Critical Minerals: Russia, U.S. Ready To Use Oil Cartel's Playbook
News reports indicate Russian President Vladimir Putin has proposed offering the United States critical minerals from Russian as well as Russian-occupied regions of Ukraine.
The Trump administration is pushing Ukraine to grant the US a significant share of its mineral wealth—estimated to be worth hundreds of billions of dollars—as repayment for military and economic aid provided since Russia's invasion began three years ago. Russian President Putin has responded with an unusual offer for the US to collaborate to share rare earth metals and aluminum production in Russia and Ukraine's ethnically Russian region, the Donbas, which the countries have been at war over.
Critics say Putin seeks only to undermine the Ukraine negotiations, but this could be a canny Realpolitik strategy that borrows from the foreign policy and national politics of oil. For many decades, the US has extended its security umbrella over crude oil production and trade, regardless of the country that owns the rights. The underlying message has been clear: disrupt the oil market at your peril.
It is not a perfect overlap, but it is worth noting what a surprising early olive branch from Russia this is.
Just as oil-rich nations use their vast petroleum reserves to ensure US security guarantees, Putin is dangling Russia's abundance of critical minerals—rare earths, aluminum, and more—to influence US policy. Oil has been a very successful bargaining chip for the Gulf states, and critical minerals have developed into a vital national security problem for the US.
Before the US fracking boom, oil-rich states successfully integrated into the US strategic security orbit. The US tolerated the OPEC oil cartel even as it persecuted and sanctioned the De Beers' diamond cartel; oil is essential, whereas diamonds are just lovely to have and hold. With China recently restricting exports of some minerals and declaring that China is the focus of American near-peer military concerns, Putin's calculus may be that US tech and defense dependency on a broad range of critical minerals makes his offer guaranteed to appeal.
The world will view Putin's play cynically, but it has a certain logic that could remove the incentive for war from all the belligerents and make the threat of NATO on Russia's doorstep less threatening. It could introduce a new status quo that parallels oil-rich but strategically vulnerable countries. At the same time, it could also reset global oil security dynamics by embedding Russian energy flows into Europe through a more extensive minerals extraction and trade regime.
Given how far the Gulf states have moved since the 1945 Quincy Pact between the US and Saudi Arabia, the idea should receive more attention. All the Gulf states have developed much more independence from the US, including in foreign policy alignment. Add in the US's fracking revolution that has almost eliminated its reliance on imported oil, and you have a geopolitical chessboard ready to be reset. However, it seems unlikely that Russia would tolerate the American military presence visible in all its client states. That said, the US does appear headed for a period of relative international disengagement as more nationalist and populist impulses take hold.
Putin won't be counting on a Gulf state-like alliance with the US. However, that doesn't rule out a wholesale reset for the postwar international order as we know it. Putin might be willing to forge a new era of mutual benefit that eases competitive friction, builds regional stability by giving the West a nonmilitary stake in a key region, and assures Europe that it is not on the dinner menu. Putin is banking on Trump's transactional instincts more than anything. Still, it could work if the US foreign policy establishment can overcome cynicism about Russia merely exploiting a momentary flux in American policy and if Russia can prove itself capable of a trustworthy agreement.
"if Russia can prove itself capable of a trustworthy agreement." That's rich.