When it comes to the beginning of the China-Iraq relationship, there are a number of starting points. Some are framed within the longue durée and civilizational discourse favored by the Chinese and cherished by the Iraqis. For instance, in his March 15, 2023, speech introducing the Global Civilization Initiative, Chinese President Xi Jinping invoked ancient cross-cultural exchange as the foundation of China’s modern outreach. Chinese officials talk about Iraq in similar terms. When Cui Wei, China’s ambassador in Baghdad, visited a local research center, he opened by recalling that “our ancestors—more than two thousand years ago—built the ancient Silk Road for friendly communication with the countries of the world . . . As for Iraq, it is a shining pearl on the Silk Road, which left China and Iraq with good memories.” In this narrative, Abbasid-era trade brought Chinese papermaking, gunpowder, printing, compasses, silk, porcelain, and tea to Iraq and, through Iraq, to the wider Middle East and Europe. In return, astronomy, calendars, medicine, spices, and arts moved eastward into China. This semi-mythical view of the Silk Road allows Beijing to distinguish itself from Western powers and present its presence in Iraq as rooted in deep history rather than modern geopolitics. 

Alongside this civilizational rhetoric sits an official diplomatic starting point, and these two stories are mutually enhancing. China recognized the Kingdom of Iraq in 1942, though ties remained limited. A substantive relationship emerged after the 1958 coup led by Abd al-Karim Qasim and the two countries formally established diplomatic relations on August 25, 1958. Beijing viewed Qasim’s coup as part of a broader anti-imperialist realignment and saw Iraq through the lens of Cold War polarization. The Iraqi Communist Party’s strength reinforced this perception. During this period, China’s embassy in Baghdad became a key hub for distributing Maoist literature, part of Beijing’s effort to export revolutionary ideology. 

A third foundation of the two countries’ relationship is personal and ideological, as demonstrated through figures such as former Iraqi President Jalal Talabani and, later, Adil Abdul-Mahdi. Talabani visited China in 1955 and met Premier Zhou Enlai, seeking support for the Kurdish national movement in Iraq. China declined, and Talabani later recalled realizing that Beijing’s stance on national questions was incompatible with Kurdish aspirations. Despite this refusal, he remained drawn to Maoist thought. Material links also emerged early: During the Great Leap Forward famine, Iraqi dates became an important ration for Chinese households, a memory now invoked in cultural exchanges pairing Iraqi dates with Chinese tea. These civilizational, diplomatic, personal, and material strands gave China a multilayered story about its presence in Iraq and prepared the ground for the more strategic phase that followed. 

The modern relationship: War, weapons, and debt 

The modern China-Iraq relationship took shape in post-Mao China, especially during the 1980s. By the onset of the Iran-Iraq War, China had begun prioritizing economic development and external markets—priorities later embodied in the Belt and Road Initiative (BRI). But Beijing’s approach to the two countries and their conflict was never purely economic. Deng Xiaoping saw an opportunity to counter Soviet influence as Moscow appeared to pivot toward Tehran. According to historian Pierre Razoux, China pursued three goals: containing the Soviet Union, expanding markets, and maintaining a balance between the two belligerents. 

In practice, Beijing discreetly armed Iraq while avoiding any outcome that might destabilize Iran. Chinese shipments included T-59 and T-69 tanks (copies of the Soviet T-55 and T-62), Type 59 towed field guns (copies of the 130-milimeter M-46), Type 56 assault rifles (copies of the Soviet Kalashnikov), and millions of shells and assorted munitions. Throughout the war, China became Iraq’s third-largest arms supplier, after the Soviet Union and France. This arms trade generated substantial Iraqi debt and Chinese claims became the largest portion of Saddam Hussein’s external war debt, including roughly $8.5 billion in commercial obligations. These debts later provided Beijing with leverage as Iraq reentered the international system after 2003. 

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.  

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. 

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. 

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.

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Energy & Environment Energy Markets & Governance

MENASource Oct 6, 2025

Can Iraq and Kuwait transform the Khor Abdullah waterway dispute into a regional diplomacy model?

By Rami Alkhafaji and Safwan Al-Amin

The dispute underscores the complexities of post-conflict border demarcation— and how legal disputes may multiply into geopolitical ones.

Iraq Maritime Security

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.

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

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:

Lisa Basquel: The transatlantic energy fault line at Davos 2026

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. 

Staff

Lisa Basquel

Program Assistant, European Energy Security

Global Energy Center

Energy & Environment Europe & Eurasia

Staff

Elina Carpen

Associate Director

Global Energy Center

Americas Energy & Environment

Staff

Amy Drake

Assistant Director

Global Energy Center Nuclear Energy Policy Initiative

Energy & Environment Energy Transitions

Staff

Alexis Harmon

Assistant Director

Global Energy Center

Critical Minerals Geopolitics & Energy Security

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EnergySource Oct 30, 2025

A unified call for G7 cooperation on energy security

By David L. Goldwyn, Lee Beck

Ahead of the G7 energy ministerial, energy stakeholders at the Atlantic Council’s Summit on the Future of Energy Security showed optimism but also had a message for G7 leaders on the path to greater progress.

Energy & Environment Geopolitics & Energy Security

EnergySource Sep 11, 2025

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

By Atlantic Council experts

Atlantic Council experts provide their take on von der Leyen’s vision for energy as laid out in her State of the Union speech.

Energy & Environment Europe & Eurasia

EnergySource Jun 18, 2025

Energy security is only achievable through global partnerships

By Elena Benaim, Paddy Ryan

The Atlantic Council’s flagship Global Energy Forum concluded its programming in Washington, DC, today. What emerged as a central theme throughout was the undeniable need for any single country to engage in international partnerships to achieve energy and national security, whether speakers were discussing divergent transatlantic views, nuclear power, or critical mineral supply chains.

Africa Americas

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

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The post Davos underscored how leaders are navigating global energy crossroads  appeared first on Atlantic Council.

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.”

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. 

The post Wang Yi’s MENA tour was long on messaging, short on outcomes appeared first on Atlantic Council.

Bottom lines up front

• Greenland has substantial reserves of rare earth elements, uranium, and other strategically important minerals.
• Yet there are substantial obstacles to mining and processing these minerals, including Greenland’s limited infrastructure, its harsh climate, and local opposition to mining.
• A unilateral approach by the United States risks limiting its ability to engage productively with Greenland’s mineral sector; a better option is for Washington to collaborate with partners to help de-risk projects for investors.

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.

The post Greenland’s critical minerals require patient statecraft appeared first on Atlantic Council.

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:

1. 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.
   
2. 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.
   
3. 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 capacity. 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. 

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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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 Defens​​​​e-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.

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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The post Why Ankara’s rising power in the Sahel could benefit the West appeared first on Atlantic Council.

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. 

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.

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.

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EnergySource Oct 15, 2025

Solving the US military’s gallium dilemma requires turning trash into treasure

By Macdonald Amoah, Morgan D. Bazilian, Lt. Col. Jahara “Franky” Matisek, and Col. Katrina Schweiker

The metal gallium plays an outsized role in US war readiness—and China controls most of its supply. As geopolitical competition deepens, the United States needs a new playbook to fix this vulnerability.

China Critical Minerals

EnergySource Sep 15, 2025

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

By Macdonald Amoah, Morgan Bazilian, and Jahara Matisek

The making of jet fuel for military use depends on the rare earth element lanthanum. With China in control of most of the element’s supply, the United States must prepare for potential supply disruptions.

China Energy & Environment

Issue Brief Jul 1, 2025

A US framework for assessing risk in critical mineral supply chains

By Reed Blakemore, Peter Engelke

Critical mineral risks to US national and economic security should be evaluated on a mineral-by mineral basis

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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.

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The post Sapuppo in Kyiv Post on Hungarian exemption from US sanctions targeting Russian energy appeared first on Atlantic Council.

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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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.

The post US power utilities must prepare for a crisis in the Indo-Pacific. Here’s how they can start. appeared first on Atlantic Council.

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.

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

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.

Further reading

UkraineAlert Oct 23, 2025

Russia’s ‘human safari’ in southern Ukraine is a warning to the world

By Oleksandr Tolokonnikov

Russia’s escalating campaign of drone attacks on the civilian population of Ukraine’s Kherson region highlights the destructive power of modern drone technologies, writes Oleksandr Tolokonnikov.

Conflict Defense Industry

UkraineAlert Oct 9, 2025

Putin the geopolitical gangster is trying to intimidate Europe

By Peter Dickinson

Putin the geopolitical gangster is trying to intimidate Europe into abandoning Ukraine with an escalating campaign of gray zone aggression designed to highlight the continent’s vulnerability to Russian attack, writes Peter Dickinson.

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Ukraine’s unrivaled experience of drone warfare makes it a key partner for NATO and an indispensable ally in the defense of Europe as the continent faces up to the mounting threat posed by an expansionist Russia, writes David Kirichenko.

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

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Click to jump to an expert analysis:

Josh Lipsky:  A trade truce, if they can keep it

Matthew Kroenig: This relationship will get worse before it gets better

Melanie Hart: Beijing is wielding the power of the calendar to its advantage 

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

Tressa Guenov: The US needs to up its game to counter Chinese espionage

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

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

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.

The post Experts react: What does the Trump-Xi meeting mean for trade, technology, security, and beyond? appeared first on Atlantic Council.

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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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.

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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.

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

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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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.

Issue Brief Aug 15, 2025

The future of US and Japanese engagement with Central Asia

By Kyoko Imai

Situated between China and Russia, and with an abundance of vital natural resources, Central Asia is an area of strategic interest for Tokyo and Washington. Beijing and Moscow currently enjoy overwhelming political, economic, and cultural influence, which limits other countries’ ability to constructively shape the region. Some friction has emerged between the two authoritarian powers as post-Soviet dominance over Central Asia erodes and Chinese economic influence takes its place.

Central Asia China

EnergySource Apr 15, 2025

Central Asia’s geography inhibits a US critical minerals partnership

By Haley Nelson and Natalia Storz

Central Asia holds vast critical mineral resources, but limited export capacity and complex environmental, geopolitical, and legal risks make large-scale US investment unfeasible. The US should instead focus its efforts on allied nations with established mineral export industries.

Central Asia Critical Minerals

Report Oct 23, 2025

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

By Kiran Baez

Understanding Turkey’s presence in Central Asia its implication for US foreign policy objectives in the region.

Central Asia European Union

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

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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.

Atlantic Council experts provide their takes:

Click to jump to expert analysis

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

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.

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.

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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EnergySource Sep 4, 2025

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By Olga Khakova

The announcement of a China-Russia natural gas pipeline deal is attention-grabbing geopolitical theater. The United States should instead be focused on curbing Russia’s evasion of LNG sanctions.

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• 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

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.”

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

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

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.

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.

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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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.

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

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.

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The post Ukraine’s drone sanctions are working but don’t expect a Russian revolt appeared first on Atlantic Council.

This event rattled more than just commodity markets; it exposed a fault line in the US defense industrial base.

Gallium has an outsized yet overlooked strategic value. Embedded in radars, missile seekers, secure radio frequency links, and satellite solar cells, this obscure metal is crucial for advanced electronic warfare systems. The United States produces no domestic gallium and lacks a government stockpile to cushion against Chinese weaponization.

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.

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.

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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EnergySource Sep 15, 2025

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The post Solving the US military’s gallium dilemma requires turning trash into treasure appeared first on Atlantic Council.

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.

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.

Report Sep 23, 2025

The critical minerals boom is an opportunity to integrate public health into mining operations

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Africa is central to the global push for cleaner energy, including the continent’s stocks of critical minerals that power green-energy technologies. But a race to extract more minerals poses public health risks, from the occupational hazards miners suffer to new disease outbreaks in mining camps. There’s a better course for investors and African governments.

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Africa Critical Minerals

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Prioritizing access to critical minerals will require prioritizing Africa

By Benjamin Mossberg

Access to critical minerals is an urgent national security issue. The United States must view investments in African energy, mineral, and mining—key to securing this access—with similar importance.

Africa Critical Minerals

The Africa Center works to promote dynamic geopolitical partnerships with African states and to redirect US and European policy priorities toward strengthening security and bolstering economic growth and prosperity on the continent.

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The post Responsible stewardship models can transform Africa’s mineral wealth into prosperity appeared first on Atlantic Council.

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.

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

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.

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.

Further reading

UkraineAlert Oct 9, 2025

Putin the geopolitical gangster is trying to intimidate Europe

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Putin the geopolitical gangster is trying to intimidate Europe into abandoning Ukraine with an escalating campaign of gray zone aggression designed to highlight the continent’s vulnerability to Russian attack, writes Peter Dickinson.

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

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

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In the long run, a weakened Russia and a Ukraine that succeeds in reclaiming as much of its occupied territory as possible is in line with Turkey’s interests, as it would reinforce Ankara’s strategic role in the Black Sea and the Mediterranean Sea. This would encourage both the United States and the European Union (EU) to include Turkey in bilateral and multilateral defense projects, as well as to supply Turkey with the military equipment it needs.

But in the short term, Turkey’s close energy cooperation with Russia presents a challenge. Trump’s demand that Europe and NATO allies end their energy trade with Russia, which he repeated both in his United Nations General Assembly (UNGA) opening speech and in front of the press with Erdoğan, is actually something that Turkey has been taking precautions about for a long time. However, Trump’s call to stop importing Russian oil comes as Washington and Ankara are expanding their energy cooperation. In the same week as the White House meeting, the United States and Turkey signed a Memorandum of Understanding on Strategic Civil Nuclear Cooperation and Turkey’s state-owned BOTAŞ signed a major agreement to import US liquefied natural gas (LNG). In addition to its agreements with US companies, Turkey has signed LNG deals totaling 15 billion cubic meters (bcm) with several global firms.

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.

The post How energy and trade are redefining US–Turkey regional cooperation appeared first on Atlantic Council.

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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EnergySource Sep 11, 2025

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

By Atlantic Council experts

Atlantic Council experts provide their take on von der Leyen’s vision for energy as laid out in her State of the Union speech.

Energy & Environment Europe & Eurasia

EnergySource Feb 27, 2025

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

By Andrea Clabough, Andrei Covatariu, Elena Benaim, Carol Schaeffer

Atlantic Council experts share their analysis on the EU’s new industrial policy, its implications for European energy security, and how key partners may respond to the bloc’s evolving regulatory landscape.

Eastern Europe Energy & Environment

EnergySource Nov 14, 2024

Europe’s new industrial plan faces formidable obstacles

By Andrei Covatariu

European Commission President Ursula von der Leyen has promised to put forth in her second term a new Clean Industrial Deal to mobilize investment in infrastructure and industry, and reduce dependence on energy imports. But energy supply challenges and geopolitical hurdles risk undermining plans to restore Europe’s industrial competitiveness.

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The post EU enlargement could redefine its energy geopolitics appeared first on Atlantic Council.

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

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.

1. 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.
   
2. 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.
   
3. 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.
   
4. 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.

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.

1. 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.
2. 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.
3. 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.
4. 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.

Staff

Reed Blakemore

Director, Research and Programs

Global Energy Center

Geopolitics & Energy Security Energy Transitions

Staff

Alexis Harmon

Assistant Director

Global Energy Center

Critical Minerals Geopolitics & Energy Security

Staff

Peter Engelke

Senior Fellow, GeoStrategy Initiative

GeoStrategy Initiative Global Energy Center

Technology & Innovation

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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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. 

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.

The post Is the Baghdad-Erbil oil deal a blueprint for settlement—or a stopgap?  appeared first on Atlantic Council.

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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EnergySource Aug 14, 2025

US military readiness in the Pacific requires strengthening Guam’s power grid

By Emma Sampson

Guam’s energy system, already under strain, faces new operational demands. To ensure mission readiness, the Department of Defense must fortify Guam’s energy infrastructure against cyber, natural, and kinetic threats.

Energy & Environment English

EnergySource Jun 11, 2025

Complex energy systems face low-tech threats

By Travis Nels

The daring destruction of Russian strategic bombers through an operation of the Ukrainian intelligence service highlights the power of asymmetric warfare. While a stunning feat for Ukraine, the operation serves as an important reminder that the use of cheap, low-end systems can also be used against critical, vulnerable infrastructure in the West—its grid, in particular.

Energy & Environment Europe & Eurasia

New Atlanticist Jun 18, 2025

‘The Department of Defense runs on fuel’: Energy’s evolving role in US security

By John Cookson

As adversaries increasingly target power grids, fuel delivery systems, and digital control networks, the security of these energy systems has become a growing concern for military planners and policymakers alike.

Defense Policy Energy & Environment

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

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

Atlantic Council experts provide their takes: 

Click to jump to experts analysis:

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

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

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Geoffrey Pyatt

Distinguished Fellow

Global Energy Center

Energy & Environment Europe & Eurasia

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Michał Kurtyka

Distinguished Fellow

Global Energy Center

Eastern Europe Energy & Environment

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András Simonyi

Nonresident Senior Fellow

Global Energy Center

Energy & Environment Europe & Eurasia

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Andrei Covatariu

Nonresident Senior Fellow

Global Energy Center

Eastern Europe Energy & Environment

Staff

Joseph Webster

Senior Fellow, Global Energy Center

Global Energy Center Indo-Pacific Security Initiative

Central Asia China

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Uliana Certan

Assistant Director, European Engagement

Global Energy Center

Democratic Transitions Energy & Environment

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Olga Khakova

Nonresident Senior Fellow

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Geopolitics & Energy Security Europe & Eurasia

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Elena Benaim

Nonresident Fellow

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Energy & Environment

EnergySource Jun 27, 2025

Strong currents, stronger alliances: Reinforcing the EU’s Black Sea energy strategy through transatlantic collaboration  

By Andrei Covatariu

The EU’s recently released Black Sea strategy will thrive only with robust transatlantic collaboration. This relationship will be crucial to stabilizing the region’s energy security, facilitating its energy transition, and ensuring that initiatives align with geopolitical and national security objectives.

Energy & Environment Energy Markets & Governance

EnergySource Nov 14, 2024

Europe’s new industrial plan faces formidable obstacles

By Andrei Covatariu

European Commission President Ursula von der Leyen has promised to put forth in her second term a new Clean Industrial Deal to mobilize investment in infrastructure and industry, and reduce dependence on energy imports. But energy supply challenges and geopolitical hurdles risk undermining plans to restore Europe’s industrial competitiveness.

Defense Industry Energy & Environment

EnergySource Oct 8, 2024

A new European Commission faces three key issues at the heart of the clean energy transition

By Michał Kurtyka

As the European Commission takes shape, it faces three critical issues that it must address to meet energy demand and restore Europe’s climate credibility: inadequate funding for the green transition, dependence on foreign energy imports, and declining economic competitiveness. The EU must take bold action to survive in a changing world.

Energy & Environment Europe & Eurasia

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The post What von der Leyen’s call to ‘fight’ means for European energy and climate goals  appeared first on Atlantic Council.

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 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.

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

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.

Further reading

UkraineAlert Aug 21, 2025

Putin is facing a fuel crisis as Ukraine escalates attacks on Russian refineries

By David Kirichenko

Historically, Russia’s sheer size has always been considered one of its main strengths. By launching waves of airstrikes across the country, Ukraine now intends to exploit this vastness and transform it into Russia’s greatest weakness, writes David Kirichenko.

Conflict Defense Technologies

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Russia attacks Zelenskyy’s legitimacy to derail US-led Ukraine peace talks

By Serhii Savelii

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Conflict Democratic Transitions

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Putin’s failed summer offensive shatters the myth of inevitable Russian victory

By Peter Dickinson

The failure of Putin’s summer offensive should help to debunk the persistent myth of inevitable Russian victory and persuade Western leaders to increase their support for the Ukrainian war effort, writes Peter Dickinson.

Conflict Defense Policy

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

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The post Ukrainian bombing campaign turns Russia’s sheer size into a weakness appeared first on Atlantic Council.

Years of negotiations over the Russia–Mongolia–China Power of Siberia 2 pipeline culminated in a splashy memorandum of understanding (MOU) signed during Putin’s visit to China. Yet the obstacles to realizing what Gazprom’s Alexei Miller recently described as “the world’s biggest and most capital-intensive gas project” have only multiplied over the past three and a half years.  

This geopolitical theater, however, should not distract the United States and Europe from a far more urgent priority: curbing Russian evasion of liquefied natural gas (LNG) sanctions and placing additional sanctions on remaining projects and volumes. Every loophole leaks funds that sustain Russia’s daily atrocities in Ukraine. 

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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The post The China-Russia natural gas deal is a distraction from LNG sanctions evasion appeared first on Atlantic Council.

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.

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

Since the 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.

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

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

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The post Hungary has alternative energy options but chooses to rely on Russia appeared first on Atlantic Council.

Introduction

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.

Staff

Caroline Costello

Assistant Director

Global China Hub

China Chinese

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The post Leveraging Beijing’s playbook to fortify DFC for global competition appeared first on Atlantic Council.

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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EnergySource Dec 11, 2024

The United States needs a durable national energy strategy

By Sara Vakhshouri

The United States lacks a comprehensive, long-term energy strategy that can persist through election cycles and aligns energy security with broader national interests. Congress should address this shortfall by mandating a “National Energy Strategy” that establishes a durable energy policy framework.

Energy Markets & Governance Geopolitics & Energy Security

EnergySource Oct 18, 2024

Innovation can accelerate Southeast Asia’s energy transition 

By Reed Blakemore, Chase Thalheimer

As Southeast Asia’s energy landscape undergoes profound transformations, innovative clean technologies will be critical in meeting surging demand and ensuring a reliable, resilient, and clean energy supply.

Energy & Environment Energy Transitions

Report Jul 2, 2024

Strengthening Taiwan’s resiliency

By Franklin D. Kramer, Philip W. Yu, Joseph Webster, Elizabeth Sizeland

Resilience is a nation’s ability to understand, address, respond to, and recover from any type of national security risk. Given the scale of risk Taiwan faces from mainland China, domestic resilience should be front and center in Taiwan’s national security strategy, encompassing areas such as cybersecurity, energy security, and defense resilience.

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The post US military readiness in the Pacific requires strengthening Guam’s power grid appeared first on Atlantic Council.

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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EnergySource Jun 27, 2025

Strong currents, stronger alliances: Reinforcing the EU’s Black Sea energy strategy through transatlantic collaboration  

By Andrei Covatariu

The EU’s recently released Black Sea strategy will thrive only with robust transatlantic collaboration. This relationship will be crucial to stabilizing the region’s energy security, facilitating its energy transition, and ensuring that initiatives align with geopolitical and national security objectives.

Energy & Environment Energy Markets & Governance

EnergySource Oct 25, 2024

Hungary’s Russian oil deal threatens EU solidarity

By Sergiy Makogon

By striking a deal to resume Russian oil transit through Ukraine, Hungarian oil and gas company MOL undermines Europe’s collective action against Russia. The European Union must respond quickly and decisively with solidarity to close sanctions loopholes.

Financial Sanctions and Economic Coercion Geopolitics & Energy Security

Press Release Jun 30, 2025

Atlantic Council expands global presence with a new regional office in Bucharest

BUCHAREST, ROMANIA – JUNE 30, 2025 – The Atlantic Council, one of the most influential and globally active think tanks in the United States, announced today the opening of a new regional office in Bucharest. This new office will foster bilateral and transatlantic cooperation on key priorities including energy, security, infrastructure, economics, and advanced technology, […]

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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.

The post A tale of two supply chains: Comparing Trump’s new copper tariffs and rare earth investments appeared first on Atlantic Council.

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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EnergySource Oct 25, 2024

Hungary’s Russian oil deal threatens EU solidarity

By Sergiy Makogon

By striking a deal to resume Russian oil transit through Ukraine, Hungarian oil and gas company MOL undermines Europe’s collective action against Russia. The European Union must respond quickly and decisively with solidarity to close sanctions loopholes.

Financial Sanctions and Economic Coercion Geopolitics & Energy Security

EnergySource May 13, 2025

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

By Ellen Wald

Trump’s upcoming trip to the Middle East will focus on advancing energy and commercial agreements, including securing Gulf investments in US manufacturing, increasing US LNG imports, deepening nuclear cooperation with Saudi Arabia, and locking in oil production commitments. These efforts are ultimately aimed at advancing broader geopolitical objectives—countering Russian influence and strengthening US energy dominance.

Energy & Environment Energy Markets & Governance

EnergySource Jun 2, 2025

MDBs must finance nuclear power—or Russia and China will

By Juzel Lloyd

The growing influence of Russia and China in global nuclear energy financing threatens to reshape the future of energy geopolitics. To address this, multilateral development banks must recognize nuclear energy as a vital tool for expanding energy access, and modernize outdated policies to support deployment.

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The post What a new nuclear deal with Hungary means for US influence in Europe appeared first on Atlantic Council.

Click to jump to an expert analysis:

Graham Brookie: A deliberative and thorough plan—but three questions arise about its implementation

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: 

1. 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. 

2. 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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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.

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.

Jul 24, 2024

Venezuela Solutions Group

The Adrienne Arsht Latin America Center’s Venezuela Solutions Group is a diverse group of experts and practitioners from Venezuela, the United States, Latin America, and Europe, brought together to advance the conversation on how to reach a peaceful, democratic, and negotiated solution to the crisis in the South American country. The group comprises former government officials, civil society leaders, private sector leaders, humanitarian voices, economists, and leading experts on Venezuela who work to promote debate and propose actionable and concrete policy recommendations in order to advance policy innovation in addressing the situation in Venezuela. 

New Atlanticist Mar 26, 2025

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US tariff threats against countries importing Venezuelan oil seem geared toward extracting concessions from strongman leader Nicolás Maduro.

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By Lucie Kneip, Geoff Ramsey, Ilona Barrero

International actors including the US, Canada, and the EU have imposed sanctions on individuals responsible for acts of corruption, human rights violations, and the breakdown of democratic rule in Venezuela. How aligned are these countries on sanctions, and where do gaps exist?

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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.

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.

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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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.