The Russian president has figured out a way to get Trump’s attention and distract him to such effect it delivers what Russia really wants. By reducing Ukraine to business deals and minerals, there is something much deeper and darker going on, writes Owen Matthews
For Donald Trump, talks with the Kremlin are a path to ending the Ukraine conflict as fast as possible. And if there’s a Nobel Peace Prize in it for him, all well and good. Securing some great deals for US business would be even better. For Vladimir Putin, on the other hand, talks are a path to victory and to the victor, the spoils. To get there, the KGB veteran has read Trump like a book.
Putin has correctly calculated the precise way to bamboozle Trump into agreeing to his maximalist demands is to sweeten any eventual deal with some attractive business propositions for the Americans.
“The two leaders agreed that a future with an improved bilateral relationship between the United States and Russia has huge upside,” read the official White House readout of the two-hour Trump-Putin conversation earlier this week, jarringly mixing the lexicon of international diplomacy with that of real estate. “This includes enormous economic deals and geopolitical stability when peace has been achieved.”
What, exactly, could these enormous economic deals be? In the 1990s, US and European multinationals piled into Russia with dollar signs in their eyes, hoping to make fortunes in the ruins of the fallen Soviet empire. US giants like Procter & Gamble, Ford, McDonald’s and Philip Morris, and European brands like Pirelli, Ikea, Volkswagen, Danone, and Siemens all cashed in and built stores and factories all over Russia. By 2020, McDonald’s Russia was racking up close to 10 per cent of the company’s global turnover.
But even before Putin’s invasion of Ukraine, many of these deals had gone badly wrong. Oil majors BP and Shell were squeezed out of their lucrative drilling concessions by hostile takeovers backed by Federal Security Service muscle. And after the invasion, hundreds of Western companies left because either sanctions made it illegal for them to do business, or because their shareholders shunned Russian aggression.
It will take businesses with iron cojones to return to the Russian market. “The US business community will want to know whether Trump’s ambitious forecast for normalcy with Russia will include a backstop,” says Charles Hecker, who spent 40 years as a geopolitical risk consultant in Russia and is the author of the new book Zero Sum: The Arc of International Business in Russia. “Political risk insurance for companies returning to Russia will be astronomically expensive, if it is available at all. Will the White House act as an insurer of last resort?”
Talk of “huge upside” and “enormous economic deals” by the White House has rung alarm bells in Ukraine and among its backers. Ultimately, it assumes the dismantling of the current sanctions. Despite confident predictions by US officials in the summer of 2022 that Western sanctions would quickly deplete Putin’s war machine, the Russian economy quickly found workarounds. They started to export oil to India for refining before being re-exported to Europe and importing restricted technology through neighbouring former Soviet countries. But with interest rates at an uncomfortable 22 per cent and strict banking sanctions, the Kremlin is nonetheless feeling the squeeze and Putin would welcome the lifting of sanctions – though he still has the wherewithal to fight on for years.
‘Putin has correctly calculated the precise way to bamboozle Trump into agreeing to his maximalist demands’open image in gallery
‘Putin has correctly calculated the precise way to bamboozle Trump into agreeing to his maximalist demands’ (Getty)
Russia still has many rich pickings. The Shtokman natural gas field under the Arctic White Sea off the coast of Novaya Zemlya is the world’s largest untapped gas reserve. Russia is full of Soviet-era oil wells that are soon to run dry - but could be revitalised by hydraulic fracturing, known as fracking, but that would require Western expertise and massive investment.
In theory, Trump’s implied promise that economic sanctions on Russia would be lifted as part of a peace deal puts him on a collision course with the European Union At a summit in Brussels on Thursday they vowed to tighten, not loosen sanctions. More tension in US-Europe relations works very much in Putin’s favour. See too any fracturing within Europe itself and there remains one major prize that could tempt Germany away from the EU’s hard line – the prospect of renewing cheap gas imports via the Nord Stream pipeline under the Baltic.
In September 2022, three of the four Nord Stream pipes were blown up by - according to German and Danish law enforcement - Ukrainian saboteurs. But one Nord Stream-2 pipe remains intact and pressurised with gas. The estimate for the repair of the others could reach €400m. According to the German tabloid Bild, citing anonymous sources, Nord Stream-2 may be handed over to the US to resume pumping Russian gas to Germany. According to the paperwork on the relevant agreement “is already underway”.
A thermal power plant in Ukraine damaged during a missile attackopen image in gallery
A thermal power plant in Ukraine damaged during a missile attack (AFP/Getty)
A resumption of Russian gas imports would be massively politically controversial in Germany and the rest of Europe. But the right-wing AfD party, which gained some 21 per cent of votes in recent elections to Chancellor Friedrich Merz’s 28 per cent, campaigned on a promise to restore Nord Stream after peace with Russia. Backing the reopening of Nord Stream would also be a massive U-turn for Trump, who, in his first term, repeatedly lambasted the Germans and Europeans for becoming too dependent on Russia. But the pipeline would mean big business for whoever operates it.
So far the only concrete deal that the Trump administration has specifically discussed in public since the Putin-Trump call is a frankly bizarre proposal for the US to manage all of Ukraine’s nuclear power stations – including the largest one at Zaporizhiye which has been under Russian occupation since 2022.
If it would be “helpful” to achieve peace in Ukraine, US energy secretary Chris Wright told Fox News, “We could have US run nuclear power plants in Ukraine. No problem, we can do that.” Asked how that would work, Wright responded “we have immense technical expertise in the United States to run those plants. I don't think that requires boots on the ground.”
Exactly how taking Ukraine’s 15 ageing, Soviet-era nuclear power stations under Washington’s control will help bring peace has not been explained. What’s even less clear is how any US corporation could hope to turn a buck from these dangerous nuclear behemoths in a country where energy prices are multiple times less than Western Europe’s. Meanwhile, Zelensky has firmly said that he had “definitely not discussed the ownership issue with President Trump” – and in any case, all Ukraine’s nuclear power stations “all belong to our state”.
The US president during his tense meeting with Zelensky in Februaryopen image in gallery
The US president during his tense meeting with Zelensky in February (Reuters)
Finally, of course, there’s the much-vaunted “rare earths” deal which Volodimir Zelensky was due to sign earlier this month in Washington – but was derailed after the meltdown in the Oval Office. Like the mysterious “enormous” Russian business opportunities, the minerals deal with Ukraine also offers few obvious actual business opportunities. In truth Ukraine, according to the US’s own Geological Survey, next to no actual “rare earths” – defined as 17 elements used in tiny quantities in electronics and batteries.
But even if it did, the entire global market for rare earths was worth just $6.2bn in 2024. The same goes for other minerals that Ukraine actually does possess like titanium – a global market worth just $29bn last year, of which Ukraine accounted for 0.5 per cent – or lithium, which is worth some $37bn a year but Ukraine, as yet, produces precisely none. Ukraine’s only graphite mine actually closed in December after 80 years in production because of a collapse in global prices.
But Trump is obsessed by his image as the king of the art of the deal. Putin has clocked that and is only too happy to offer Trump the prospect of every kind of deal he can to con the White House into handing over something much more worthwhile. Renewed influence over Ukraine, a lifting of sanctions and a future where Russia is treated as a great power again.