Trump Mulls Another ‘Peregruzka’ with Russia

As Trump mulls another ‘peregruzka’ with Russia, he should consider perils of Big Oil diplomacy

Amy Myers Jaffe, University of California, Davis

Energy has long been used as a tool of U.S. foreign policy, particularly in the Middle East. But it’s true in other regions and countries as well, most notably Russia, where President Donald Trump is pondering another possible “reset” in relations.

This will be the fourth such attempt at a relationship reboot with Moscow since the disintegration of the Soviet Union began in 1989. And each time – in 1993, 2002 and 2009 – renewed investment by the U.S. oil and gas industry played a role in trying to improve ties. And each effort failed for a variety of reasons.

With the U.S. relationship with Russia once again high on the White House agenda amid Russian overtures and intensive attention to the ins and outs of Russian hacking, it’s worth taking a closer look at these past roles the U.S. energy industry has played in efforts to pursue warmer ties with Russia. Trump would be wise to heed this history, especially since oil always looms large in the bilateral relationship.

Oil and American diplomacy

The U.S. oil and gas industry is widely considered one of the most technologically advanced in the world, having pioneered fracking techniques as well as other advanced technologies needed to drill in Russia’s harsh Arctic terrains and to liquefy natural gas for easy shipment.

And for decades, the U.S. has sponsored trade missions that use oil and gas investment as a way to persuade other countries to adhere to American interests. Examples include disarmament in Kazakhstan and Libya, conflict resolution in the Middle East and Latin America and nuclear nonproliferation and the fight against terrorism in the former Soviet Union and West and East Africa.

On the flip side, denial of access to American know-how has been wielded as a stick against countries that defy the U.S.-led international order: for example, by sponsoring terrorism (Iran and Libya) or invading neighboring countries (Russia).

Post-Cold War euphoria turns sour

The opening of Russia’s oil industry to American companies began shortly after the collapse of the USSR. A 1993 summit between leaders of both countries led to the creation of the Gore-Chernomyrdin Commission to promote Russo-American economic and technological cooperation, including in energy.

The United States, in essence, was offering up its companies to assist Russia in revitalizing its energy industry. ConocoPhillips was an early adopter with its Polar Lights project, which began in 1994 amid the euphoria of U.S.-Russia collaboration. But the company soon became a victim of Russian bureaucratic hassles that hampered its ability to export oil.

Other U.S. companies that followed suffered similar fates as that early optimism was met with myriad legal, regulatory and logistical difficulties that eventually turned profits into losses in some cases.

Such failures mirrored the difficulties on other policy fronts that eventually beset the Gore-Chernomyrdin deal and subsequent U.S. arms control initiatives as the Kremlin failed to honor both the letter and spirit of agreements.

While this experience clearly illustrates the dangers of being lured by unfulfillable promises and misplaced optimism when it comes to Russia, the U.S. had a hard time learning this lesson.

Putin, 9/11 and a new hope

In the aftermath of the Sept. 11, 2001, terrorist attack, the U.S.-Russian energy dialogue again gained momentum after newly elected Russian President Vladimir Putin let it be known that Moscow was willing and able to help diversify global energy supplies away from the troubled Middle East to help the U.S.

It was in this context that several U.S. oil companies, including ExxonMobil, expanded their exploration and production deals in Russia. In May 2002, President George W. Bush and Putin initiated a new high-level dialogue that led to an energy summit in Houston, Texas, in October and new oil and gas investment deals.

But all was not smooth sailing despite what seemed to be initially an auspicious geopolitical backdrop. No sooner had billions of dollars been committed and oil started to flow than Putin initiated a change of political course in 2005 that defined Russian national security as better served by renationalizing the oil and gas industry.

And so U.S. oil companies experienced similar reneging and renegotiations, as well as threatening tactics directed from the Kremlin, which in some cases included outright arrests of partners and the taking of assets.

The Kremlin used a variety of means to “convince” its foreign partners to turn over assets to favored firms whose leaders were positioned inside Putin’s inner circle. Disputes over back taxes and other kinds of trumped-up environmental or criminal charges were used to justify the retaking of assets. Approvals for access to export pipelines were often linked unofficially to selling stakes back to Russian entities.

The pressures on oil industry executives trying to do business in Russia was so intense at least one American-born senior executive of a major multinational company was forced into hiding. In another example, in 2004 the Russian government effectively annulled a tender award ExxonMobil had won in 1993 for exploration rights in the Russian Arctic region of the Sakhalin Islands and requested over a billion dollars for a new license to operate there.

Obama’s reset goes wrong

Perhaps the most famous effort at a reset with Russia came in 2009 shortly after President Obama took office, when then-Secretary of State Hillary Clinton gave her Russian counterpart an actual red button with the word “reset” written on it.

While the Obama administration did not explicitly make energy cooperation a diplomatic carrot, the effort did improve the situation for a few American oil firms like Chevron and ExxonMobil – at least temporarily – as Russian interest in developing technically challenging Arctic oil and gas resources increased.

As we all know, the Obama reset ran aground as other geopolitical disagreements, such as Russia’s invasion of Ukraine in 2014 and its military intervention in Syria’s civil war, overshadowed the relationship. The U.S. and Europe placed sanctions on Russia in 2014, creating losses anew for U.S. oil companies.

In the end, most American companies such as ConocoPhillips and Marathon Oil have chosen to sell their holdings in Russia and exit completely in recent years. Others, like ExxonMobil, have reduced risk by participating in international consortia involving important Russian and international firms.

ExxonMobil, for example, eventually secured its multi-billion dollar deal in the Sakhalin Islands by partnering with Russian oil giant Rosneft and several other foreign firms. Still, the venture has faced many obstacles, including tax disputes and logistical problems.

Lessons for the U.S.

There is no question that this history of triumphs and failures offers important lessons for the oil industry and the Trump administration.

In all three efforts, American diplomats and oil executives alike focused on discussions about long term win-wins, while the Russians goals were more limited and short-term.

The first lesson is that Moscow can be quick to offer an accommodating posture when it needs something, such as money or advanced technology, but that this is not necessarily reflective of a permanent change in vision. One savvy American oil company chairman once confided to me that the CEO of his Russian counterpart in a joint venture spent nearly all of his workday canvassing the halls of the Kremlin to intercept early changes in policy or internal political power shifts.

Right now, for example, Russia desperately needs the sanctions on its economy removed. The history suggests Trump probably shouldn’t offer any relief until Russia has brought substantial concessions to the table on issues such as nuclear weapons, cooperation on ISIS and Syria, and ongoing hacking threats.

Secondly, a position of strength will facilitate a deal faster than an accommodative posture or natural alignment, as Rex Tillerson, the newly confirmed secretary of state and former chairman and CEO of ExxonMobil, knows from first-hand experience. Oil companies that approached Russian leaders with talk of technology transfer and technical expertise were not necessarily those that excelled against the political winds in Moscow. Rather, companies posing a strong competitive market challenge to Russian counterparts such as Rosneft fared better than the rank and file, many of whom have been forced to abandon Russian assets over the years.

ExxonMobil is an example of the success of this strategy. After lengthy negotiations with Rosneft seemed to be getting nowhere, ExxonMobil mounted an assertive campaign to challenge that company in key markets such as Eastern Europe, Germany and China by offering its customers competitively priced, alternative supplies. The tenor of the talks with Russia improved after that, leading to an expanded strategic agreement (read truce) in 2013.

The Russian wolf

As the Kremlin tries to woo yet another incoming U.S. administration, Moscow expects to count on what it considers the “greed” of Big Oil to help it end the sanctions strangling its economy and to attract fresh investment in its energy industry.

But perhaps this time around, the U.S. government and the Western oil industry will more accurately view Russia as a wolf in sheep’s clothing and greet the overture prepared with its own gun in hand: U.S. shale exports, which provide competition for Russian oil and help prevent diplomatic strong-arming.

The new administration has already positioned itself to use this lever, perhaps evidence that Trump could be the negotiator-in-chief he has promised to be.

The Conversation

Amy Myers Jaffe, Executive Director for Energy and Sustainability, University of California, Davis

This article was originally published on The Conversation. Read the original article.

U.S. State Department Announces Additional 500 Million In Funding for the Green Climate Fund


January 18, 2017

WASHINGTON –   The U.S. State Department  announced yesterday Tuesday, January 17, 2017, that it has made an additional $500 million grant to support the Green Climate Fund (GCF). Consistent with last year’s GCF grant, this funding is provided from the fiscal year 2016 Economic Support Fund (ESF) appropriation. U.S. funding for the GCF continues U.S. government support by this and prior Administrations for climate change programs through multilateral funds.

The GCF is the world’s largest multilateral finance institution dedicated to advancing low-emission, climate-resilient development. The GCF was created to help protect vulnerable populations and drive clean energy deployment, all with a special focus on engaging the private sector and mobilizing private capital.

More than 180 countries have set forth their plans to cut emissions; many of them are making important policy and regulatory reforms to promote private sector investment in energy efficient and low-emissions technologies. The GCF supports developing nations in their efforts to achieve those objectives and to become more resilient to climate change – in turn, reducing the global and national security risks associated with inadequate adaptation to and preparedness for extreme weather events and other climate related impacts. With limited public resources, the GCF also directly engages the private sector in new and innovative ways to mobilize greater private investment, sending an unmistakable signal to global markets that the low-emission transition is moving forward.

Green Climate Fund

Practicing Balance For Life’s Delicate Dance


Balance is Dance


Peg Ryan
Mile High Pilates and Yoga

Proponents of practicing yoga and Pilates often stress the ability of these disciplines to improve strength, flexibility and balance.  Frequently I hear people say “I can’t do yoga because I’m not flexible.” Physical flexibility is often defined as full range of motion within a joint or a series of joints.  Although many of us have lots of flexibility as children, over time due to lifestyle habits such as excessive sitting, driving and many forms of repetitive motion, we begin losing it.  This can create all kinds of problems including chronic pain and joint deterioration.  No amount of yoga or Pilates will give us back everything we’ve lost, but most of us can maintain or even improve our range of motion through practice.  When I started practicing yoga I had the tight hamstrings that are common to most runners.  Forward bends were practically impossible.  My hamstrings are still tight and one side is more flexible than the other but I have greatly improved.  This is attributable simply to practice.  No particular physical skills or attributes on my part.  Just non-judgmental patience and practice.

The same can be said of balance.  Human balance is a complex process that relies on a number of anatomical systems including the senses of touch, vision and inner ear motion sensors.  Your brain has to receive and process this information in real-time and your muscle and joint systems must respond and coordinate appropriate movements.  No wonder balance is so difficult!  In fact, our ability to balance at all is nothing short of miraculous.  Most of us can stand on our feet and even walk which actually involves a lot of balance.  Still, just like with flexibility, I hear people say, “My balance is terrible.”

A commonly held belief is that our ability to balance declines as we age.  This is not strictly true, but balance disorders are more common among older people due to various diseases or injuries that take their toll through the years.  As with flexibility, though, balance can be improved through practice.  Medical intervention may be required for the treatment of specific disorders, but most generally healthy adults regardless of age can improve their balance.  In fact, it becomes more critical to focus on balance improvement as we age in order to avoid falls which can become very dangerous.

The ability to maintain balance impacts more than just our physical mobility.  The word “balance” comes from the Latin word “balare” which means to dance.  Anyone who has ever stood on one foot in Tree Pose can understand this derivation.  Your standing foot is in constant motion, internally and externally, requiring minute shifts of the body to maintain equilibrium.  Recently I heard an analogy made to surfing. To me this seems like the ultimate example of responding to subtle changes while staying centered.  One thing that helps with these tiny adjustments is attention.  In balance poses, we are often instructed to find a focal point and concentrate our energy to help maintain the stillness required. It is also important to stay relaxed and to breathe.  Many people hold their breath when trying to balance.  This creates tension which undermines balance.  rhythmic breathing helps the body to relax and adapt to stressors.  Accommodating the dance of balance is difficult enough, but if your attention is diverted it becomes almost impossible.  When people tell me they have fallen or injured themselves, the cause is often traceable to not paying attention.

Sometimes, too, the transition between stillness and movement can be as demanding of our attention as holding our balance.  Perhaps even more so.  Recognizing when to be still and when to move requires that all of the contributing anatomical systems maintain an awareness of what is actually happening in the moment – where your body is in space and in relation to the objects around it and the surfaces it rests on. When you reflect on all that goes into it, it becomes understandable that mindful movement can really help.

The practice of paying attention and being mindful can translate into other aspects of our lives.  Physically, we have two sides – left and right. But we also have a front and back and lower and upper bodies.  There are internal systems and external systems.  Light and dark, day and night, yin and yang.  Each of us is an individual but we are also part of a whole – a family, a community, a country, our planet, the universe. We all also harbor contradictory tendencies within ourselves – positive and negative thoughts and feelings, tendencies toward fight or flight, fear and confidence, hard and soft, etc.  Figuring out how to balance our own inner conflicts and confusion is an enormous challenge. Balance is a lot more than our ability to stand on one foot.  Handling all of this requires coordination of many more systems.  Sometimes we have control over some aspects of these systems, but mostly we have no control.  Stuff happens.  Still similar principles can apply. Maintaining presence in the moment, focusing attention on conditions as they arise and change, adapting to those changes without losing our equilibrium and the values we cherish, assessing each shift and remaining open to all possibilities these are not easy tasks.

Once again practice helps.  But practice does not mean perfect.  There are many times our better nature can be overrun by the tidal wave of emotions in a given moment.  This doesn’t make us bad or faulty but if we can learn from our faults and failings and practice behaving differently, we can begin to experience some sense of equilibrium.  When people say to me “I’m not flexible” or “My balance is lousy” or “My mind is too noisy to focus”, I often reply, “That makes you just like everyone else”.  We all tend to think our abilities and tendencies, or lack thereof, are unique and unusual.  But all humans are coping with challenges.  There is a saying, “Be kind for everyone you meet is fighting a great battle.” We as humans seem to have a natural desire to want to make order out of chaos find the stillness of peace.  We seek predictability, order and unity.  Disorders of all types, both mental and physical, can subvert this tendency and turn it upside down.  Those of us with the ability to practice mindfulness have a gift.  We need to value that gift and find compassion for those unwilling or unable to make that choice.  This is where the third leg of the yoga/Pilates stool comes in – the quality of strength.  Building strength, inner and outer, can help us to stay mindful and make the right choice even when it’s difficult.

This week we’ve seen some tragic examples of chaos in our world.  But this week is not unique.  Every day there is violence, despair, misunderstanding, fear and hatred.  Perhaps it’s time for all of us to acknowledge the difficulty of maintaining balance, take a collective deep breath and try to recognize that “everyone you meet is fighting a great battle.”  There is no perfect solution, but we can all improve with practice.  As with any practice, the hardest part is starting.