Trump's oil gambit: A complex path to peace in Ukraine
Analysts suggest that the US President has limited options to exert pressure on the Kremlin to end the war. The most viable option is to continue supporting Ukraine with armaments. For over a week, the leaders of Russia and the United States have been exchanging views, and the President of Ukraine, Volodymyr Zelensky, has also been involved.
Speaking at the World Economic Forum in Davos, Donald Trump asserted that "If the price came down, the Russia-Ukraine war would end immediately." He also said he would negotiate with Saudi Arabia and OPEC to lower its price.
Saudi Arabia's budget forecasts a considerable deficit, with public debt reaching approximately 30% of its GDP. In contrast to the late Soviet Union, which suffered due to Saudi-driven oil price reductions, the country now needs oil prices to stay above £80 per barrel to maintain a balanced budget, according to a Russian analyst.
Trump seemingly suggests that he might attempt to replicate Ronald Reagan's strategy, who bankrupted the USSR by reducing oil prices on global markets. However, the current international situation is far more complex.
The Saudis are executing an ambitious investment plan that strains their budget and engaging in military cooperation with Russia. Following the outbreak of the war with Ukraine, Riyadh received dozens of Pantsir-1 air defence systems from Moscow, which were more urgently needed by the Russian army at the front. However, the Kremlin decided it was preferable to invest in maintaining good relations with the Saudi regime.
Ineffective threats
The Kremlin does not respond to Trump's threats. As Russian Deputy Foreign Minister Aleksandr Grushko highlighted, "And will not only seek ironclad international guarantees that will prevent Ukraine’s membership in NATO in any form, but we will also insist it will become a policy of the alliance itself." This pertains to acquiring assurances that Ukraine will not join NATO.
- Welcome again to the turn of 2021 and 2022 – remarked Carnegie Foundation expert Tatiana Stanovaya, referring to Putin's reiteration of demands from late 2021 concerning Europe's future security architecture, based on two main principles: no Ukraine in NATO and no NATO in Ukraine.
Putin's strategies have shifted: instead of issuing a blunt ultimatum, he focuses on softening Trump's stance and appealing to his ambitions. It is relevant to note that Putin publicly supported Trump's assertion of the "stolen" 2020 elections, which provoked indignation among the Russian opposition.
What will NATO do?
President Zelensky proposes that NATO deploy peacekeeping forces to Ukraine once military operations conclude. "Foreign Policy" observes that the Alliance has two choices: provide Ukraine with sustained financial and military backing or extend Article 5 guarantees of its treaty to Ukraine. The Kremlin firmly opposes both options.
The means of achieving a truce remain unclear. Kyiv anticipates that hostilities will cease at the pre-aggression border as of 24 February 2022, whereas Putin contends that the war's objectives have already been met, including weakening the Ukrainian army and securing a "land corridor to Crimea." If Zelensky's demands are to be satisfied, the Kremlin would need to relinquish this "corridor."
To date, neither side shows any sign of willingness to compromise. Trump has curtailed foreign aid provided by the US, but this does not encompass military support for Ukraine. Meanwhile, Washington continues to apply "energy pressure" on Russia. General Keith Kellog, Trump's special envoy for Ukraine, believes it is possible to lower the price of oil to £37 per barrel, which could undermine Russia's financial strength and compel the Kremlin to negotiate.
However, as Timothy Ash of Chatham House highlighted, a prolonged war will not notably damage Trump, while Putin will find it increasingly challenging to sustain the situation the longer the conflict endures.
