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Hello everyone and welcome back to These Times. I'm Tom McTae. And I'm Helen Thompson. We're recording this week's episode with world events moving fast yet again. Since we recorded the episode last week following the spectacular blow up in the Oval Office, the long-fated minerals deal between... Thank you.
two economies in what he called a win-win agreement that he says could restart US intelligence sharing with Ukraine and arms supplies as part of a wider push for peace. It all comes after another huge week in geopolitics that saw EU leaders endorsing a new 150 billion euro defense spending plan at an emergency summit in Brussels, though not aid to Ukraine. And Germany's incoming Chancellor Friedrich Mertz announced plans for 1 trillion euros.
spending. And then wrapping up the week, President Zelensky himself surprised analysts by flying to Saudi Arabia to discuss the minerals deal, which lies at the heart of much of what has been discussed over the past few weeks. The question we're asking in this week's episode... is has the war in Ukraine been or become a war for resources? Today I received an important letter from President Zelensky of Ukraine.
The letter reads, Ukraine is ready to come to the negotiating table as soon as possible to bring lasting peace closer. Nobody wants peace more than the Ukrainians, he said. My team and I stand ready to work under President Trump's strong leadership to get a peace that lasts. We do really value how much America has done to help Ukraine.
maintained its sovereignty and independence regarding the agreement on minerals and security ukraine is ready to sign it at any time that is convenient for you So Helen, it strikes me that we've been talking about this so-called minerals deal for a few weeks now, without ever really getting into the details of what this actually amounts to.
And I think the first thing we should say is that it isn't just a minerals deal, is it? It's a resources deal. Yeah, I think if you look at the draft agreement that... zelensky was going to sign when he went to washington it's essentially a reconstruction investment fund built around resources those resources are far from just about minerals that they cover not just hydrocarbon so the extraction of oil
and gas but actually hydrocarbon infrastructure so that would include for instance the pipelines in ukraine which as we know we've talked about before being an important part of the context of the relationship between russia and ukraine for long time possibly actually includes the development of ports as well and what the fund would do would be to establish effectively joint
ukrainian government and u s government management of an investment fund in which the the funds from resource extraction resource production would be put back into the fund for further investment and i think that it's striking that it isn't just about minerals even though the framing has become about mineral deal because it does get at this fact that actually there's a whole set of issues about Ukraine and resources that have framed not just this conflict
because there are clearly also other reasons for this conflict than just resources but the whole nature both of the ukraine russia relationship through the post-independence of Ukraine period, but also of the US relationship to this. And in recent years, European countries' relationship to this. But I think that came in some sense a bit later. Yeah. So, I mean, I think it's worth pointing out, isn't it, to listeners now that
What we're going to try and do in this episode is to focus in on the U.S.-Ukrainian relationship in the first half to try and explain what is going on here in terms of the U.S. interest in Ukrainian resources and what the strategy is.
from Ukraine is because I think we shouldn't just think about this as some kind of colonial war for extraction. There is agency here on Zelensky's part very clearly and what he's trying to do to try and bring the US into the picture here. And then the second half we're going to turn to The bigger picture really, which focuses in on Russia and crucially how important Russia's resources are to the world economy, because I think that is absolutely crucial.
part of this picture. So Helen, where do we start in trying to understand this? I think that stressing Zelensky's agency here is really correct. Tom, if we go back to October of 2024, so the month before Donald Trump's election, then Zelensky, I think we probably talked about this at the time, proposed, published what he called a five-stage victory.
plan and obviously a significant part of that was trying to get biden to give some kind of security guarantee to ukraine before he left office on the assumption that there was a reasonable chance then that that Trump was going to win the election. But if you look at what stage four of Zelensky's victory plan was, it was a offer of those who he called Ukraine's strategic partners, a special agreement for what he called then the joint protection of ukraine's critical resources and these are his
words now the deposits of critical resources in ukraine along with ukraine's globally important energy and food production potential are among the key predatory objectives of the russian federation in this war and this is an opportunity for growth so here's Zelensky attributing the resource acquisition motive to... the russians then saying actually instead of you tolerating the russians taking our resources we will be partners with you in developing those resources so in that sense
I think it's wrong just to think that Trump comes in and sort of, as you said, has some kind of like predatory plan for Ukraine's resources. This is something that Zelensky is committed to, and as we'll see, is that... In this sense, Zelensky's strategy is actually part of a longstanding strategy of Ukrainian governments. I would argue going all the way back to which from like 2010, as we'll come to. And I think there's some evidence. We just stick with Zelensky for the moment.
that when Zelensky met Trump in September of 2024, 27th of September 2024, so this is a good six weeks before the election Zelensky met. Trump Tower. And there were some reports, some of the media reporting then, that Zelensky was, if you like, pitching. to trump that the way that the us should stay on side if trump were to be president was for the us to partner with ukraine in developing these resources and the framing looks like zelensky saying you don't want to be dependent
and we can help you out in that. And in return, you can give us a security guarantee. So this question or this issue of the relationship between the... A security guarantee from the Americans to Ukraine is bound up with resources, not just on Trump's side, but on Zelensky's side too. Yeah, as this war develops, it strikes me that sort of layer after layer is being peeled away. And we start to see... most.
the kind of the future contours of the 21st century, all kind of bound up in this one conflict. So just thinking it through what Zelensky's strategy is there, because it essentially, it makes a lot of sense, doesn't it? We know it's well documented that not only is the United States seeking to turn its attention away from Europe geopolitically towards China, its principal adversary, it is seeking to reduce its own dependence.
China and particularly in things like critical minerals particularly rare earth where China is concerned right and these are important not just in the production as I understand it of things like microchips but also in terms of weaponry and even there has been detailed reports of the United States military, some of the weapons that are currently being used in Ukraine, which are ultimately dependent on material control by China. So it's a kind of the connectedness of this. think is what is.
Fascinating. And if you go and look at what is happening on the battlefield, I think you get a sense of how it is all connected. And you've got this extraordinary drone warfare that is taking place. And ultimately... Where are the drones? How are the drones made? They're made domestically in Ukraine a lot of the time, cheaply, to something like 2 million a year now. And they're seeking to replace humans on the front lines as much as possible to deal with their deficit.
terms of the number of people number of soldiers that they can fight against the russians but they are dependent on this kit from taiwan and often itself from china as well as the hardware that's coming in from the united states
And I think this just gets at this fundamental question of why resources are so important. If you have these great powers that are dependent on supply chains and where you get... ultimately these critical minerals and rare earths from and this is why zelensky's offer is something close to what Lindsey Graham is talking about when Lindsey Graham, the influential senator that I mentioned at the beginning, is talking about binding the two economies of Ukraine and the United States together.
And Trump himself is saying this is the security guarantee. Now, we can question whether that is a security guarantee. But the point at the sort of heart of it, I think, is the construction of blocks. whether it's essentially supporting the United States or supporting China and their control of the minerals that are going to be necessary, not just for future warfare, but also I think we're going to turn to during this episode.
the transition towards a net zero economy. Yeah, if we stick just for a moment with Zelensky's perspective on this, I think we can conclude that he has been dissatisfied. with what has been on offer on the security guarantee side of it, because it's not a guarantee. The American position under Trump has become, we will create sufficient commercial interests.
for American companies and via this fund the American government that would either deter Russia from acting in a military way again if and when the peace settlement is reached or would mean that in practice even if there wasn't a security commitment the americans couldn't detach so it's saying there will be enough commercial interdependence between the us and ukraine to mean
that it has security consequences. If we then turn to Trump's perspective on this, I think you can see that there's some sense of internal conflict going on within him because he doesn't really actually want to give any kind of security guarantee as we know to Ukraine and obviously the risk is that something that is very unspecific and not got clear lines will keep the Americans bogged down in Ukraine when Trump and the people around him want to be focused on.
China but the reason then why he can't or they can't quite detach the China question and the Ukraine question is as you said Tom because the US has critical mineral dependency upon China particularly in relation to like rare earths where a very significant proportion of US rare earth imports come from China. And I think once you see that, and then you see what Trump's approach to these questions has been since his first presidency, some other things come into view quite clearly.
In December 2017, Trump declared effectively a national minerals emergency for the United States. And that included some minerals that Ukraine does have. And we should say that... what ukraine has in relation to some of these minerals particularly rare earths is actually pretty contested but there are two i think that are not particularly contested particularly titanium where ukraine was a major
significant exporter before the war began and also lithium so these are two minerals that were on trump's emergency list in 2017. You can also see if we look at 2017 that he tried or at least flirted with the same strategy in relation to Afghanistan. where at some point in 2017, I can't remember the month, he offered the Afghan government effectively an agreement for the US troops staying in Afghanistan in exchange for...
the opportunities for mineral development. There are certain of these potentially, including rare earths, where Afghanistan does have the minerals. But that agreement fell flat. And there are reasons, I think, why it did so in terms of the instability in Afghanistan. actually sort of replay in terms of Ukraine if this deal were to go through but what's notable there is within three years so by 2020 then Trump was saying that the United States was going to withdraw all its troops from
Afghanistan, that was obviously in the end implemented by the Biden administration rather than by the Trump administration. So the story there is minerals for security of some kind doesn't really work out. and then withdrawal. And then it's not difficult to see how you could have some kind of repeat story of that in relation to Ukraine. I think what's different though in the Ukraine case is just how, in a way, systematic Zelensky has been.
about pushing the minerals angle for what is now a substantial period of time, certainly from a couple of years before the war. And this is where we can see that the issue is not just about the minerals, but also about oil and gas. albeit not necessarily the production of oil and gas, incentivising the Europeans by offering Ukraine's gas storage. So Ukraine has gas storage that is only comparable in size, i.e. the only two countries that have larger.
gas storage of the United States and Russia. This is a function of Ukraine's history within the Soviet Union and the fact that Ukraine as a republic of the Soviet Union was central to the storage and transit of gas. And you can see back from like 2000... that Zelensky's government was working out deals with the European Union in terms of a regulatory framework that would make it easier for European Union traders to access.
Ukraine's gas storage. Just to give listeners some sense of what Ukraine has to offer here, that the combined underground storage of the European Union for gas is 100 billion cubic metres. Ukraine has 31 billion cubic metres. So for the size of Ukraine compared to the whole of the European Union, this is a big deal. And if you are European Union countries now that need to import liquefied natural gas because you're not getting pipeline gas from Russia, then storage is significant, really.
important i mean all of that helen just makes me think how weak europe is as a collective in this effort because if you tell this story and you say why ukraine could be important to the united states in its battle for supremacy with china You could equally make the case that for Europe as a whole or Western Europe, the EU, Ukraine should be absolutely critical. You know, if it is going to develop a defence sector itself comparable with the United States, if it's going to have any autonomy.
if it's going to have any ability to store its gas and provide the energy that it needs for an industry to compete with China and the United States, then Ukraine is going to be critical, just as it is setting itself up as being critical for the United States. But the fact that Europe has no ability to project a power in the way that the United States is doing means that it is not part of this game. And that goes to the heart again. this Ukraine war is so revealing.
But you could argue, and this is where I think we get into some quite tricky territory to understand, is the European Union got there first on critical minerals. Because actually in July 2021, the EU and Ukraine signed a strategic partnership. I think it was actually termed as being on raw materials was the language for this. And it was part of what the EU is calling more generally its critical raw materials action plan. Then if we look at the UK, then...
That agreement that Starmer signed with Ukraine, a 100-year commitment in January of this year, that agreement also seems to cover some metals. So one question to ask is, well, actually... is ukraine under zelensky being playing off totally the different potential allies partners in developing ukraine's minerals and i think for a moment we should concentrate at least on the minerals aspect of it is that part of the problem in some sense that
Zelensky has been promising too much to too many people. And I think that one of the ways in which you can see how central that this has been to what Zelensky has been trying to do since the beginning of the war is that back in September of 20...
22 he set out a whole approach or framework whatever one wants to call it investors for western investors it was called advantage ukraine and to launch it he virtually rang the new york stock exchange bell and it set out 10 different sectors of natural resources for investors and so this particular episode there's now so much bound to trump has actually got such a longer like story to it and actually the question might be well who is it who actually is going to be in a position yeah
to work with ukraine on its minerals but at the same time and this is where the question of what ukraine actually has on the mineral front really does matter there are plenty of people who say on rare earths which is the area from the united states
point of view that is most significant because of the dependency upon China, that it's not at all clear that Ukraine has that much on rare earths, that the geological surveys go back to the Soviet era, they've not been updated, that rare earth mining is incredibly difficult.
to do because it's bound up like with uranium and it's quite toxic and if you look at the supposed minerals deal that's on the table at the moment there isn't actually any commitment from american companies that are going to go in and do this so
In that sense, it's a fairly flimsy basis for thinking how the United States is going to acquire commercial interests in Ukraine, both because it may be undercut by other agreements that Ukraine has, but also because the prospects for at least some of this mining are very difficult.
And we haven't even mentioned the fact that, yeah, that some of these resources, a significant proportion of these minerals are actually in Russian controlled Ukraine. Yeah. So the United States finds out that it's signed up to an agreement in which includes a security pact and that there's not much.
when they arrive in Ukraine as a result. I mean, I was quite intrigued this morning. We're recording this on Monday morning, as we always do. On the way in to record the episode, I was going through X and I saw some... tweets from the kind of Trump-supporting MAGA movement in the United States complaining about this exact point, saying that, oh, Zelensky was playing them. But not only Zelensky, apparently the UK was playing them. because they had sort of highlighted or they had seen
that the UK had signed this partnership deal with Ukraine. And it is interesting to read through the deal. It's a 100-year partnership with Ukraine, cementing the UK, in quotes, as a preferred partner for Ukraine's energy sector. critical minerals strategy in green steel production. Now, interestingly, this comes with no security guarantee included. It's absolutely specific on the UK government website about this. It says,
to defend Ukraine in the event of a future aggression. The agreement does not contain a mutual defence clause akin to NATO's Article 5 provisions. Now, from the kind of angry kind of MAGA movement, they're saying, look, the UK has got their first...
It signed up 100 years and it doesn't have to provide any security. And now Keir Starmer is arriving in the White House and saying to us, we have to provide the security, but we don't get the minerals. So you can understand from their perspective. But I mean, my guess is that the answer to all of this is.
in the end, the US deal will trump the UK deal because it has the resources and it has the power to back it up. And the sort of the warm words in the UK agreement will not amount to very much. I mean, can we possibly be the... preferred partner for critical minerals if Donald Trump has agreed a minerals agreement with President Zelensky. I think the answer is likely to be no on that front. And I think like underneath that.
is this issue of what kind of possibilities actually are there for resource extraction and commercial opportunities for Western companies in Ukraine. This is where the fact that... is in a succession of different Ukrainian premiers who have adopted this strategy, like really comes in. to play so if you go back to yanukovych so this is the president of ukraine from 2010 to 2014 to the point when he was removed from office after the demonstrations and then they
annexation of Crimea by Russia followed that. Yanukovych had been following a policy of trying to attract the Western hydrocarbon majors, so the oil and gas majors, and really similarly to zelensky bigging up ukraine's potential as a resource partner so in 2013 chevron and shell signed contracts to develop ukraine's onshore shale
gas shell the contract was for in the donbass and chevron in western ukraine now all of these companies ended up leaving after the annexation of crimea so you could say well it just came to a geopolitical end but if you look at the chevron contract it was in western ukraine so it wasn't actually affected either by what happened in the black sea or by the breakaway republics in the donbass and when chevron terminated its contract in december 2014
actually blamed Ukraine's failure to meet its contractual obligations under the agreement and no drilling had started. anyway if you look at this we can see several things the first of them is that and this point really goes way beyond ukraine that resource extraction is a high-risk business that companies make commitments to doing things they sound very expensive contracts that they
pour millions in terms of investment and there can be no reward for it. It's also the case that doing resource extraction investment in places that are politically unstable is really difficult. from the point of view of the companies and we'll come to this in the second half in terms of what happened to exxon mobil in russia but just because a government even if it's the united states government thinks that there's some geopolitical reason either in itself so
ukraine's future or in terms of escaping dependency on a state like china that you don't want to be dependent upon for companies being in these war-torn countries that doesn't mean the companies themselves want to be in these war-torn countries because it's high risk. Yeah, I think, Helen, that brings us back to ultimately the peace deal and the reasons why we... can at least be skeptical about how likely it is that a peace deal, a lasting peace deal, a sustainable peace deal...
The chances of one being reached, because from Zelensky's point of view, he is alighting on exactly this problem. And he is saying that, look, if the result of a peace agreement with Russia leaves Ukraine with no... security guarantee from the United States. There cannot be one from Europe. It's not capable of delivering one, as Keir Starmer has made clear a number of times, saying that there has to be a US backstop. There is no US backstop coming. So Ukraine is ultimately insecure.
And this is the problem. Now, if you look at, and so which companies are going to then invest in Ukraine to extract the resources and then pay into this fund that they're talking about, this, you know, where Ukraine would get 50%. of the minerals or the wealth from the minerals but from putin's point of view a peace deal cannot and he has said this explicitly cannot have western troops in ukraine so he is specifically creating conditions where there cannot be
security guarantee. Now, whether that applies to the United States is less clear, but he has made clear that it cannot mean NATO troops in Ukraine. And so it comes all the way back, I think, to the questions that are also going to be...
being debated in riyadh and saudi arabia which is the extent of the military support from the west and then ultimately from the united states to the ukrainian army because we should just say look what britain and france are talking about you know the 20 000 troops that
J.D. Vance sort of dismissed in the U.S. the other week or the other day. The current, I think, deployment of Ukrainian troops is something like 900,000. You know, so we're talking about an enormous army that has to be mobilized permanently and on guard against a future russian incursion and they need to be armed with american kit american intelligence everything that has been turned off and we saw over the week-end
Even the importance of things like Starlink, which is controlled, of course, by Elon Musk. And you had this unseemly spat between the Polish foreign minister and Elon Musk about Europe's dependence on Starlink. the sort of central point here which is that Ukraine really is dependent on locking in the United States into some kind of economic commitment to Ukraine because at the moment there doesn't seem to be any
other logical security guarantee that it can get. But the crucial point there is that the peace of some kind, which does depend on some kind of military support structure... for Ukraine is a necessary condition of investment. Yes, exactly. Of foreign investment. And I think there's one more thing that should be stressed here is that... the the war has had really difficult consequences for ukraine's own energy like system so in losing most of the donbass then ukraine has lost
pretty much all its coal mines, which has significant effects for its electricity system. Its electricity system has been bombed. Its grid has been, electricity infrastructure has been bombed quite relentlessly at times by the Russians. Ukraine has to be energy reconstructed. as well before in some sense you can even get onto the question of being able then to use energy in ukraine to do resource
extraction, in particular, the electricity grid would need significant investment, I would guess, in order to provide some kind of energy base for large scale mining in Ukraine. So there's a lot of different things that don't add up here. And I think that this what... gets us to and the implications of this will come out in the second half is ukraine was late to the strategy of trying to attract western investment capital
into resource extraction. It really starts trying to do that under Yanukovych from like 2010. But if you look at the period from the 90s and the 2000s, it isn't there. Ukraine's governments have an emphasis on Ukrainian sovereignty.
over resources. They don't want... foreign capital or they're not willing to do the things that would be necessary in in order to entice it by contrast russia at this point really from the 90s onwards from the period of the else and economic reforms is willing to welcome
the oil majors the hydrocarbon majors in and so that's why you have pretty considerable foreign investment in the russian oil and gas sector and that persists even during that period when putin from when he comes into power is trying to take more control of energy for strategic
reasons and that's why then it's such a blow for various of these oil and gas companies both when the sanction regime comes on that obama puts in place after the annexation of crimea because there are various of the new projects that they effectively to withdraw from. But also in terms of the sanctions that have been in place since 22. So we're kind of left with...
Ukraine trying to attract foreign investment and Russia, as we'll come to, kind of wanting these companies to come back into the US. Yeah, it makes you think about that moment in the White House where Trump says to Zelensky, you know, you haven't got any cards, you haven't got any cards.
cards left. I mean, I just am struck by the enormity of the challenge that Ukraine has, even if there is a peace agreement, as you say, to rebuild their electricity network, their energy infrastructure. You know, they are a transit company, or they were a transit.
country for Russian gas. Maybe I'll leave it, we'll end this half with this thought that I was in Estonia just a few weeks ago. This is 35 years after independence and the front pages that day when I was out there were all about how the Baltics had finally switched from the Russian electricity.
grid to a eu electricity grid the 35 years later and these are wealthy countries now ukraine is the poorest part of europe before this war it is now lying destroyed and this is the kind of magnitude of what it has to achieve in the coming year It kind of is extraordinary to think about. We should leave it there for this half and we'll return in the second half to concentrate on Russia's importance to global resources.
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Welcome back everybody. So Helen, I think one of the difficulties I've had when trying to think about the importance of this minerals deal is to, on the one hand... take it seriously as the key to bringing the Trump administration into the peace negotiations on Ukraine's side. I think that's kind of important rather than at the moment.
you know essentially stacking the cards in brushes favor on the battlefield by withdrawing intelligence cooperation arms sales and all the rest and to take seriously the fact that this minerals deal might be the thing that allows trump to change course i mean there's that essentially being his strategy and then to assess as you made quite clear in the first half well you know how much does this actually matter on you know when you look at
how difficult it is to extract the rare earths, how much is actually in Ukraine, what is the key interest in the long term for the United States, and if that's the basis for their security, enduring security relationship, it doesn't seem enough. and then you turn.
to the same questions to russia and i think this is where it's important when trying to assess the importance of the minerals deal itself between the u s and ukraine because you hear the words from vladimir putin and i suppose you could say well he would say this but his to the potential deal was a kind of he shrugged his shoulders and said look russia undoubtedly has and i want to emphasize he he says significantly more resources of this kind than ukraine
As for the new territories, he adds, talking about the ones that he is annexed in the east of Ukraine, we are ready to attract foreign partners to the so-called new or to our historical territories, which have returned to the Russian Federation. He goes on to talk. about how he wants to see a deal between Russia and the United States on critical minerals and the rest itself. And suddenly when you read that, it does place this whole conflict in a different light because you say, well...
If the relationship between the United States and Ukraine is fundamentally only one about critical minerals, well then it's the other side. who, as Putin says, has more. And therefore you can see the incentive for a relationship over time to build between the United States and Russia. So I think that there's two different things here and we should separate them out.
There's the minerals question and there's the hydrocarbons question, so the oil and gas question in terms of Russia's position in this. I think that it's undoubtedly true that controlling the resources of... the Donbas was a strategic Russian warring during this war. The Donbas is a relatively resource rich part of Ukraine, including the coal mines that Ukraine has now.
lost as a consequence of russia's aggression but also that some of the the minerals are in this area not all of them by far and if you look at the history of the donbass you can see that this was a place in the time of the late russian empire so the end of the 19th century the beginning of the early 20th century that was deemed by the Tsarist regime essential to Russian industrialization. And the strategy was actually to entice foreign investors to come.
So if you look at Donetsk, the city of Donetsk, I mean, that is essentially a town that was founded by a Welsh coal miner, a Welsh miner owner.
called john hughes i think his name was that was some version of his name was the original name like for the the town so there is a history here of foreign capital in this case actually settlement in some sense to develop the resources of the donbass when it was part of the russian empire and it is striking that putin has never had a problem really with the oil and gas majors investing in russia now
He's wanted to control what they do. It's not like there was certainly some shift in terms of how... much freedom that they had from the yeltsin era to the putin era but he was encouraging their presence particularly in those sectors of the oil and gas that were technologically hard offshore and the arctic in particular and if you then go back to the the period when ukraine under yanukovych was pushing for the western oil and gas majors to to come in then
putin was following pretty much the same approach in terms of wanting more investment capital from the majors particularly in relation to the arctic so in august of land 11 then exxon mill built announced a strategic cooperation agreement with rosneff that's the russian state-owned oil company that covered all of the arctic the black sea and shale in siberia it was supposedly going to be a 15-year partnership and
By 2014, that ExxonMobil with Rosnefer discovered a very large oil and gas field in the Kara Sea in the Arctic. This was so important to ExxonMobil that one oil analyst said about it, Russia was going... to be Exxon's next mega area and the list of mega areas in the world is very short. And the Crimea annexation by Putin was then a complete turning point in this because the sanctions forced Exxon Mobil to withdraw from this. And so the developments in the Arctic have not come off.
not just not for exxamobil but for rosnevin the russian state So the incentive from Putin's point of view to get this sanction regimes off and to welcome back the oil and gas majors into Russia is pretty acute. So you can see from the Russian side how this talk of, well,
You can go and invest in Ukraine in minerals. Looks insignificant compared to telling the oil and gas majors, you can come back into Russia. So then the question becomes, well, is there actually a willingness on the American side under Trump to consider... normalization with russia either because they're you know in some sense being influenced by
The oil companies, particularly by ExxonMobil, it's got the biggest incentive to go back. I should say that ExxonMobil's assets were frozen and they've not been sold off. Putin's extended the deadline several times. I think it's now pushed into 2026 for that. Or... Because on the mineral side that the Americans come to the conclusion that actually Russia is a better long-term bet for breaking dependency upon China than Ukraine is.
I think that final point, Helen, is absolutely key, isn't it? I was reading over the weekend a book called The Rare Metals War, The Dark Side of Clean Energy and Digital Technologies by a Frenchman, Guillaume Petron, which was absolutely fascinating on this question. It really digs into, as I kind of mentioned a bit in the first half, the American military dependency.
on Chinese-controlled rare earths. And this began, and just to reiterate your point really from the beginning, this is a much bigger story than some kind of row between... President Zelensky and President Trump. This is just a longer term strategy from Ukraine and part of a much longer term strategy from the United States to try and wean itself off essentially from its own Chinese dependency.
sets out how you can trace this story back to the presidency of bill clinton actually when the united states first began selling off some of its key battery factories that would be necessary for its defense industry and they were set up they were bought out by the chinese and then recreated in china and this was part of a wider package that was then sold at the time as being beneficial to the united states in the long run but it meant that the defense industry in particular became dependent
on china but it also allowed american companies to export some of its production to china in commercially so it was sold as a great win but by the time it starts being wound back under the first trump presidency That then, they start to root.
to understand the scale of their dependence and they start winding that back but i think you know you mentioned the donbass helen as you were talking it reminded me that fiona hill remember the british woman who testified against trump in the first impeachment presidency
over this question of ukraine during the first term she actually wrote her dissertation i think it was on the connections between the donbass the northeast of england and the midwest and it was to do with this very reason these were mining areas were once considered bastions of left-wing political dominance had moved all had moved right because they had
become so economically depressed. And you see how all of this seems remarkably connected to me that you have this kind of a de-industrialization in these places and you have a dependence on China.
And then what you have then is an attempt to create something new globally. Effectively, it seems to me that we're kind of... bifurcating the global economy or trying to between the united states and china and a lot of the ripples that we're seeing i mean obviously we're seeing a lot more than ripples in in ukraine but it is to do with how then they fit into this different world and to your point about Russia, it seems absolutely central.
where Russia is going to fall into that new reality in the world. And just to stress your point, I think that the potential of Russia in this new great game between the United States... and china when they had their peace talks the the opening peace talks in riyadh between the russians and the americans the ukraine war was actually a kind of secondary issue
to the normalization of the relations. It wasn't the sort of first issue on the agenda after which you could move on to Russian normalization. It was actually a kind of subset of the wider discussion, which I think gives you the sense of what is really going on here. There's loads there Tom. I mean I think that if we sort of try and unpack some aspects of it you could think about the first Trump administration as a thwarted attempt.
normalisation with Russia. That is what Trump seemed to want to do. If we look at then some of his actions, including actually sending more lethal armaments to Ukraine and more US troops into Poland, all that commitment to Poland, it doesn't quite look... like that but i think there is one thing that is significant and is worth thinking about in terms of understanding where he might be now and why and that is that the person whom he
First appointed as Secretary of State was Rex Tillerson, who was the CAO of ExxonMobil, the biggest losers by far of those sanctions on... that the Obama administration put on developing new projects because they affected all of its commitments in the Arctic and Siberian shale. So if you say that actually...
that the oil companies are not quite queuing up, but have got some interest in getting back into Russia. This is where they think profits lie and that they think the Arctic is a big opportunity. And the Russians know. that the Russian companies are not capable of doing things by themselves, that the Chinese do not have the same capabilities, particularly in relation to shale, as the Western companies, particularly the American companies.
This kind of adds up from Russia's perspective because it's hydrocarbons that are central to Russia's ability to project geopolitical power. So if the Arctic is where it needs to be next, then it needs the Western companies, the American companies. in particular. And then if you think there's American, the influence of those companies on White House decision making, you can kind of see how all that fits together. The counter argument.
to that would be that actually it's significantly more complicated and the fact that Tillerson in the end was like booted out and there wasn't actually a reset on Russia during the first term. I think the next thing though we should think about is the general shift that Trump brings in the American approach to energy. Because at least in principle, the Biden administration was committed to the idea...
that oil and gas consumption was coming down in the medium term. And particularly where oil was concerned, that electrification was going to replace high consumption of... oil in transportation we know that trump has got no interest in the energy transition in some sense then it's a reset to drill baby drill and if that's the case then the people in the white house are going to be thinking about well what are the
specs for oil in 10 years time not right now because the u.s shale oil boom means there isn't really an oil problem albeit that trump thinks the price is still too high but
But what happens, say, by the middle of the 2030s? Is there then a sense that actually that is when the world or the world economy will need expanded Russian oil production? So in that sense, and I think I've said this before, If the Biden administration bet was, well, we can get electrification done before the shale oil boom ends. and you take the bet on electrification out of it, then you already start worrying about like what the oil future in 10 years time post US.
shale is and then you kind of have a rationale for thinking well russia is the hydrocarbon player here that matters and that is probably more important than the mineral deal i think though that the counter to all this is though that once Putin had made the moves in which he did in relation to Ukraine and indeed grabbed resource rich territory from Ukraine that Russia stops being a geopolitical
player if you like in the energy world and when the resource extraction world that can be trusted because that was the thing that russia offered in fact you could say the soviet union offered to european states all the way back to the 1970s that actually whatever the state of relations between the European states and the Soviet Union over any particular issue that the gas and the oil kept.
flowing and again that proved true in the period up to the annexation of crimea and well you could say actually all the way through till 2022 june 2022 when putin cut off their supply through the nordstrom pipelines but once Russia can't be seen as trustworthy in these matters, then...
the geopolitics of this and what you do in relation to Russia becomes that much more complicated. Well, I guess, what is the counter argument to that, that from China's perspective, Russia can still be... trusted and i guess just running it through in a sense the importance of normalization with the united states becomes that much more important because if it can't be trusted with europe the way that it returns to
kind of global top table is through this normalization deal with Trump. So in some senses, maybe this plays into what quite a few analysts have been saying, that Trump has more cards here in his relations with Russia.
that he seems to be willing to play, that the importance of getting this deal for Putin is really quite significant. He needs it. I think if you look at... the energy sector in Russia and you look at the hits that have been taken by this war both in terms of being able to supply sell gas to Europeans via pipelines and you look
at the arctic to liquefied natural gas port where the exports have pretty much dried up since last autumn i don't think there's any doubt that russia regardless of the other problems militarily that's had has taken hits that putin would like to come to an end and that it's not been in Russia's interest for the Western oil majors to pull out of Russia. And if he could get a reset on that without having to pay too high a price for it in his mind.
I'm sure that's absolutely what he would want. I mean, Russia needs new oil and gas fields. And that means the Arctic. And I think that the interesting thing about the Arctic isn't we've... obviously talked about the the the arctic several times before as well as doing that episode is that it is the place now i think where there's u.s russia china competition
comes out quite directly and systematically because China wants to be an Arctic power, but it isn't actually in a geographical sense an Arctic power. Its way to that is through Russia. And that's where Russia does hold some cards.
I mean, I think it's pretty fanciful to think that Trump can bring about in supposing that he wanted to a China-Russia split. There's far too much commonality of interest as well. But he may... be able to or any american president may be able to divide china from russia over some particular issues and i think the arctic would be
near the top. Or ideally to get Russia into some kind of neutral place, I guess. I think that's too hard because Russia, in terms of its export of energy, is now more dependent upon China than it was before. In order for that... in some sense, to be undone, then the Americans would have to concede the Russians going back to selling pipeline gas to European countries, which is absolutely not in the interest of the...
american shale companies who've been making big profits by selling liquefied natural gas to europeans and in that sense i think that there is a there's quite a conflict if we're thinking about this in general like resource terms between Trump's desire, which has been there, absolutely there from the start, to push the interests of the American liquefied natural gas exporters and the desire for normalisation with Russia. Those two things are in conflict with each other.
The other thing that strikes me, Helen, about this, because you can evidently see Trump quite clearly in terms of the representative of American... corporate interests, you know, not just the oil and gas companies, but also, you know, the tech companies and how he and Vice President Vance have treated European counterparts when it comes to American tech companies. I mean, that's very high up the agenda. And it does strike me.
though that if they pursue this attempt at normalization with Russia in a way the trust that the Europeans have in the United States just naturally diminishes. And that is a cost to the Americans in terms of their geopolitical position as well. Now, it might be that they've calculated that Europe is just too fundamentally weak to do anything about it, that they just have to accept their kind of weak position and they can be bullied into taking your American LNG and changing the regulations.
on tech and all the rest. That is perhaps the calculation that they have made. But you're clearly seeing a reaction from China towards Europe as well. If people are talking about this kind of reverse Nixon that... Donald Trump is trying to pull off by drawing Russia away from China, that in fact it might be the Chinese who pulled the reverse Nixon by pulling the Europeans away from the United States by essentially saying to them that you can no longer trust them.
And you clearly need better trading relations with us on all of these key issues. If you're going to become an independent actor in the world, you're going to have access to rare earths as much as the Americans are going to have. And we control rare earths in the world. And I think this sort of bumps against what seems to me to be
at the heart of a lot of this, not just the struggle for supremacy between the United States and China, but also this net zero question. Because if the ambition is to reach net zero by mid-century, And that's when the importance of oil and gas is going to start to diminish. And as you say, there might be this period which the importance of our reliance on the Russians will still be there in, when did you say, sort of 10 or 15 years' time?
then the idea at least is that we're going to start reducing that dependence on oil and gas. But the dependence then shifts, as I understand it, towards rare earths. I mean, I was reading over the weekend. that to meet the need for electric vehicle batteries alone by 2035 400 new mines will need to be built around the world. 97 for natural graphite, 74 for lithium, which I think is important in Ukraine, 72 for nickel. And so how do we understand that there? But the thing I think, Tom, is that...
there is a significant, a very significant backlash against net zero going on. There's a great deal of pessimism about the energy transition. And that isn't just even bringing into focus the opposition to the energy transition in Washington. I think that the bet being made in Washington under Trump pretty clearly, and I think it spills over into Europe in a number of different ways, is that the importance of oil and gas not going away quite. quite the contrary so long as that is the case
that the minerals question is secondary to the oil and gas question. That doesn't mean that the minerals don't matter for defence reasons that they absolutely do. But if we look at it in terms of the generation of energy and where it is coming from, I don't think that there's anybody who... thinking that net zero by 2000 and when i say anybody i'm meaning the capitals
Western capitals at net zero by 2050 is going to happen. And in this context then for Europe, then China is secondary question to the issue of Do we make ourselves energy dependent upon the United States, particularly where gas is concerned? Or do we make ourselves try to go back to being energy dependent upon Russia? China can't help with that question. And I think that that sort of gets at in terms of...
The way that some people have been framing what Trump's been doing around Nixon just goes to show actually how far the world has changed in this respect. And that sort of narrative about what Nixon did kind of... misses the fact that the China-Soviet split had happened more than a decade, really, before Nixon, or at least it begun more than around a decade before Nixon came to power.
this question of the american dependency upon resources for one or other of these places wasn't really coming into question and to the extent that it was then Actually, what Nixon wanted was détente with Russia, in part because he saw a future in which Russia and the United States could cooperate over energy matters. And in that sense, it wasn't like...
oh, we're going to go soft on China and hard on Russia. It was actually, we're going to have detente with Russia as part of this move in the 1970s. And partly that was because of Russia's energy significance. And that's the bit of the world that hasn't changed in that. What changed it was in a way what's gone on in the last few years was the attempt to break European in particular dependency.
upon Russian resources the Americans have in relation to enriched uranium. And in that sense, what has happened is that attempt to break dependency upon Russia has failed. Well, we don't actually know with Trump, just thinking of then about... Nixon, as you were setting it out, we don't really know if Trump is going to be a China hawk. That is the rhetoric in some sense, but he's also been talking about...
you know, grand bargains with President Xi. And it's not clear what his position is, I don't think, towards war with China over Taiwan. he certainly seems to be changing the position in terms of american willingness to defend japan against china so and i think that's worth watching helling over the coming weeks because it's i think that that seems to be shifting a bit from the first term
even if they're kind of the fundamental ambition to be less dependent on China remains. But again, I'm struck by this kind of, well, almost like a sense of foreboding about Europe's own weakness and all of this because you're talking about the decisions of dependency between the united states and russia on gas and and oil but i mean it's dependence across the board isn't it i mean that let's be honest about it it's a dependence on on the united states
on the most basic things like Starlink. There is, as you've mentioned before, this is something that Angela Merkel was talking about previously. It's absolutely clear now in Ukraine that this is key for microchips in Taiwan and all of that goes.
into that processing comes through back to this where Earth's question. I mean, it made me think of the novel Catch-22 when I was reading about it over the weekend. But, you know, Russia is one of the main producers of the strategic metals which go into the... manufacturer of american munitions that are then used against russians in ukraine i mean it just strikes me as completely astonishing when i you know so when you actually look at how the world functions in this regard but it does seem that
The countries that seem to have, you know, assets that they're able to trade in this new world that's coming into being, they do seem to be, as you say, Russia, China, the United States, and it's unclear at the moment how Europe is going to sort of wrestle itself out of this.
choices about what kind of dependency it has but on that very optimistic note we should probably bring this episode to an end thank you again so much for listening we really do appreciate it and if you can jump onto apple podcast or spotify and leave us a review or a rating that would be much appreciated thanks very much
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