allies “laying a single finger” on Iranian Supreme Leader Ayatollah Ali Khamenei. This is a common feature of militia public communications—allowing them to demonstrate opposition while assuming little risk of acting on it.

Despite the popular momentum around fighting Israel, militias may believe they have too much to lose from expanding the conflict. Not only could counterattacks by Israeli forces kill key leaders, but they could also disrupt lucrative oil smuggling operations that provide significant leverage with the Iraqi government. According to some estimates, Iran and its Iraqi proxies generate over one billion dollars per year in revenue, of which all get a cut. Oil smuggling is also not their only source of funds. In addition to embezzling from the Iraqi government, they have invested in the Iraqi economy, generating billions more in revenue. As a result, they now appear to be more focused on safeguarding these business interests than getting involved in a fight with Israel or the United States.

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The Iraqi government’s moves this year to have its militias to lay down their arms underscores this point. Iraq’s Minister of Foreign Affairs, Fuad Hussein, observed that this dialogue could not have happened two or three years ago; however, having militias operate outside the government is much less socially acceptable. He even offered that Iraq would like to mediate US-Iran tensions, similar to the role it played in normalizing relations between Saudi Arabia and Iran.

It is equally unlikely that Baghdad will move demonstrably closer to Washington, at least publicly. But, the discussion over the status of US troops in the region could present a window of opportunity for the relationship to progress.

The US had planned the withdrawal of its regional combat forces, while maintaining an advisory effort. But in the aftermath of the December ousting of Bashar al-Assad’s regime in Syria, Iraqi leaders have suggested that they would support the United States slowing down its military withdrawal.

Still, Iraq’s security interests and domestic politics likely preclude taking a position that supports the United States at the expense of Iran. While al-Sudani would likely invite expanded economic cooperation, as long as Israeli operations in Gaza and Lebanon continue, the security situation may remain prohibitive for significant Western, especially US, investment.

For now, this means that the best the United States can hope for is the pitch made from al-Sudani on his visit to Washington: continued security, and expanded energy cooperation.

To capitalize on this opportunity, Washington should continue its military advisory efforts and expand senior-level engagement in Iraq’s security sector. These efforts are wholly Iraqi-driven; however, as with most reform efforts, effective application requires political will, which US emphasis could bolster through engaging Iraq’s leaders.

Washington should also facilitate Iraq’s ongoing efforts to diversify its energy sources, thereby reducing its dependence on Tehran. Iraq has made deals with Turkmenistan, Qatar, and Oman for natural gas imports. French company TotalEnergies has agreed to invest ten billion dollars over a four-year period to develop natural gas resources and increase electricity generation capacity. Baghdad also signed an agreement permitting integration into the Gulf Cooperation Council’s electric grid, which could provide 3.94 terawatt-hours annually of electricity, or approximately 5 percent of Iraq’s annual consumption.

In fact, in a call with then US National Security Advisor Mike Waltz, al-Sudani reinforced Iraq’s interest in greater involvement by Western energy companies to facilitate energy independence. If Iraq were to become energy independent from Iran, the US would be in a position to remove the sanctions waiver allowing Iranian natural gas imports without posing hardship on the Iraqi people.

A complicated future

The future of US–Iraq relations is neither as dim as it may first appear, nor as promising as one might hope. Given the rapidly changing dynamics, the relationship will continue to be uncertain, contingent, and highly sensitive to regional developments. While Baghdad remains unwilling to openly align with Washington at the expense of Tehran, it has also shown restraint in responding to Iranian pressure and militia provocations, indicating a continued interest in maintaining a relationship with the United States.

Iraqi Prime Minister Mohammed Shia’ Al-Sudani speaks at an Atlantic Council Front Page event on April 15, 2024.

Al-Sudani’s overtures suggest there is a strategic logic in preserving US engagement, particularly in areas where Washington retains a comparative advantage, such as defense cooperation and energy investment.

For its part, the United States must recognize that its influence will increasingly depend not on force posture but on its ability to support Iraq’s sovereignty, economic resilience, and institutional reform. Navigating this terrain requires a kind of constructive opportunism, where the United States has sufficient contact with Iraq to identify opportunities for expanding cooperation and the ability to quickly act on them. In this context, maintaining a quiet but durable partnership—anchored in mutual interests rather than grand ambitions—may be the most viable path forward.

C. Anthony Pfaff is a nonresident senior fellow with the Iraq Initiative in the Atlantic Council’s Middle East Programs and the research professor for the Military Profession and Ethic at the Strategic Studies Institute (SSI), US Army War College in Carlisle, PA. A retired Army colonel and Foreign Area Officer (FAO) for the Middle East and North Africa, Pfaff recently served as director for Iraq on the National Security Council staff.

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Strong currents, stronger alliances: Reinforcing the EU’s Black Sea energy strategy through transatlantic collaboration

Andrei Covatariu — Fri, 27 Jun 2025 18:57:40 +0000

The Black Sea region serves as a geostrategic crossroads for great power competition, acting as an intersection for Europe, the Caucasus, Central Asia, and the Middle East. In response to Russia’s 2022 full-scale invasion of Ukraine and its subsequent ramifications, the European Union has reaffirmed the region’s significance and recently issued a joint communication outlining its strategic approach for the Black Sea basin.

The document, though not exhaustive, establishes a strategic framework for the region, characterizing it as a “hub of security, stability, and prosperity.” Central to this dynamic is the region’s role in broader European energy security, which Russian aggression has demonstrated is essential to national security. What the plan fails to recognize, however, is the significance of the transatlantic partnership in empowering Black Sea nations—home to major energy infrastructure and untapped gas and renewables resources—to maximize their capacity in this role.

Despite the current challenges in EU–US relations, the number of strategic partnerships and international alliances in the Black Sea region demands a thorough evaluation of how transatlantic cooperation could enhance regional and broader European energy security.

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Bridge over troubled water – Why the transatlantic partnership matters more than ever

The Black Sea region stands at the convergence of multiple geopolitical and economic blocs, including NATO, the European Union, and the Energy Community (for prospective EU member states). The region also serves as a battleground for great power competition, characterized by Russia’s persistent use of hybrid tactics, China’s growing interest as an entry point to the EU markets, the EU’s ambitions for an expanding and unified single market, and the US’s emphasis on strategic partnerships.

Figure 1. Three geopolitical and economic blocs converge in an extended region around the Black Sea

The collaboration between the European Union and its transatlantic partners is essential for improving energy security preparedness and the resilience of critical infrastructure. Although Brussels and Washington may currently have differing perspectives on various matters, the strategic energy significance of the Black Sea region, particularly in light of current security and geopolitical challenges, cannot be overlooked.

Similarly, the region’s resources present a significant opportunity for Black Sea nations (specifically EU member states) to leverage energy diplomacy. The win-set between the EU’s energy targets and the United States’ energy policy goals, though arguably limited, achieves an optimal equilibrium in the region, with objectives serving as either joint EU-US priorities (e.g., infrastructure and connectivity, geothermal, clean manufacturing technologies) or being tacitly endorsed by them (e.g., nuclear development, gas explorations in the Black Sea).

The successful implementation of the EU’s new Black Sea strategy, which leverages a diverse range of internal mechanisms, will significantly hinge on proficient transatlantic coordination. The United States and NATO provide essential resources, strategic weight, and credibility to a region where robust energy infrastructure resilience is critical for national security.

Collaboration with transatlantic allies is essential for reinforcing the EU’s initiatives in energy infrastructure protection, which includes maritime safety, cybersecurity, and hybrid threats preparedness. NATO members in the region already play frontline roles, and the recent NATO summit’s increased attention on dual-use civilian and military applications corresponds with the EU’s initiative for improved mobility, energy connectivity, and infrastructure resilience in the area. Furthermore, evaluating (and later auditing) dual-use investments and their expected contribution to the 5 percent defense spending goal relies on recognizing synergies between the European Union and the North Atlantic alliance. Strategically aligned investments in rail, ports, and energy infrastructures that facilitate logistics and defense goals will be essential. In this context, collaboration between the EU’s mechanism and other US-supported platforms, such as the Three Seas Initiative, would bolster the region’s strategic priorities, rather than increasing the risk of redundant investments.

Transatlantic alignment would also enable the EU’s other energy security objectives. It would facilitate the bloc’s development of energy transmission lines, including a green energy corridor through the Black Sea. Leveraging US expertise in critical infrastructure would expedite the deployment of cross-border capacities. Collaborative strategic planning—particularly in Moldova, Georgia, and even more so in Ukraine—would enhance supply diversification and strengthen regional resilience against energy weaponization. Furthermore, the United States’ leading expertise in nuclear energy and its regional partnerships would substantially enhance the European Union’s energy security while complying with the EU’s 2050 climate neutrality objectives. Similarly, offshore gas explorations in the Black Sea would guarantee the stability of supply security in the short to medium term, facilitating the transition to cleaner energy by 2050.

Ultimately, Turkey’s intricate status as a NATO ally and EU partner (and long-term candidate) highlights the necessity of transatlantic unity. Turkey’s roles in Black Sea security, its significant position as an EU partner for energy security, and its regional diplomatic capabilities render it an essential ally; thus, alignment between Brussels and Washington is crucial to foster constructive engagement while addressing geopolitical sensitivities.

Uncharted territories

The EU’s enlargement, including Ukraine’s reconstruction, is another essential factor in its energy landscape and demands substantial collaboration between the EU and its member states on the one hand and the US on the other. The process is evolving into a strategic tool for enhancing energy security and regional resilience in the Black Sea, transcending mere political alignment—it facilitates the integration of vital partners into the EU’s energy market structure, climate efforts, and energy security frameworks. Prospective members’ energy systems face considerable technical and environmental obstacles; thus, transatlantic support is crucial to expedite energy investments in alignment with the EU’s 2040 and 2050 energy and climate goals.

The reconstruction of Ukraine will serve as a pivotal case study: revitalizing its energy infrastructure with an emphasis on cross-border connectivity and clean energy technologies, while harnessing the nation’s vast onshore and offshore resources, will not only facilitate its integration into the EU but also enhance regional energy stability and promote decarbonization.

In this context, the transatlantic partnership is indispensable. Financial and technical support from the United States—through public and private collaborations—would help mitigate risks tied to investments in grid modernization, resource exploration, and cross-border infrastructure in Ukraine, as well as in neighboring countries contributing to the reconstruction process. Furthermore, collaborative EU-US support can guarantee that reconstruction adheres to European regulatory standards and overarching strategic interests, establishing a foundation for a more robust and integrated Black Sea energy sector.

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

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Power Africa can help boost American energy dominance

Molly Moran — Fri, 27 Jun 2025 13:50:59 +0000

The Trump administration recently paused funding for Power Africa, an initiative to facilitate investment to expand electricity access, to reconsider if it aligns with US interests.

At a time when the administration is focused on national security interests and economic opportunities, investing in African energy infrastructure may seem like a diversion of resources. But, on the contrary, it strengthens US supply chains, reduces Chinese market control, and opens profitable avenues for American firms. In this context, Power Africa should be repositioned not as foreign aid, but as a strategic investment in this administration’s energy dominance agenda. By reimagining key projects, prioritizing strategic energy partnerships, and enabling American business expansion, Power Africa can bolster US supply chain security and counter Chinese influence in Africa.

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Successes in US-Africa energy collaboration

Started in 2013, Power Africa aimed to double electricity access in sub-Saharan Africa by leveraging US aid dollars to de-risk private investment. In just a decade, $7 billion in US funding catalyzed more than $80 billion in commitments from African governments, the private sector, and multilateral development banks. The initiative was part of a broader strategy to increase US influence in Africa, where China’s Belt and Road Initiative has a significant presence. During its tenure, Power Africa added 14.3 gigawatts of electricity across Africa and engaged over one hundred US companies to market opportunities in Africa.

These accomplishments demonstrate how US public-private collaboration through Power Africa has opened new markets for American firms while simultaneously challenging China’s dominance in Africa’s energy development.

US Energy Secretary Chris Wright reaffirmed the US commitment to the continent at the Powering Africa Summit in Washington, DC, on March 7, despite Power Africa’s projects ceasing in late February. Wright stated that Africa needs “more energy of all kinds”—from oil and gas to renewables—and said the US government would prioritize mutually beneficial partnerships but without a “top-down grand plan” to make that happen. However, Power Africa projects currently remain frozen.

Increasing African energy access is in the US’ interest

Power Africa is not just about energy access—it promotes US business. Africa’s energy sector is among the fastest growing in the world. During Power Africa’s tenure, US firms engaged in over $26.4 billion worth of deals in generation, transmission, and off-grid systems. Through a redesigned Power Africa, American firms could provide gas turbines, microgrids, and modular energy systems to Africa. This would strengthen US energy companies, which in turn aligns with the administration’s energy dominance strategy.

If the Trump administration decides to cease all or most Power Africa projects, US businesses could face reduced access to emerging African energy markets. Ending Power Africa creates an opening for China, Russia, or even the European Union to offer financing and infrastructure support instead, strengthening their geopolitical influence and substantially limiting the opportunity for US investment in the region. In other words, Power Africa is not aid, it is a pipeline for American exports and a mechanism to strengthen US export competitiveness in global energy geopolitics.

Africa can bolster US supply chain security

Increased US-Africa collaboration has the potential to support more secure and diversified supply chains for US manufacturing. As automakers and other industries actively seek to reduce dependence on China for critical minerals, African countries are emerging as important partners in the global battery material supply chain.

Access to stable, affordable electricity is foundational for scaling mining and mineral processing operations. While increased access to power at mining and processing sites in Africa does not guarantee investment will flow, it lays the essential infrastructure that makes development possible. US support to upgrade underdeveloped grid infrastructure and invest in new power generation can help meet the energy demands of mineral production and help the United States secure a stable supply for domestic battery and electric vehicle production. Programs like Power Africa can offer miners an alternative to the Chinese financing that dominates the sector, expanding US access to ongoing operations. For example, financing solar microgrids as a cost-effective and scalable power solution for remote mining operations in the Democratic Republic of the Congo would simultaneously boost Congolese mining productivity, support US supply chain resilience, and ensure reliable access to essential battery materials outside of China’s control.

Countering China

China has a growing presence in Africa, becoming the largest investor in renewable energy on the continent. Chinese entities are also expanding their control over grid infrastructure and mineral extraction, raising concerns about Beijing’s geopolitical influence. Power Africa provides an opportunity for the United States to counter China’s power in Africa by offering alternative partnerships that promote transparency and sustainable development.

From 2000–22, China provided $52.4 billion in loans to Africa’s energy sector, with over half allocated to fossil fuel projects. This significant investment positions China as the dominant player in Africa’s energy landscape. Without continued engagement through initiatives like Power Africa, the United States risks ceding the limited foothold it had established, allowing China to further consolidate its influence through state-backed financing, large-scale infrastructure deals, and favorable trade deals. Without a credible alternative to Chinese financing like Power Africa, Chinese state-owned enterprises will continue to outmaneuver US firms and lock in resource access critical to global energy markets.

Reenvisioning Power Africa for an era of US energy dominance

Wright is justified in recommitting to Africa, as partnerships across the continent can further US interests. The National Energy Dominance Council, of which Wright serves as vice chair, aims to make the United States a global leader in energy production—that requires not just fossil fuel production, but also securing critical minerals needed for new energy technologies in an all-of-the-above energy strategy.

Critics—including those in Africa—have argued that Power Africa has been too focused on renewables. The program should indeed cast a wide net, as Wright noted. In fact, Power Africa has also invested in gas, and was “never a climate initiative,” according to its former deputy director, Katie Auth. It was “always a project backed by US firms and driven by US economic viability.”

Under a new administration focused on US energy dominance, Power Africa should be seen as an enabler of that agenda, rather than a hindrance. Power Africa doesn’t contradict the America First doctrine; it advances it. Power Africa enhances US energy security by enabling critical minerals development, expanding US firms participation and business in energy projects, supporting American jobs and technologies, and securing long-term geopolitical influence and competitiveness—all of which are core pillars of energy dominance and the administration’s goals more broadly. If the Trump administration doesn’t act, China will.

Molly Moran is a former young global professional at the Atlantic Council Global Energy Center.

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Building electricity bridges: The critical role of high-voltage direct current lines

Joseph Webster, Frank Willey — Mon, 23 Jun 2025 13:00:00 +0000

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Executive summary

High-voltage direct current (HVDC) electricity lines serve as electricity bridges, connecting previously untapped energy resources to distant demand centers. They also enable optionality for grid operators and, with more than forty-four international interconnections, connect grids across countries.¹ Consequently, HVDC lines are critical tools for improving energy security and lowering energy costs.

The scale and quantity of HVDC projects are growing rapidly. Indeed, HVDC lines are critical for meeting rising electricity demands across developed countries, emerging markets, and the developing world, as the growth in renewable energy generators increases the need to deliver electricity over long distances. The best renewable assets are often located far from demand, whereas most traditional power plants—such as coal, natural gas, and nuclear plants—have been built in relative proximity to load centers such as cities. Compared to high-voltage alternating current (HVAC) lines that connect traditional power plants to relatively close load centers, HVDC lines offer long-distance advantages such as lower energy loss and adaptable power flow. Without HVDC lines, the developed and developing worlds might not be able to provide the additional electricity generation needed for cooling, data centers, artificial intelligence, and other uses.

While HVDC lines present an exciting opportunity to advance several objectives simultaneously, obstacles loom as projects grow to unprecedented scope. Industry leaders and policymakers should grasp the scale of the HVDC opportunity and work in concert to remove unnecessary barriers to development; identify and mitigate potential supply chain shortages; ease trade and investment hurdles; strengthen certainty and predictability for investors; and foster international dialogues to establish the trust needed to conduct these projects.

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1 Jingxuan (Joanne) Hu, “DC and Power Electronics—Key Enablers of Flexible, Reliable, and Economic Future Networks,” CIGRE, March 12, 2021, https://www.cigre.org/article/ GB/dc-and-power-electronics—key-enablers-of-flexible-reliable-and-economic-future-networks.

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New EU and US energy sanctions are needed to disarm Putin’s war machine

Aura Sabadus — Thu, 19 Jun 2025 11:33:01 +0000

Europe and the United States are currently preparing ambitious new sanctions measures targeting Russia’s lucrative oil and gas exports, which play a crucial role in funding Putin’s war machine. However, it is not yet clear if Western leaders have the requisite political will to impose these measures in full.

Published on June 17 just hours after Russia carried out one of its deadliest missile and drone attacks on Kyiv, the EU’s new draft regulation on phasing out fossil fuel imports is arguably long overdue. If adopted, it would deprive the Kremlin of vital budget revenues and potentially prevent Russia from fracturing Europe’s unity through energy blackmail.

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The EU’s draft regulation lays out several key steps such as a ban on signing new contracts. It calls for phasing out spot and long-term supplies between 2026 and the beginning of 2028, while prohibiting the provision of services at EU terminals for liquefied natural gas (LNG) to customers from Russia or controlled by Russian undertakings.

Importantly, the current draft also includes tough enforcement and transparency measures that would oblige importers of Russian gas to submit all information needed in order to evaluate risks for gas trading and supply security to the European Commission. In line with the proposals, customs authorities would be given greater powers to monitor imports.

The draft regulation aligns with a proposal recently endorsed by the European Parliament to impose tariffs on fertilizers and agricultural products originating in Russia and Belarus. While these measures are underpinned by trade law, which may insulate them from a potential veto from Kremlin-friendly gas buyers such as Hungary and Slovakia, it may take at least another six months to implement them. Even after adoption and implementation, there would likely still be lingering questions regarding the penalties that may be imposed in case of non-compliance.

Earlier in June, the EU presented its eighteenth package of sanctions targeting Russia. This latest package included a ban on any EU operators engaging directly or indirectly in transactions regarding Russia’s controversial Nord Stream gas pipelines. It also proposed to lower the oil price cap from $60 to $45. The slashing of the price cap would inflict significant damage on the Kremlin’s war economy, which is heavily reliant on oil exports. However, the escalating conflict between Israel and Iran, which lifted oil prices more than 10 percent in recent days, may help Russia rake in further income.

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While the EU’s latest sanctions package and proposed Russian fossil fuel import phaseout are welcome steps, these measures would still leave sufficient flexibility for the Kremlin to export oil, LNG, and oil products to the rest of the world. Since Russia’s full-scale invasion of Ukraine began in February 2022, Moscow has generated fossil fuel revenues of close to $1 trillion, with only a quarter of this revenue coming from the EU.

The remaining $700 billion has come from sales to large importers such as China, which has been buying oil or oil products often transported by Russia’s shadow fleet of tankers. To clamp down on these grey zone exports, there is a need for a far more determined approach to limit Russia’s international oil and gas trade.

Legislation proposed by US Senators Richard Blumenthal and Lindsey Graham may be the only decisive measure that could tear down Russia’s war machine and safeguard Ukraine’s security. The bill, which benefits from bipartisan support and a supermajority of 84 Senate cosponsors, aims to impose a 500 percent tariff on imported goods from countries such as China or India that buy Russian oil, gas, uranium, and other products.

This bill would send a hard-hitting message not only to Russia but also to any other country which may now feel empowered to attack other sovereign nations without fear of retribution. However, approval ultimately rests with US President Donald Trump. So far, he does not appear ready to give the green light.

For more than a decade, Russia has been using oil and gas exports to pay for its war of aggression against Ukraine, fracture European unity, and consolidate ties with fellow authoritarian regimes around the world. The European Union and United States have prepared measures that could dramatically weaken Russia’s energy weapon and undermine Putin’s war machine. The question now is whether they have the political leadership to proceed.

While acknowledging the relationship’s current difficulties, all panelists agreed on the need to find common ground and foster a forward-looking agenda rooted in mutual interests. The panelists raised liquefied natural gas (LNG) as a focal point of transatlantic cooperation. “Europe needs security and flexibility and US LNG can provide for that,” said Rice, highlighting LNG as a central issue in US-EU negotiations.

Morningstar emphasized that other energy technologies, including nuclear and fusion, should also be considered. He noted that the development and deployment of these technologies will depend not only on political will but also on private sector engagement. When asked about the future, Reitan responded, “we need to build predictability and overcome barriers.”

Nuclear energy has global momentum. What’s next?

Jennifer T. Gordon, director of the GEC’s Nuclear Energy Policy Initiative, moderated “The role of nuclear energy in global energy security,” a discussion featuring Sama Bilbao y León, director general of the World Nuclear Association, Aleshia Duncan, deputy assistant secretary for international cooperation at the US Department of Energy’s Office of Nuclear Energy, Amb. Georgette Mosbacher, co-chair for Three Seas programming at the Atlantic Council Europe Center and former US ambassador to Poland, Jeremy Pocklington CB, permanent secretary at the United Kingdom’s Department of Energy Security and Net Zero, and Robert Rudich, chief business development officer of Synthos Green Energy.

Gordon began by highlighting that the conversation takes place at an exciting time for nuclear both globally and in the United States, where four recent nuclear power-focused executive orders demonstrate “an ambitious agenda for civil nuclear partnerships.” Duncan detailed US government efforts to ensure those partnerships succeed. Nuclear power is “a 100-year relationship,” Duncan said, noting the pitfalls inherent with such timescales.

Bilbao y León provided a global tour of the nuclear sector’s momentum, citing reversals of opposition to nuclear power in European states and at the World Bank, a long list of projects underway across the Global South, and efforts to lead in the technology by both the United States and China. Bilbao y León lauded the progress of a 31-nation “coalition of the ambitious,” which is mobilizing to realize the COP28 objective of tripling global nuclear capacity by 2050.

Pocklington focused on the United Kingdom, which is building new conventional and advanced reactor capacity in addition to prolonging and maximizing existing nuclear power generation. “The single greatest challenge,” he said, “is figuring out what we can do to speed up the process,” citing financial innovations that the country is pioneering to make projects a reality.

The next two panelists discussed US nuclear partnerships in Poland and Central Europe. Mosbacher praised Poland’s foresight in reducing its reliance on Russian gas even before the full-scale invasion of Ukraine. Today, she argued, US policymakers must exercise similar foresight in fostering partnerships to keep pace with nuclear-exporting adversaries in Russia and China: “if we don’t scale up fast, we will be left behind.” Rudich offered a private sector perspective, elaborating on Polish firm Synthos Green Energy’s efforts with North American partners to build advanced reactors that will eventually “go beyond Poland and construct the Green Wall.” This zone, stretching from the Baltic states to the Black Sea, would use nuclear power to eliminate dependency on Russian energy. Helping to enact this ambitious plan, Rudich argued, is profoundly in the US national interest: “energy dominance,” he said, “means exports.”

Gordon concluded the conversation by asking what participants would like to see changed in nuclear energy before the 2026 Global Energy Forum. As stakeholders increasingly realize “energy security is national security,” Duncan suggested, “we should fund it as such.” Duncan and Bilbao y León both emphasized the importance of leadership for the deployment of reactors at scale. Rudich concluded by stressing the need for funding to translate into action: “we need to start doing projects and move away from talking about doing projects.”

Can quick wins in critical minerals reduce reliance on China?

The final panel of the Global Energy Forum, “Critical minerals, critical decisions: Quick wins in critical mineral supply chain partnerships,” was moderated by Audrey Hruby, Atlantic Council Africa Center senior advisor, and featured Helaina Matza, chief strategic development officer of TechMet, Stephen Rowland, head of North America copper at Glencore, Reggie Singh, director of the US Department of State Bureau of Energy Resources’ Critical Minerals and Energy Technology Office, and Imad Toumi, chairman and CEO of Managem.

Hruby began by elucidating the central goal of the conversation: “in a long-term sector like mining, we want to look for quick wins.” The fundamental challenge? “We rely too much on one major player for all our critical minerals: China,” continued Singh, who elaborated on how the US government is working to initiate international partnerships that diversify supply while meeting rapidly rising minerals demand.

Matza, delivering a financial sector view of government initiatives, commended bipartisan efforts to “operate a little more like US Government, Inc.,” and make use of unique capabilities among partners to bring more supplies to market. Toumi, who runs a Moroccan minerals company, shared an African perspective: “we no longer want to export raw materials; we need to refine.” He provided an overview of his company’s efforts to work with African partners to build holistic supply chains able to compete with China.

Rowland zeroed in one key mineral—copper—which is faced with spiking demand from electrification and data centers. Despite this challenge, Rowland suggested resource availability is not the issue: “it’s hard to say if the bottleneck is copper or power,” pointing out the inadequate scale of extraction.

Hruby concluded by posing a rapid-fire question to the panel: “what can we achieve in 24 months rather than five-to-ten years?” Participants responded with measures such as pushing forward shovel-ready projects, fostering innovation and recycling, and legislative changes in the United States and globally to fast-track development.

Equinor and EQT are sponsors of the Atlantic Council’s Global Energy Forum. Managem is a sponsor of the Atlantic Council’s Africa Center. More information on Forum sponsors can be found here. 

Elena Benaim is a nonresident fellow with the Atlantic Council Global Energy Center.

Paddy Ryan is a former assistant director with the Atlantic Council Global Energy Center. He is a senior writer/editor at the University of California Institute on Global Conflict and Cooperation.

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‘The Department of Defense runs on fuel’: Energy’s evolving role in US security

John Cookson — Wed, 18 Jun 2025 20:05:59 +0000

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“An army marches on its stomach.” This famous phrase, often attributed to Napoleon Bonaparte, hits at the importance of logistics and basic supplies in sustaining military deployments. Today, the same can be said of energy.

“The Department of Defense runs on fuel,” said Lieutenant General Jered Helwig, deputy commander of US Transportation Command (USTRANSCOM), on Wednesday at the 2025 Global Energy Forum. “Fuel is a huge part of the equation.”

How huge? On any given day, Helwig said, USTRANSCOM has about two hundred railcars, four hundred aircraft sorties, and fifteen ships moving cargo (including fuel) around the world. In addition, he said, in the past two years USTRANSCOM has taken on the mission of being the global bulk fuel manager for the Department of Defense.

The challenge Helwig faces is not just making sure that the Department of Defense has the necessary amount of fuel, he explained to moderator Meredith Berger, a nonresident senior fellow at the Atlantic Council’s Global Energy Center. It’s also about “getting the right fuel to the right place at the right time, globally,” he explained.

“Anything that moves in the Department of Defense moves in some way through TRANSCOM,” Helwig said.

As if organizing the supply chain to fuel the globally deployed US military were not enough of a task, this very same supply chain makes for a tempting target. In the event of a conflict, Helwig said, “Our adversaries will actively be looking to interdict the supply chains.” This issue of security for not just fuel, but also for electricity, was expanded on in a panel discussion that followed. Here are some highlights of the discussion.

More threats

“As we are moving fuel around the globe, it’s an incredibly dangerous and expensive thing to do, and the last thing that we want to do is be reliant on a partner, ally, adversary for access to that fuel,” US Deputy Assistant Secretary of Defense for Energy Resilience and Optimization Rebecca Isacowitz said. As a result of this concern, “domestic energy dominance” has been elevated to a “core component of our strategy,” she added.
The threat extends to domestic electricity and power infrastructure, too, added Alex Fitzsimmons, the director of the Office of Cybersecurity, Energy Security, and Emergency Response at the US Department of Energy. “We know that nation-state actors are prepositioned inside our networks already. They are already inside the wire,” he said. And these adversaries are not just targeting the big US energy companies, which have the resources to resist these attacks. “They’re targeting everyone,” including smaller, regional energy providers.
Many US military bases abroad were once considered sanctuaries from threats, said Major General Jason Woodworth, commander of Marine Corps Installations Command. Not anymore. “We need to consider them as under threat each and every day,” he said. Some US Marine installations, he explained, are just a few hundred miles from Chinese military bases. As a result, he said, working with private industry to increase resilience in military sites abroad and at home is critical.

More demand

“The services don’t generate power. We rely on our partners in the commercial industry to do that for us,” said Rear Admiral George Bresnihan, the commander of the Defense Logistics Agency—Energy. What keeps him up at night, he said, is not production as much as how to get energy and fuel to the point of need, when it’s needed.
And that need is only increasing. Fitzsimmons pointed to artificial intelligence (AI) and onshoring manufacturing as factors in the current surge in energy demand. To win the AI race and be competitive in the twenty-first century, “that’s not possible without energy,” he explained.
From a private sector perspective, Richard Donaldson, the chief information officer for Duke Energy, agreed that it was an “era of growth” for energy. But the challenge is not just to provide energy for new AI data centers, for example. It’s to provide this power, he said, while also meeting energy demands for other current and future consumers—and to do so in a way that is safe and secure.

More safety and more security

“One of the most important things we look for in resilience is a backup power generation capability,” said Woodworth. Panelists listed small modular nuclear reactors, microgrids, large-scale backup batteries, and renewable sources of power as important next steps to achieve greater supply-chain resilience.
New technology is also needed in power grids to make them more efficient and resilient. But as Fitzsimmons warns, “cyber-informed engineering principles” need to be incorporated into the design of new technology so that vulnerabilities to cyberattacks are not inadvertently introduced into the system.
Nonetheless, cyberattacks will come. “You can solve 90 percent of the cyber problems you face by doing like basic cyber hygiene—multi-factor authentication, network segmentation, things along those lines,” Fitzsimmons says. “But then even if you do all that, you still have to equip them with the training and the planning to operate through compromise.”

John Cookson is the New Atlanticist editor at the Atlantic Council.

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Norwegian Foreign Minister Espen Barth Eide: Ukraine must emerge from war independent—including its energy

Katherine Golden — Wed, 18 Jun 2025 14:53:09 +0000

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On Tuesday, the European Commission unveiled a plan to entirely stop its use of Russian oil and gas. For Espen Barth Eide, the foreign minister of Norway (which neighbors the European Union and is the bloc’s top gas supplier), the plan marks a “significant change.”

At the first day of the 2025 Global Energy Forum, hosted by the Atlantic Council’s Global Energy Center, Barth Eide said that the plan is good for “security policy,” “strategic autonomy,” and the “climate transition.”

“By investing in renewables,” while diversifying from Russian oil and gas, “you are both cleaning up your energy system, but at the same time, you are also providing more energy independence from powers like Russia,” he explained.

The plan, which would still need to be passed by the European Parliament, is one example of the “changing geopolitics of energy in Europe,” Barth Eide said. “The geopolitics of energy is important for foreign ministers . . . because it is so central to power dynamics.”

“Everything is connected,” he added. “The degree to which you can create energy independence is so much related to security policy.”

Below are more highlights from the conversation, moderated by Atlantic Council President and Chief Executive Officer Frederick Kempe, which also touched upon the upcoming NATO Summit, Norway’s relationship with the United States, and support for Ukraine.

True independence takes energy independence

“The most daunting challenge is to make sure that Ukraine emerges from what’s happening now as a free, independent, sovereign nation that can make its own choices. And that is also about energy independence,” Barth Eide said.

He noted that Oslo has supported Kyiv with funding for gas purchases as well as help building a more resilient energy system. “Ukraine needs missiles and drones and weapons technology, but they also need to keep the economy alive, and that can only be done with a reasonable access to energy,” he noted.

Barth Eide said he thinks Russian President Vladimir Putin needs to be squeezed harder by European allies—as Norway works with its neighbors on controlling Russia’s sanctions-busting “shadow fleet”—and that he would “welcome stronger sanctions also from the US side.”

Barth Eide said that Europe understands it should do more to support Ukraine; “but it’s paramount that the US is still in, even if there’s sort of a burden shifting,” he said.

Divide and conquer

Ahead of next week’s NATO Summit, Barth Eide said that he believes allies are “moving towards consensus” on a new spending goal of 5 percent of gross domestic product on defense—with 3.5 percent focused on traditional defense spending and 1.5 percent earmarked for defense-related spending such as ports and airports. “The majority of NATO is moving there, and I think with the good spirit of the meeting, it will happen,” he said.

Reflecting on US President Donald Trump’s demands for Europe to spend more on defense, Barth Eide said “Europe should pay more for its own defense and invest more in its own defense,” in part because doing so means that the United States can spend more of “its mental bandwidth” on the Indo-Pacific.

A US pivot could still redound to Europe’s benefit. Russia turning to North Korean troops or Iranian drones for help in Ukraine, Barth Eide explained, shows that “any idea that you can separate” these theaters “is simply wrong.”

“I always appreciate when the Atlantic Ocean is narrow in a political sense,” the foreign minister said. “And if we move away from each other, we have to try to get back to where we were.”

Wishing for Washington

The foreign minister, who was scheduled to visit US Secretary of State Marco Rubio on Wednesday, said that Norway’s partnership with the United States is “very strong” and has not deteriorated with the current US administration. “There are decisions being made here on global issues that I do not always agree with, I don’t think I’m alone in that. But our partnership is strong and growing.”

Barth Eide pointed to US and Norwegian cooperation on fulfilling Europe’s gas demand. “I think there is a rather deep alignment because we have a shared interest in assisting our allies and friends in Europe in not returning to that dependency on Russia,” he said.

He added that Norway is “very much eager” to “see more cooperation” on carbon capture and storage, in addition to rare earths and critical minerals, which are important inputs for green technologies. “We need to invest now in how we make sure that some of these sources are controlled by Western friends and allies,” he argued.

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

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The energy system is more complex than ever: Navigating AI, competitiveness, and growth

Elena Benaim, Paddy Ryan — Wed, 18 Jun 2025 03:37:11 +0000

On AI and energy: ‘Infrastructure is destiny‘

In the first panel of the Forum, “Thinking big and building bigger,” Global Energy Center (GEC) Senior Director and Morningstar Chair Landon Derentz led a conversation on meeting the energy demands needed to power AI. The discussion featured Mariam Almheiri, group chief executive officer of 2PointZero and chair of the international affairs office of the Presidential Court of the United Arab Emirates (UAE); Chris James, founder, chief investment officer, and chairman of Engine No. 1; Chris Lehane, OpenAI’s chief policy officer and vice president of global affairs; and Chase Lochmiller, co-founder, chief executive officer (CEO), and chairman of Crusoe.

“AI and energy are inextricably linked,” began Derentz, outlining the challenge that industry and policymakers face in needing to “smash through the bottlenecks” to enable technological progress. Lehane reflected on the energy-related challenges OpenAI grappled with as it became the fastest digital platform in history to reach 100 million users. On lessons learned, Lehane stated that “infrastructure is destiny,” and that AI breakthroughs can only happen when providers are able to bring together “chips, data, talent, and energy” to facilitate this game-changing technology. Lochmiller suggested that AI can help unlock a “new era of abundance”—but before material abundance can be reached, energy abundance is needed to make that a reality.

James continued by defining the obstacles in meeting AI’s energy demands. “Energy is a fairly linear system, but the demand for compute is exponential.” James advised that if policymakers and industry can overcome bottlenecks such as project permitting, outdated regulations, and credit availability, they can foster “an enormous amount of reindustrialization across the United States.”

Almehri then contextualized the international trends that preceding speakers had identified. “When I think of creating AI clusters, there are certain elements that regions have to combine,” she said, ranging from their ability to channel strategic investments to having adequate infrastructure and energy. Citing the UAE’s relevant advantages, Almehri counseled that “for this AI megatransition, we need a transformation on the energy side”—to do that, she continued, requires partnerships.

Derentz continued by asking panelists about the timelines, regulatory hurdles, and geopolitics associated with AI growth. “The age of intelligence is incredibly resource intensive,” noted Lehane, “and this resource intensity is where we’re seeing bottlenecks.” Lochmiller cited Crusoe’s work in Texas as showing not only that “every aspect of the economy is required,” to realize AI’s potential, but that “every aspect of the economy will benefit.” Regarding international AI rivalry, Almehri highlighted that while the UAE has “made it clear to everyone that we are partnering with the United States,” it is important for major players to cooperate on global tech governance and “work together to build standards.”

Derentz concluded by asking participants the top of the policy wish list. They identified regulatory adaptability, innovative capital solutions, public-private partnerships, and international collaboration. Most fundamentally for the future of AI, is a change in perspective. “It’s a mindset,” said James. “This country is at its best when it thinks big, acts big, and builds big: we need to get back to that.”

Pathways to industrial competitiveness and trade

The panel “Pathways to industrial competitiveness and trade,” moderated by Saphina Waters, director of stakeholder engagement and communication at the Oil and Gas Decarbonization Charter (OGDC), explored the complex intersection of trade, competitiveness, and climate policy—something panelists described as a puzzle with one thousand pieces.

Emphasizing the urgent need to reshore US manufacturing, Sarah Stewart, CEO of Silverado Policy Accelerator, called for an aggressive agenda to “build, protect, and promote” that aligns policy tools with clear construction objectives.

Sasha Mackler, senior vice president and head of strategic policy at ExxonMobil Low Carbon Solutions, noted that the company is focused on strengthening domestic manufacturing and expanding energy exports. He stressed that climate policy must evolve from being just a matter of regulation to one integral to business models.

Participants criticized the absence of a clear, concise, and universally accepted carbon accounting system. Without that system, panelists said international collaboration is hindered and domestic implementation becomes more challenging and that a harmonized, interoperable framework would help simplify climate-related policy and economic planning.

On the European Union’s Carbon Border Adjustment Mechanism (CBAM), Stewart expressed concerns about potential discriminatory effects. She argued that while identical systems are not necessary, interoperability is essential to ensure fairness and global cooperation.

The panelists argued that creating a level playing field for US manufacturers is not just a climate issue—it is a matter of national and economic security. They held that ensuring American industries are not unfairly disadvantaged must be a policy priority.

The makings of a manufacturing powerhouse

The panel “The makings of a manufacturing powerhouse: Legacy strength and new frontiers,” moderated by Neil Brown, nonresident senior fellow at the GEC and managing director of KKR Global, explored how manufacturers are navigating today’s complex geopolitical landscape, focusing on capital flows, project financing, and talent development.

One of the central topics of discussion was the strategic role of emissions accounting. Karthik Ramanna, co-founder and principal investigator at the E-Liability Institute, suggested that when carbon accounting is viewed merely as a reporting requirement, it tends to become a burden. He argued, however, if reframed as a tool for product differentiation, it can become a source of value creation. Brandon Spencer, president of the motion business area at ABB, added that using emissions data in a strategic—not just operational—way can become a real competitive advantage for companies.

Catherine Hunt Ryan, president of manufacturing and technology at Bechtel, presented a two-part framework for managing complexity: “what to continue” and “what to consider.” Companies should prioritize core competencies, she said, particularly in engineering and subject-matter expertise, while also identifying and managing critical supply chains and building data-driven execution models. At the same time, organizations must consider their ability to embrace change in a dynamic global environment.

Looking ahead to the next decade, the panel discussed which regions are likely to emerge as manufacturing leaders in this new geopolitical context. Julian Mylchreest, executive vice chairman at Bank of America, remarked that the United States is well positioned to be among the winners.

Leveling the global playing field

In a leadership spotlight moderated by Dan Brouillette, former US secretary of energy, Sen. Bill Cassidy (R-LA) emphasized that the world must adapt to new geopolitical realities. China has gained a competitive edge by not enforcing environmental or pollution standards, allowing it to strengthen both its economy and military. Meanwhile, the United States and European Union have adopted stringent climate regulations, putting their industries at a relative disadvantage. Cassidy also argued that differing regulatory regimes have created an unfair global marketplace. He proposed leveling the playing field with a US version of CBAM: a foreign pollution fee. This fee would apply to imports from countries that do not adhere to US environmental standards, helping to protect domestic industry and workers.

Cassidy highlighted the strategic importance of producing natural gas domestically. He noted that natural gas supports manufacturing, replacing coal and thereby reducing emissions. Moreover, argued Cassidy, by producing gas domestically, the United States can support economic policies, which supports US working families.

Unlocking energy abundance to enable equitable access

To wrap the first day’s panels, Phillip Cornell, GEC nonresident senior fellow and principal at the Economist Impact, moderated a discussion on creating abundant, affordable, and reliable energy to sustain economic growth, foster innovation, and promote national security. The panel featured Jude Kearney, member of the board of advisors at the African Energy Chamber; Tarik Hamane, CEO of Morocco’s National Office of Electricity and Drinking Water; Thomas R. Hardy, acting director of the US Trade and Development Agency (USTDA); and Bob Pérez, Baker Hughes’ vice president for strategic projects.

Cornell framed achieving abundance as “one of the most consequential energy questions of our time.” With 800 million people across the globe still lacking access to electricity while technology-related demand grows rapidly, Cornell said it is crucial to “build systems that can deliver energy abundantly, equitably, and affordably.”

Hardy discussed USTDA’s role in fostering energy abundance through international partnerships. While administrations change, Hardy noted, USTDA continues to work on projects that contribute to US security and prosperity, “working with our partners and meeting them where they are” to grow different forms of energy supply.

Next, Kearney elaborated on Africa’s role in achieving abundance. Advising that access is key, he highlighted the need for an “abundance of thoughtfulness and good governance.” Pérez, offering a private sector view, added that the formula for abundance, ultimately, is rather simple: “I’ve never seen a good project not get money,” he said, “the question is how you get to a good project.”

Finally, Hamane expanded on the theme of partnerships by sharing lessons from Morocco. The country has achieved near-universal rural electricity access, up from less than a quarter only three decades ago. As Morocco looks to build infrastructure that can connect its growing renewable production to new markets in Europe and Africa, Cornell concluded by lauding these projects as a “a physical manifestation of the integration needed to achieve abundance.”

2PointZero, ABB, Baker Hughes, Bank of America and ExxonMobil are sponsors of the Atlantic Council’s Global Energy Forum. More information on Forum sponsors can be found here.

Elena Benaim is a nonresident fellow with the Atlantic Council Global Energy Center.

Paddy Ryan is a former assistant director with the Atlantic Council Global Energy Center. He is a senior writer/editor at the University of California Institute on Global Conflict and Cooperation.

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

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

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JUNE 9-10, 2026 WASHINGTON, DC The tenth Atlantic Council Global Energy Forum will be held June 9-10, 2026 in Washington, DC. Please check back regularly for updates on our programming.

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

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

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

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

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

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

The objectives

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

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

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

The options

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

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

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

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

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

The impact

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

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

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

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

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

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

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

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

The post What comes next in the Iran-Israel war, from a US response to energy impacts appeared first on Atlantic Council.

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

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

Watch the full Global Energy Forum

Global Energy Forum

JUNE 9-10, 2026 WASHINGTON, DC The tenth Atlantic Council Global Energy Forum will be held June 9-10, 2026 in Washington, DC. Please check back regularly for updates on our programming.

Speakers

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

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

Moderator

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

Event transcript

Uncorrected transcript: Check against delivery

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

HELIMA CROFT: I will be super fast.

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

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

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

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

Watch the full event

The post The energy risks of escalation in the Middle East, according to Brett McGurk and Helima Croft appeared first on Atlantic Council.

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

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

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JUNE 9-10, 2026 WASHINGTON, DC The tenth Atlantic Council Global Energy Forum will be held June 9-10, 2026 in Washington, DC. Please check back regularly for updates on our programming.

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

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

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

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

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

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

An engine of peace

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

Shift into hyperdrive

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

Power to the people

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

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

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

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

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

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JUNE 9-10, 2026 WASHINGTON, DC The tenth Atlantic Council Global Energy Forum will be held June 9-10, 2026 in Washington, DC. Please check back regularly for updates on our programming.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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US global leadership in the age of electricity

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

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

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

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

Security, growth, and innovation

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

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

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

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

Competition for electricity markets

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

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

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

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

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

National security and global engagement

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

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

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

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

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

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