It’s the Energy Market, Stupid: An Economic Strategy for Ending the Conflicts in Ukraine and Gaza
By Tom Ordeman, Jr.
Despite the abrupt departure of President Joe Biden from the 2024 election campaign, and the equally abrupt substitution of Vice President Kamala Harris as his effective proxy, many commentators continue to believe that the November contest remains former President Donald Trump's to lose. Should Trump prevail in November, he will inherit the management of American support for two longtime allies, both of them - Israel and Ukraine - currently engaged in costly, prolonged conflicts. A single major policy change from that of the sitting administration could generate the leverage that Trump requires to end both conflicts in manners favorable to America and the respective international partners, while satisfying, at least in part, the isolationist wing of the Republican party.
In the now-historic June 27th debate, President Trump pledged to end the war in Ukraine prior to his inauguration, acknowledging that Vladimir Putin's declared terms were unacceptable. While some Republican officials oppose the Biden White House's Ukraine policies on purely partisan grounds, others - notably Trump's running mate, Senator J.D. Vance - either sincerely believe, or represent members of the electorate who sincerely believe, that American intervention in Ukraine harms America's long-term interests. This viewpoint mixes fiscal concerns about what is described, perhaps inaccurately, as a "blank check for Ukraine," with isolationist sentiment borne from the ill-fated post-9/11 campaigns in Afghanistan and Iraq. Still other critics oppose the current, open-ended, so-called "strategy" that can be summarized as "fighting to the last Ukrainian."
Meanwhile, around 1,400 miles south of Kyiv, Israeli leaders continue to fight a costly and controversial urban warfare campaign in the neighboring Gaza Strip. The ongoing operation seeks to eliminate Hamas as a viable organization, and to repatriate the handful of hostages - or their physical remains - who have yet to be accounted for. Approximately eight of the remaining hostages hold American citizenship. The conflict continues to draw allegations of Israeli war crimes, and to polarize societies in Israel, the United States, and the world at large, as well as stalling prior progress toward ongoing Israeli rapprochement with key Arab states, which - rather ironically - involve corresponding political settlements with said Arab states that would fundamentally transform life for Palestinians.
American partisan differences over these respective conflicts remain remarkably diametric. The Biden White House, in moves reminiscent of the Obama Administration before it, seem to have leveraged aid to Israel, in an effort to undermine Prime Minister Benjamin Netanyahu, in favor of Israeli politicians whose philosophies more closely mirror those of Obama's wing of the Democratic party. Meanwhile, some conservatives have taken to portraying Ukrainian President Volodymyr Zelenskyy as a grifter. Conversely, American progressives remain strongly committed to supporting Ukraine, while American conservatives remain strongly committed to supporting Israel.
Should he secure a second term, Donald Trump will enjoy a narrow window with which to apply uniquely American leverage to alter the trajectory of both conflicts. So, how could he do it? Very directly: by restoring American energy independence, and reducing inflation.
By the end of the Obama era, and despite deliberate efforts by the Obama White House, American energy production had surged. During President Trump's first term, his administration further facilitated this domestic production of energy. This included fossil fuels, but also alternative energy sources like modern nuclear reactors. When Donald Trump left office, the average price of a gallon of gasoline was $2.41, while the current price is $3.52, occasionally surging above $7.00 in some areas of the United States. Throughout the country, federal and state regulations have diminished generating and transmission capacity, leading to brownouts and outages during periods of surging demand. Within hours of taking office, President Trump could reinstate a range of executive branch policies that were dismantled during Joe Biden's initial days in office, immediately alleviating some such constraints, and setting the stage to alleviate more over the medium term. Meanwhile, inflation - ironically, escalated in part by the Inflation Reduction Act of 2022 - impacts energy prices because in most markets, oil and other fuels are bought and sold with dollars. Thus, fluctuations in America's currency cause second order fluctuations in the global oil market, and efforts to curtail or reverse inflation could similarly stabilize the market.
Aside from providing relief for American families, how can this simple policy adjustment provide American diplomats with leverage to bring the wars in Ukraine and Gaza to satisfactory ends? Again, very directly: by deflating the value of the oil market, the Trump Administration could deflate the economic power of the belligerents that are sustaining both wars.
In the case of Ukraine, Russia is commonly characterized as a "gas station with guns." Years of decay in Russia's industrial base, coupled with the ongoing emigration of the bulk of Russia's academic base, have forced the Kremlin to rely upon two central economic pillars: energy, and arms. Despite the various international sanctions efforts that have arisen since the Ukraine crisis escalated in 2022, with oil prices up, Russia's already unstable war effort could drop below a threshold of viability. This might compel Vladimir Putin to make the legitimate, war-ending concessions that high oil prices have thus far allowed him to circumvent.
Elsewhere, Hamas and Palestinian Islamic Jihad receive the lion's share of their funding from the Islamic Republic of Iran, as do Yemen's Ansar Allah (better known as the Houthis) and Lebanese Hezbollah. Deflating the oil market would similarly hamstring the Iranian regime's finances, limiting their own capacity to satisfy their budgetary line items for supporting these overseas proxies.
American leverage relative to Russia's arms exports is limited, as is American leverage against global energy demand. However, the United States can leverage domestic capacity against the global energy supply, as well as collaborating in this effort with other global energy producers, notably key members of both the Arab League and OPEC. Iran has yet to diversify its economy, so Tehran's own international leverage relies heavily upon a strong oil market. In America, the domestic benefits of concrete efforts to control inflation, and of corresponding efforts to boost energy supply in order to both meet and drive demand, should be self-evident.
In both cases, prior precedent exists. During the 1980's, a central tenet of the Reagan Administration's economic agenda was to facilitate domestic economic growth, while curtailing the Soviet Union's, by deflating the price of oil. At that time, Reagan was rebuilding relations with the newly minted Gulf Cooperation Council states, which had previously enforced an oil embargo against America in 1973, and an ensuing price spike in the wake of Iran's 1979 Islamic Revolution. More recently, in 2015, the Saudi government led a sustained effort to deflate oil prices, seen as both an effort to drive American producers out of the oil market, and as an effort to apply leverage aimed at weakening Iran's position in the nuclear negotiations that eventually produced the controversial Joint Comprehensive Plan of Action.
Additionally, the new Trump Administration would enjoy several benefits relative to a notional Harris Administration. The Trump team would be unlikely to suffer any significant political damage from pursuing such policies, and Trump continues to enjoy cordial relationships with both Tel Aviv/Jerusalem and Riyadh. Without hauling out too much prior baggage, Trump himself has offered up indicators - notably a recent phone call with President Zelenskyy that reportedly went well - that suggest the potential for a reset of that relationship that would be favorable to Ukrainian interests. Conversely, Harris would be obligated by her political base to keep energy prices high, to hold Israel to account for alleged war crimes, and to support Ukraine without any substantive conditions. Harris would also inherit fraught relationships with both Benjamin Netanyahu and Mohammed bin Salman.
Will Trump win? While many commentators believe that recent events render November’s national poll his to lose, the same commentators acknowledge that he remains, as in both 2016 and 2020, entirely capable of doing so. Should Trump succeed, he and his team could squander their brief opportunity to change the trajectory of these and other challenges. Should Harris prevail, some might hope that a new hand at the proverbial helm could offer up new solutions, or introduce new advisors to replace ineffective holdovers from the Obama and Biden Administrations. Meanwhile, the world anticipates new solutions with bated breath, but with no clear endgames in sight.
And these are only two of the challenges that America's forty-seventh chief executive will be called to manage on day one.
About the Author(s)
Tom Ordeman, Jr. is an Oregon-based information security professional, freelance military historian, and former federal contractor. A graduate with Distinction from the University of Aberdeen’s MSc program in Strategic Studies, he holds multiple DoD and industry security certifications. Between 2006 and 2017, he supported training and enterprise risk management requirements for multiple DoD and federal civilian agencies. His research interests include the modern history of the Sultanate of Oman, and the exploits of the Gordon Highlanders during the First World War. His opinions are his own, and do not necessarily reflect those of any entity with which he is associated.