Jo Biden’s trip to Saudi Arabia this month highlights the paradox of US power. The US has the economic weight to punish an adversary, but not enough to change the behavior of a determined adversary. Sanctions will shrink the Russian economy by 9% next year. But Washington needs more countries to join its camp to stop Moscow’s brutal invasion of Ukraine. Biden was forced to put war objectives above ethics when meeting Crown Prince Mohammed bin Salman, who the CIA says ordered the barbaric murder of prominent journalist Jamal Khashoggi.
The havoc the Russian war has wrought on the world’s energy markets is contributing to an economic crisis that plays into the hands of Biden’s domestic opponents. This highlights the West’s failure to address the climate emergency with a less carbon-intensive economic model. The green agenda is in danger of being derailed by skyrocketing hydrocarbon prices. This scenario could have been avoided if Western countries had accelerated their net-zero agendas by reducing energy demand – the UK’s lack of home insulation is a blatant failure – and spending on renewables to achieve energy security. Instead, the G7 this week watered down pledges to halt fossil fuel investments over fears of winter energy shortages as Moscow puts pressure on stocks.
Boycotts and bans against Russia, even if they take their toll on the global economy, will put ordinary Russians in trouble. But this did not affect Vladimir Putin. Rising crude oil prices are fueling Moscow’s war machine. A price cap on Russian oil exports could choke the money. But one concern is that China and India will buy Mr Putin’s oil at a price that continues to benefit the Kremlin. Smart technical solutions mask hard choices. Sanctions drive up energy prices for consumers unless alternative facilities are available. Right now, lowering oil prices means producing more planet-destroying energy. That requires US involvement with Saudi Arabia and the United Arab Emirates, both of which are responsible for the disastrous war in Yemen. Washington may have to chase Venezuela and Iran, countries that will pit Moscow against the west.
The US is pursuing a three-pronged strategy: increasing pressure on Russia; getting more oil into the markets to lower prices; and allowing central banks to raise interest rates to levels that look like they could trigger a recession. The latter is intended to signal to oil producers that energy prices will collapse. The painful recessions of the 1970s and early 1980s played a role in lowering oil prices after energy shocks – and contributed to the disintegration of the Soviet Union. But this took 15 years. Putin’s Russia may not be as powerful as its predecessor. It may be more fragile than the Soviet Union. But there are few signs of an impending collapse.
As the west tries to reduce its reliance on Russian hydrocarbons, there appears to be a global “gold rush” for new fossil fuel projects defended as temporary supply measures. The risk, with the US as the largest hydrocarbon producer, is that the world will get stuck in an irreversible climate catastrophe. Europe may become as dependent on American gas as it once was on Russian gas. Donald Trump proved that America could be an unreliable ally. Right-wing Supreme Court justices have curtailed Mr Biden’s power to limit harmful emissions. Meanwhile, China has: emerged as a world leader in renewable energy and the metals on which it depends. Mr Biden had wanted to get the US away from oil. But during his tenure, the industry’s market value has doubled as prices have risen. Shockingly, as the climate emergency becomes increasingly urgent, fossil fuel appears to be the linchpin on which the war in Ukraine will revolve.