A gambit move is expected – on the great geopolitical chessboard – and as they say in chess, in which one of the sides, most often white, sacrifices material, usually a pawn, in order to achieve strategic benefits. This move by Donald Trump towards Vladimir Putin aims to distance – relatively – Russia from the influence of China, a competing power, while at the same time offering it the opportunity for an “honest” peace in Ukraine that will secure Russia’s status as a great power (as Vladimir Putin fervently desires). This specific gambit move is based on the energy sector.
Natural gas pipelines to China
Russian Energy Minister Alexander Novak released details of the proposed Russian natural gas pipeline to China via Kazakhstan just before the start of the year. He confirmed that “this process, so to speak, is underway. The assessments, the feasibility study and the negotiations are now underway.” However, this statement should not be misinterpreted as assuming that the project is a done deal, however, as it is more of a message to the US at this point.
The ongoing differences between China and Russia over pricing for the Power of Siberia II (POS2) pipeline, which ends up with China demanding significant discounts, continue, while Russia apparently wants a higher price. This impasse in the negotiations has not yet been resolved, and while some consider the Kazakh proposal to be an agreed rerouting of POS2, this is undoubtedly a premature conclusion.
Disagreements over pricing persist, and the “process” Novak described has only just begun. It is far from being finalized and may still take some time to complete, as the precedents of the POS2 and Pakistan Stream gas pipelines show.
The former, which was previously known as the “Altai Pipeline” before the decision to reroute it through Mongolia, has been under discussion for a full decade without any agreement being reached. The same goes for the second, which was first agreed in 2015, but no progress has been made since then either.
Amid the latest discussions on the Russia-Kazakhstan-China gas pipeline, the last direct pipeline carrying Russian gas to Europe has just been closed after Ukraine decided to end its five-year transit agreement.
Russia can still indirectly export gas to Europe via TurkStream, and Europe can always compensate for this long-anticipated loss of 5% of its total gas imports through more Russian LNG, but it is expected that the EU will continue to diversify its supplies from Russia under American pressure.
Lost Revenue from Russia
In this case, Russia’s lost fiscal revenue from energy exports to Europe can realistically only be replaced by China, but Russia remains reluctant to agree to the baseline prices that China is reportedly demanding.
The thought processes of decision-makers can only be speculated upon, given the opacity and sensitivity of these talks, but this may reasonably be due to the expectation that greater US restraint of China could force Beijing to agree to better prices over time.
Another possibility, which is not mutually exclusive at least at this point, is that they may also be holding out hope that some of their European exports could one day be restored, assuming that the infrastructure is still there, but their partners have made a political decision under pressure from the US to stop imports.
The best-case scenario would therefore be for China to agree to prices closer to market price, while the EU resumes some of its Russian gas imports after the end of Russia’s invasion of Ukraine.
The reality is that Russia is unlikely to have it all, and there is no guarantee that either of its two main gas partners – the EU and China – will behave as expected even in the long term. The EU will not resume gas imports via pipelines without US approval, while China is known to operate on a much longer-term basis, so it may delay concluding a deal indefinitely until Russia finally accepts its basic price ambitions. This puts Russia in a very difficult position.
Russia’s Dangerous Dependence on China
Unless something changes in the energy diplomacy landscape, Russia may well be forced by the unfortunate circumstances in which it finds itself to agree to China’s reported offer to sell it natural gas at domestic prices, which could fuel the rise of China’s superpower status while placing Russia in a position of greater dependence.
This may be preferable to Russian decision-makers holding onto these reserves indefinitely without any economic benefit from them, as sanctions begin to create fiscal and monetary challenges.
From the US perspective, it is worse for Russia to fuel China’s rise as a superpower and enter into a relationship of increasing dependence with it, which China could exploit to procure other resources at equally cheap prices, than to allow a partial resumption of Russian exports to Europe.
At the same time, such moves could only be approved after the war in Ukraine had ended, and this would be politically impossible in any case, unless the US could portray the outcome as a victory over Russia.
Similarly, Russia could not agree to this deal unless it was able to call the outcome a victory, especially if the informal terms include a commitment not to build any new pipelines to China in exchange for the aforementioned resumption of gas flows to Europe and overcompensation for lost revenues. Therein lies the need for creative energy diplomacy.
Mutual Compromises
The gist is that the US and Russia could agree to a series of mutual compromises culminating in the partial restoration of an energy bridge between Russia and the West in order to deprive China of its decades-long anticipated access to extremely cheap Russian resources.
No one should assume that everything proposed below will be enacted, but these suggestions could help move their talks forward.
US Compromises
From the US side, its possible compromises could take the form of:
- Ukraine finally holds elections as part of a US-backed “gradual transition” of power against the Zelensky regime, which is the top obstacle to a lasting peace, and then legitimizes the following two agreements.
- Ukraine restores its constitutional neutrality in order to rule out NATO membership and thus resolve the core security problem that prompted Russia’s invasion.
- Ukraine demilitarizes everything east of the Dnieper in what has for centuries been Russia’s traditional “sphere of influence” (the west was traditionally under Polish influence).
- The US terminates its bilateral security agreement with Ukraine in order to assure Russia that any cessation of hostilities would not be a ploy to rearm Ukraine and reignite the conflict at a later stage.
- The US agrees that no Western peacekeeping mission will be deployed along a security zone between Russia and Ukraine east of the Dnieper (all parties may agree to an entirely non-Western peacekeeping mission).
- The US also agrees that NATO Article 5 will not apply to any Western country whose uniformed troops in Ukraine, which would be deployed unilaterally there and in this scenario, would be attacked by Russia.
- The US approves the partial resumption of EU imports from Russian gas pipelines, in order to stimulate the bloc’s ailing economy through the influx of low-cost fuel (but at a higher price than what China demands).
- The US and EU return some of Russia’s seized assets as “compensation” for maintaining Western control of the European section of its pipelines.
- The US lifts its sanctions on Russia-EU energy trade, including Russia’s use of SWIFT, and expands them to include more countries as a reward for maintaining peace with Ukraine.
- The US waiver of sanctions on Russia’s Arctic LNG 2 project for itself, the EU, India and Japan, so that they can replace lost Chinese investments and ensure that they receive this gas instead of China.
- The US is repeating its previous policy on a case-by-case basis to disgorge and eventually replace all Chinese investments in Russian energy projects to preclude the possibility of more future exports to China
- The US will rely on the trust it hopes to regain with Russia through these compromises to restart frozen strategic arms control talks on a priority basis before New START expires in 2026.
Compromises on the Russian side
On the Russian side, its own compromises could take the form of:
- Agreeing only to the partial demilitarization and denazification of Ukraine west of the Dnieper (ideally with the first being influenced by the Istanbul Agreement, while the second can remain formal).
- Limiting control of the territories it claims in Ukraine to only Crimea and those four regions that voted to join Russia in the September 2022 referendums.
- It tacitly accepts that it will not be able to claim control of parts of the Kherson and Zaporozhye regions west of the Dnieper, but nevertheless continues to officially maintain a rhetoric regarding sovereign rights.
- Agreeing to limited military restrictions as a confidence-building measure to advance the rest of the complex negotiation process and then complying with those terms.
- Informally agreeing to prioritize the deployment of its Arctic and Pacific fleets over its Baltic and Black Sea fleets in a tacit ceding of influence to NATO that soberly reflects current military realities.
- Formally acknowledging the loss of control over the EU and Ukrainian parts of its pipeline infrastructure (ideally in exchange for “compensation,” including the return of some of its seized assets).
- Tacit acceptance that its remaining seized assets are lost, but possibly agreeing that they can be invested in rebuilding Ukraine and/or Syria or given to the UN, perhaps to finance a new African Project.
- Unofficial agreement not to build new pipelines to China or expand energy exports to it, since energy investments from and exports to others that have been lifted due to sanctions have more than offset these lost revenues.
- Unofficial preference for investments by other countries (America, Europe, India, Japan, South Korea) in the resource-rich regions of the Arctic and Far East to the exclusion of China.
- Doing the same with regard to preferential technology imports from these countries (and Taiwan as well, which was the main source of high-precision engineering equipment a year ago).
- Tacit acceptance that these sanctions exemptions can be automatically revoked if Russia rejects the Ukrainian or Chinese terms of this proposed major deal.
- Good faith negotiations with the US on strategic arms control, which could eventually include restoring limits on intermediate-range missiles in Europe leading to the withdrawal of the mighty Oreshniks.
Because as politically difficult as these compromises are for either side, the US could see them as having prevented Russia from controlling all of Ukraine and thus preventing it from spreading to the Polish border, while Russia could see them as having prevented Ukraine from joining NATO and thus preventing that bloc from planting its boots on its exposed western border.
In addition, Russia would relieve energy pressure on Europe, while the US Navy would control the bulk of China’s energy imports.
The “key” to this is for the US to offer Russia a decent deal in Ukraine with lucrative, sanctions-free development opportunities in energy and technology, which would prompt Russia to informally agree to deny China long-term access to extremely cheap resources to fuel its rise as a superpower.
This is a big deal Trump must not lose, and the world will know he has lost it if Russia makes progress on new pipelines to China, the construction of which could follow a tactic of “escalation for de-escalation.”
