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Seeking to lower U.S. fuel prices before the midterm elections, President Trump announced last month an “energy ceasefire” under which Russia and Ukraine would stop attacking each other’s energy assets, as part of a White House plan to lift U.S. sanctions and to make Russian energy exports available to US and Western markets.
Just before, President Putin had dangled and Trump had leapt at a deal to sell Russian diesel after the US lifts the sanctions, which Congress had recently expanded in response to stepped-up Russian attacks against Ukrainian infrastructure and civilians.
A real energy ceasefire might indeed be welcome. President Zelenskyy has already agreed to one applied to both sides, but Putin shows no intention to stop his attacks. On the contrary, Russia followed Trump’s ceasefire announcement by striking a power plant in Kharkiv — after 200 strikes the week before against Ukrainian electricity generation and transmission facilities. Russian attacks have been mounting since then, and as a consequence Ukraine is responding with attacks of its own.
The underlying problems are fundamental. Energy analysts agree that Russian fuel supplies, even if they were to be freed from sanctions, will have minimal impact on global markets. To the contrary, the benefits would mostly accrue to Russia, whose economy is under serious and growing pressure.
That is not all. Under a potential Trump-Putin deal, a big Trump donor, joined by prominent Gulf investors and backed by the US International Development Finance Corporation, might acquire the international assets of the non-state Russian oil company LUKoil.
A second deal promoted by the Kremlin involvers a non-state Russian gas company, Novatek, supplying and - after a Gulf cutout was revealed - investing in liquefied natural gas development on Alaska’s North Slope.
In a third move, American and Russian business players, including Trump son-in-law Jared Kushner and Kremlin investment adviser Kirill Dmitriev, are discussing reviving Russia’s Nord Stream gas pipelines to Germany, while Russian attacks on Ukraine are continuing.
White House approval of one or more of these projects would lift wartime sanctions against Russia, a likely windfall to investors with close ties to Trump family members.
Trump’s utility dealmakers, Kushner and Steve Witkoff, reportedly defend the LUKoil deal as freeing up sanctioned energy supplies and reducing energy prices, augmenting U.S. global energy dominance and incentivizing the Kremlin to make peace with Ukraine. The Trump Administration could try to apply a similar logic to the Novatek or Nord Stream projects.
Three basic roadblocks stand in the way of such arguments. The first is the Kremlin’s continued determination to wage war on Ukraine, making it essential, as French and British leaders have pointed out, to agree beforehand to a real energy ceasefire.
The second is the self-dealing infecting large energy machinations with Russia, and recently with Venezuela, in which White House sanctions shifts can line the pockets of family members and supporters. Outside investors acting honestly and transparently are need to dissipate these ethical clouds.
A third roadblock is the history of Kremlin takeovers of private energy assets. The most famous example was in 2003-4, when state company Rosneft took over Russia’s then biggest oil company Yukos, and its major shareholder was jailed for over ten years. The difference here is LUKoil would be selling its foreign assets and Novatek would actually supply and invest, but through their Russian holdings the Kremlin could still exert leverage.
Behind this looms an even more ominous strategic question. Will the Russian state return to dominate European energy flows in the future?
For decades, Russian state energy company Gazprom controlled all gas flows in the former Soviet space, most such flows in Eastern Europe, and even the majority of such flows in the Western part of the continent. This control skewed the economics and the politics of Europe. The European response to Russia’s 2014 takeover of Ukrainian lands in Crimea and much of Donbas was blunted by Gazprom control of the two Nord Stream pipelines.
Europe’s determined diversification of gas supplies, at one point reinforced by the U.S., followed the closure of Nord Stream in 2022 through sanctions and sabotage. This enabled Europe’s strong support for Ukraine. Now, some American investors appear willing to undermine this support, running the risk of damaging European solidarity against Russian aggression.
Vladimir Putin is no stranger to the apocryphal Leninist saying that capitalists might be hung with the rope they themselves have sold. Washington should keep this in mind and insist on real ceasefire, transparency and strategy first, and dealmaking with the Kremlin second.
Jan H. Kalicki served as Counselor to the US Department of Commerce and White House Russia-NIS Energy and Commerce Ombudsman (1993-2000), and Counselor for International Strategy at Chevron (2001-2014), and is now Non-Resident Fellow at the Kennan Institute. The views herein are his alone.