There is no explanation needed for the geopolitical focus being on Russia, Ukraine and the United States this week. Without a doubt, the most significant event of the past two weeks was the spectacular, and very public, falling out between Ukrainian president Volodymyr Zelenskyy and US president Donald Trump.
In my view, the entire series of events was staged to show Zelenskyy in a poor light, holding up the resolution of the Ukraine crisis and being ungrateful for the support given to Ukraine by the US and others. From Zelenskyy’s arrival in his trademark fatigues (which annoyed some Republicans, accustomed to visitors – whose country isn’t at war – wearing formal suits) through the Oval Office shouting match and a visibly shocked ambassador from Ukraine to a fairly rapid departure from the White House grounds, the aim of the meeting was to demonstrate that Zelenskyy was the main obstacle to peace in Ukraine rather than the president of a country at war who was seen as its legitimate leader by a large majority of the country’s citizens. In answer to VP JD Vance repeatedly claiming that Zelenskyy had not once said thank you to the US for all the military and financial support it had provided: he had…33 times according to the fact-checkers.
However, whatever the individual details of the grievances aired at the meeting, there is no question that the world has changed. The key issue is whether the US is still an ally of the rest of NATO given that Trump seems fixated on doing a deal to end the war in Ukraine and is pushing hard to get that done – so much so that European NATO members are concerned that trump will simply give in to Putin.
Of course, we should remember that the war is only in Ukraine because Russian troops invaded the country – most recently in February 2022.
There were a number of confrontations which took place over the week that was. The Munich Security Conference was underway just before the day of the ill-fated Oval Office meeting and the German attendees at the Munich event were upset when Vice President JD Vance described Germany as a threat to democratic values. That wasn’t the discussion that people had expected in Munich. Trump called Zelenskyy a “dictator” when the US-Russia talks were revealed and then halted all military aid to Ukraine while German Chancellor-to-be Merz has said he wants to end the dependency on the US (previously known as the “the indispensable ally”) and which would be music to Donald Trump’s ears if only the reason wasn’t that the Germans no longer trusted the US to show up when needed – an entirely different rationale. Even Pete Hegseth, the Secretary of Defense got in on the act – warning the Europeans that they should not presume that the US would be in Europe forever (in case they had somehow missed the flashing red signals). Without the US and its logistics capability, NATO will find it hard to conclusively defend Europe given that the heavy-lift capacity, satellites and surveillance capability – and many other aspects of warfighting are US-sourced – not to mention their 90,000 troops.
US foreign policy I think we can now characterize as transactional – witness the discussion over Ukraine’s mineral and rare earth deposits where it looks as if Trump wants half of them for the US in return for all the aid the US has given to Ukraine. It’s certainly true that Ukraine could not have survived without American and European aid, although enlightened self-interest, memories of 1938’s Munich appeasement and the end-of-Cold War agreements that removed nuclear missiles from Ukrainian territory ought to justify supporting Ukraine in its fight to avoid being absorbed into Russia and to remain an independent country.
Trump now prevents people in his administration from saying that Russia invaded Ukraine, it seems that facts on the ground in this new world can now be denied with impunity. Trump himself reached out to Vladimir Putin and held a 90-minute phone conversation with him to discuss bringing the Ukraine war to an end. While that is a laudable aim – and there was online speculation that Trump was hoping for a Nobel Peace Prize (to be fair, he would deserve one if he did manage to resolve the Russia-Ukraine conflict. A mid-month FT headline read “Allies fear trump will capitulate to Putin”. A prescient headline, so they should, it looks as if that capitulation is now a fait accompli.
It looks as if the discussion about Ukraine is being carried out in an unorthodox way. During Trump’s call with Putin, the former agreed that NATO membership for Ukraine was off the agenda. Putin and Trump also agreed that there was no question but that the territory seized by Russia should remain with Russia and should not be returned to Kyiv’s control. Donald Trump is, I read (on the cover of his books), a master negotiator. I wonder then why he has surrendered two of his best cards to Putin without being asked – Ukraine is not permitted to join NATO and the occupied territory of Ukraine will remain with Russia rather than being returned to Ukrainian ownership. It is setting the mission up for failure in my view.
The most recent news is elements of European NATO working to demonstrate that they can hold the line against Russia and the alliance’s political leaders alternately flattering and pleading with Trump to maintain the US’ commitment to the alliance. At the time of writing, things are not clear in this regard. Unlike the Zelenskyy meeting, Macron and Starmer are taking the lead in attempting to persuade the US to stay in NATO and appear to have been well-received by Trump. Even if they are successful, first Trump is right that Europe has sheltered under the US’ nuclear umbrella without paying the full costs for too long and secondly Trump has the ability to hold NATO’s feet to the fire while it is a member.
Key among European NATO’s hopes are that the US security guarantee will be maintained, not just in Ukraine but also across Europe. That is an explicit hope for the Ukraine theatre but also an implicit request from Europe to the US.
The speed of change is extraordinary. Organizations that we all grew up with as shorthand for a united Europe have been rendered potentially powerless – NATO, only recently lauded as the world’s most successful military alliance, is in its 75th year but may shortly have a lot of empty desks at its Mons headquarters if it loses its most valuable member.
Without question this week has belonged to Donald Trump and the need to understand him.
For eighty years we have all lived in an extraordinarily peaceful age: economic growth, no overt global conflicts, the growth of international institutions, rising prosperity and the ethos of a welfare state. This halcyon period may be approaching its end.
After the events of this week, the nine questions that trouble me are:
- Can NATO be saved to provide the security architecture we need?
- Is the UK’s totemic Trident “independent deterrent” actually independent?
- Can we trust the United States to stand by Europe ever again?
- Is Russia a challenger or a partner for Europe?
- German leadership of Europe – a good or bad thing?
- Can Europe support Ukraine with sufficient resources to make a difference?
- Can and will Europeans cut the welfare state to pay for defence?
- Where does China fit into this new world?
- Will tariffs – rather than engagement – be the USP for Trump or Xi?
This article has been approved by Tideway Investment Partners LLP; however, the views and opinions expressed in the article are not necessarily the views and opinions of Tideway.
The content of this document is for information purposes only and should not be construed as financial advice. We always recommend that you seek professional regulated financial advice before investing.
About the Author
Stephen O’Sullivan was an ‘anchor’ client at the founding of Tideway and has been a client of James Baxter since 1999.
Stephen studied economics at university and then joined the oil industry – working for BP in their refining and marketing business as an oil trader and then with Total in the corporate planning team for their upstream business. In 1989 he joined Coopers & Lybrand’s strategy practice for oil and gas and, with the end of the Cold War, he worked extensively as a consultant across the oil and gas industry in Eastern Europe, Russia and the other post-Soviet states as well as China, the Middle East and Southern Africa.
In 1995 he joined a start-up investment bank, MC Securities, specialising in Eastern Europe and Russia where he was the Head of Research and the Head of Oil & Gas Research. His team was ranked the #1 oil & gas research team across EMEA and the #1 overall research team for Emerging Europe and Russia for the next three years. They sold the bank to JP Morgan in 1998 and Stephen relocated to Moscow to become Head of Research and a partner in UFG, the leading independent investment bank in Russia. His team were ranked the number one oil & gas research team and the number one Russia country team for nine years in a row.
After the sale of UFG to Deutsche Bank in 2005, Stephen became Head of EMEA and Latin American research for DB where the team was ranked #1 across all industry sectors, in both strategy and in economics, in country research for Russia and South Africa and across the entire EMEA region in 2006 and 2007. In 2007 he left Moscow and moved to Hong Kong as Head of Asian Research for Australia’s Macquarie Bank. In 2009 he joined Barclays Capital in Hong Kong to lead the buildout of the bank’s Asia ex-Japan research business.
Since 2013 he has been an investor in a range of businesses in technology, real estate, retail and materials while living in Hong Kong. His major interests include China’s gas sector reform, China’s nuclear renaissance and the country’s global impact on energy markets. While based in Hong Kong he has also been a Senior Visiting Research Fellow at the Oxford Institute for Energy Studies, the world’s #1 ranked energy think-tank where he published several major studies of the Chinese energy sector. He is a contributing author to several international think tanks on global energy issues and has advised international law firms on the oil and gas sector globally.
