July 12, 2017

The Conflict of Economic Interests of the USA and Russia as a Factor of the New Level Confrontation. Consequences for Ukraine

Recently, the confrontation between the United States and Russia has reached a qualitatively new level, which affects the situation around Ukraine and its interests. The reason for this was the tightening of the US sanctions policy towards Russia, which threatens with more tangible losses than the already existing restrictions, both to the Russian Federation and directly to the Russian leadership.

First of all, the Senate (Upper House) of the US Congress adopted on 15 June 2017 a draft law on new sanctions against Russia because of its actions in Ukraine. For example, the maximum loan repayment period for Russian banks subject to sanctions is reduced from 30 to 14 days, and for oil and gas companies — from 90 to 30 days. The USA is especially serious about the Russian project “Nord Stream-2”, the implementation of which can be disastrous for both the energy security of the EU, and for the gas market in Central and Eastern Europe and energy reforms in Ukraine.

The document also contains a provision on the state control over the activities of Russian businesses in the United States, including disclosing Russian businessmen's ties with V. Putin and his environment, as well as with persons who are already under US sanctions. The document is issued in the form of an amendment to the draft new sanctions against Iran. In fact, this means that Russia is officially equated with the countries-terrorists and pariah-states along with Iran, Syria and North Korea.

The principled position of Washington, which is strengthening pressure on Russia, is also confirmed by the US Treasury's decision of June 20, 2017, to add another 38 private companies and organizations to the sanctions list. For example, Deputy Minister of Economic Development D. Nazarov, private military company “Wagner”, subsidiaries of “Transneft” — “Chernomortransneft” and “Gidrotruboprovod”, as well as the non-state pension fund “Transneft”, are now under the sanctions.

According to experts, these sanctions will significantly limit Russia's ability to implement its strategically important energy projects, including not only “Nord Stream-2”, but also the “Turkish Stream” and even the “Power of Siberia”. Significant losses will be incurred in other sectors of the Russian economy, including shipbuilding, rail transport and mining.


In response, the leadership of the Russian Federation refused to hold a new round of bilateral consultations with the USA at the level of Deputy Foreign Ministers on the issues of establishing an American-Russian dialogue. The dialogue was supposed to determine possible so-called points of contact between the United States and Russia on key issues in their relations. Thus, the resumption of cooperation between the US and Russia is in fact postponed.


It should be noted that the US political forces demonstrate the invariability of their policy of restraining Russia and immediately react to its actions that are contrary to American principles, including against Ukraine, Syria and Iran. At the same time, today's disagreements between the USA and Russia have already moved beyond the pure political plane and spill over into the economic sphere.

One of the reasons for this is the rapid development of the US energy sector, which accelerated with the election of D. Trump as President of the United States of America. In particular, over the past decade, gas production in the USA has grown 1.5 times — from 500 billion to 750 billion cubic meters per year. By this indicator, the USA has already bypassed Russia. The United State's share in the world gas production is 21 %, while the Russian Federation's — 16 %.

Besides, the resources and technologies available in the USA make it possible to increase oil and gas production, which allows them to move in one of the economic directions determined by D. Trump's policy of turning the US into a “great energy power” — one of the world's leading exporters of energy carriers. It was to this that the efforts of D. Trump were directed immediately after he became President. In particular, he canceled B. Obama's decree on limiting the production of minerals on the offshore and oceanic shelves of the United States, initiated the withdrawal of the United States of America from the Paris climate agreement, and also allowed to go on developing energy resources in Alaska.

As a consequence, by 2020 the USA plans to export gas in full. As part of the implementation of such plans, the United States has created infrastructure for production and transportation of liquefied natural gas (LNG). With the assistance of the United States of America, terminals for LNG reception have been built in a number of European countries, which enabled the USA to begin exporting LNG to the European region. Since 2016, gas has been supplied to Spain, Portugal, Italy and Turkey, and since June 2017 — to the Netherlands and Poland. Since August this year, American liquefied gas is planned to be supplied to Lithuania.

This means that the USA and Russia are competing in the issue of gas supplies to Europe, and their confrontation has reached a qualitatively new level. So, while their political differences are somewhat demonstrative, the aggravation of competition between them in the energy sphere does affect their real financial and economic interests. According to the US Treasury, the appearance of US gas in the European market will increase the revenues of the federal budget in the form of taxes from gas exporters by about 120 billion US dollars. In turn, the revenues of US gas exporters will increase by 110 billion US dollars. Given such amounts of funds, today a “reset” of relations between the USA and Russia (as it happened in 2009 after B. Obama's being elected President of the United States of America) is virtually impossible.


Within the framework of these processes, it is the Ukrainian issue that became one of the main causes for the USA, which decided to weaken Russia's positions in the European energy market and undermine the entire energy sector of the Russian economy.

In this regard, indicative is the fact that the Upper House of the US Congress adopted a new package of sanctions against Russia because of its actions against Ukraine immediately after the conclusion of the agreement between the Russian company Nord Stream 2 AG and the European companies ENGIE, OMV, Royal Dutch Shell, Uniper and Wintershall on investing 5 billion US dollars into the “Nord Stream-2” project. That is, such investment has become problematic.

In this situation, the role of Ukraine for the United States, as well as for the whole system of international relations, becomes more significant. This was demonstrated by the position of US President D. Trump during his meeting with the President of Ukraine P. Poroshenko on 20 June 2017, as a result of which V. Putin defiantly declined the invitation to visit the United States. At this, despite Russia's annoying and humiliating requests, D. Trump only agreed to a formal meeting with the president of the Russian Federation on the sidelines of the G20 summit in Hamburg on 7–8 July, thereby demonstrating the priorities of US policy that do not foresee any compromises with Russia over Ukraine, including at the expense of Syria.

A confirmation of this was the destruction by the US Air Force of the Syrian government forces' Su-22 aircraft on 19 June 2017, — in fact during the meeting of the Presidents of the United States and Ukraine. Despite Moscow's sharply negative reaction, including its threats to use anti-aircraft weapons against American aviation in Syria, June 20, 2017, an unmanned aircraft of the Syrian government troops was also shot down. At the same time, the USA warned Syria about possible new missile strikes on its military targets in case of using chemical weapons against the opposition.

Besides, June 24, 2017, the US media reported that the US Congress was considering the possibility of the United States' withdrawing from the Intermediate-Range Nuclear Forces Treaty in response to Russia's deploying “Iskander-M” missile systems in Kaliningrad region of the RF. That is, the USA has demonstrated that it is ready to react to all manifestations of hostile actions on the part of the Russian Federation.


Such facts demonstrate that the United State's support to Ukraine will be more resolute and the USA will more actively participate in settling the situation in the Donbas, will provide Ukraine with lethal defensive weapons, and will help solve Ukrainian problems in the economic and energy spheres. In particular, of great importance is the decision to supply American coal to Ukraine, as it will compensate for the loss of coal mines in the occupied territories, and to stop importing coal from Russia. In the long term, Ukraine will be able to switch to full use of American nuclear fuel as well.

According to the US President D. Trump's statement of June 30, 2017, the United States is ready to supply energy carriers to Ukraine in the needed volumes. At this, he directly linked this issue with assisting Ukraine in countering Russian aggression. In fact, the USA is gradually ousting Russia from the Ukrainian energy market, which is another fact of their competition.


Of course, the US will continue to increase its pressure on Russia, including on Russian President V. Putin. It is not ruled out that the United States will support the Russian opposition, eventually leading it to the peak of maximum activity on the eve of the presidential elections in the Russian Federation in March 2018. It is then that massive social unrest could occur in Russia, which would destabilize the situation in the country and undermine the positions of the current Russian government, while inflicting a powerful blow to Putin's reputation by revealing evidence of the Kremlin's involvement in the crash of the Polish President L. Kaczynski's Tu-154 aircraft in April 2010 in the area of Russian Smolensk, as well as the destruction of Boeing-777 Flight MH17 of “Malaysian Airlines” over the zone of conflict in the Donbas in July 2014.

Of course, Mr. Putin will be “elected” President of the Russian Federation under any scenario. At the same time, the USA and the EU can use the above-mentioned circumstances as an excuse for not recognizing the results of the presidential elections, or at least to demonstrate doubts about their legitimacy. In turn, this would make it clear to the Russian leadership that its hopes for improving the West's relations with Russia are rather illusive, and therefore it is useless to restore favorable conditions for their business while Putin is in power. A significant factor in undermining the unity of V. Putin and his environment will also be the entry into force of the above-mentioned law on strengthening sanctions against Russia, passed by the Senate of the US Congress on 15 June, (in terms of disclosing Russian businessmen's ties with V. Putin and his closest circle).


In general, the policy of the United States to increase pressure on Russia is also supported by the leadership of the European Union. For example, on 28 June 2017, the EU, in fact, without objections (unlike last year) extended economic sanctions against Russia until January 31, 2018 for provoking the conflict in the Donbas. The principled position of the leading EU countries on the unacceptability of Russia's actions against Ukraine was also demonstrated by the newly elected President of France E. Macron during his meeting with the President of Ukraine P. Poroshenko on 26 June 2017. At this, like D. Trump, E. Macron directly opposed the meeting with the President of Ukraine to his meeting with V. Putin on 29 May, 2017.


True, the aggravation of relations between Russia and the West will have some negative consequences for Ukraine. For example, considering the key nature of the Ukrainian issue as an instrument of US and EU's influence on the Russian Federation, Russians will try to speed up the process of getting out of the current situation around Ukraine in their favor. In this regard, Russia could intensify its actions against Ukraine in all spheres, first of all, it will try to change the Ukrainian leadership, provoking a political crisis.

Extremely dangerous elements of such actions of Russia may also be another aggravation of the armed conflict in the Donbas and resonant terrorist actions on Ukrainian territory. Thus, Russia will try to put pressure on the leadership of Ukraine and our Western allies, and to cause panic in the Ukrainian society.

A separate goal of such activities may be Russia's desire to demonstrate its negative perception of Ukraine's rapprochement with the West. After all, the previous aggravation of the situation in the Donbas was observed in the first half of June. Immediately after the EU leadership had simplified the visa regime with Ukraine, and the Dutch parliament had ratified the Association Agreement of Ukraine with the European Union. A similar trend has been observed recently after the meetings of Presidents D. Trump and E. Macron with Ukrainian President P. Poroshenko. At this, another aggravation of the situation in the Donbas has been accompanied by acts of terrorism against representatives of the Ukrainian special services.

The confrontation between Russia and the West leads to a general increase in the tension of the situation around Ukraine, including in the military sphere. First of all, this concerns the growth of military activity of the Russian Federation and the United States and NATO in the Black Sea and Baltic regions as part of building up the groups of their armed forces, activation of maneuvers and exercises, the flights of strategic aviation, and mutual provocations. In particular, since June 2017, daily incidents are registered in the form of dangerous rapprochement between Russian and NATO aircrafts. Besides, for the first time since the end of the Cold War, the US and Russian strategic aircrafts are flying over the Baltic region. All this can provoke armed incidents with unpredictable consequences.

It should be noted that a separate problem for Ukraine is the rather ambiguous perception by the leading EU countries of the US sanctions against Russia concerning Russian gas supply projects to Europe. The reaction of Germany and Austria to the decision of the Upper House of the US Congress of June 15, 2017 was negative. We should not rule out that such a situation can intensify the contradictions in the political and economic circles of the EU countries on their attitude to Russia's armed aggression against Ukraine, as well as undermine the unity of the European Union in the policy of containing Putin's regime.


In general, despite the aforementioned problems, it can be argued that the USA, paying increased attention to Ukraine, demonstrates the immutability of its policy towards Russia. With the course of time, this policy will only be strengthened, which fully meets our national interests.