(Oil & Gas 360) – In the late winter and spring of this year, foreign policy was a major activity of the Trump Administration.
The Ukraine war with Russia, the Middle East, and negotiating cease fires between India and Pakistan and between Rwanda and the Democratic Republic of Congo, and various trade discussions, many contentious, took focused diplomatic attention punctuated by Presidential visits to the Middle East and the NATO Summit.
Israel’s conflict with Iran culminated in several days of air strikes on Iranian military and nuclear facilities and one US airstrike on their deep nuclear sites.
The last couple of months seem rather calm by comparison. The Administration seemed more concerned with domestic matters than foreign policy. The Big Beautiful Bill was passed, and various other domestic matters, such as dealing with the border, Washington, DC crime, and university priorities, received attention.
On the foreign policy front, trade negotiations continued, some were completed, and the President had a “summit” meeting with Putin in Alaska, which accomplished nothing but the effort needed doing. He arranged for a peace deal between Azerbaijan and Armenia, which got Azeri oil flowing again.
The price of oil wanders along in the mid-$60 range, gold is centered around $3400, the Fed has held interest rates steady, silver went up and then held flat, and so did Bitcoin in its volatile way. The stock market is showing signs of life, however.
With regard to energy, President Trump seems to realize American oil companies are not going to Drill, Baby, Drill. They are drilling enough wells to maintain production but not to grow.
Secretary Wright has moved heavily in support of nuclear power with the Nuclear Reactor Pilot Program, which removed many of the barriers to Small Modular Reactor development and allows testing at sites other than at national labs. This program is attracting many new entrepreneur engineers with an array of innovative ideas.
One has the feeling that things will start moving again now the kids are back to what is rather facetiously called school. Trump reached a financial settlement with Columbia, Brown, and other prestige universities which admitted no wrongdoing. He needs to uproot the entire US education system.
The idea that someone such as Randi Weingarten has any influence on the education of American children is absurd. A good public education system is necessary for upward social and economic mobility in society but is now only available at high cost for high-income families.
As Labor Day next weekend marks the social passage from summer to fall, the question arises as to what is about to move in international affairs and in what direction. A corollary is who will cause and influence events; particularly how have relationships changed and who are the new influential players.
In last weekend’s edition, the Wall Street Journal features an article “Europe is Losing” which describes the moribund state of the European economy and political and defense systems. It notes that many seem to like it that way; they are content to relax in an ever-more-generous welfare system and not worry about anything.
This may be comfortable, but it only works until it doesn’t and the system goes broke or someone invades and takes it all away from you. Some of Europe’s new leaders seem to be aware of these realities and are taking necessary steps to make changes.
Mark Rutte, a forceful Dutchman and the new Secretary General of NATO, received little publicity for his keynote speech at the NATO Summit and his comments that Trump was correct when he urged Europe to find energy sources other than Russian and to increase their defense budgets. I listened to his discussion at Chatham House in London two weeks before the Summit. He had no obligation to assuage Trump’s ego there but his message was pretty much the same and just as strong: Europe must re-arm.
Frederick Merz, the new German Chancellor, although disappointingly formed his government as a coalition with the Social Democrats who were just voted out, seems to share Rutte’s attitude. Georgia Meloni in Italy is dismissive of the EU and is strongly favorable to change. These three leaders may just be able to make some big changes in Europe. The US needs them as strong allies, not as dependents.
Rearmament will be financed by each individual country not by the EU. I expect this will cause the EU to crumble within five years along with the Euro currency.
European democracies are crumbling right on schedule. Democracies do not last more than a hundred years, and it is now 70 to 80 years since the leading European democracies were formed after World War II. The UK left the EU on 31 January 2020, just in time for the Covid shutdown, and has been floundering politically and economically ever since. It needs to find a Thatcher to take over and revitalize its collapsing economy and restore political vigor. Who that might be is not clear, least of all it seems, to the British electorate.
Israel is still in conflict in Gaza; other than that, the Middle East and the North Africa area are relatively quiet – for the time being. One cannot expect it to stay that way. Libya is effectively divided into two jurisdictions. General Haftar, who rules the eastern part, is now angling for recognition and claiming offshore rights all the way to Crete.
Egypt, Israel, Lebanon, Syria, and Cyprus all have extensive gas discoveries. An overall forceful diplomatic effort is needed in the region.
Libya could be officially divided in two with overall coordinated development of the gas resources to serve the European market. An earlier attempt failed when the Biden Administration withdrew support.
Erdogan can be expected to take advantage of the situation to increase Turkey’s clout in the region, but multinational resource development is not Turkey’s expertise. The Russians were forced out of Syria after the Assad rule ended and are trying to re-group in Libya but have no chance of putting together such a project since invading Ukraine. This project is ripe for an aggressive private group.
We head into fall expecting the rush of change to resume but not quite about who, what, or when. Look forward to it; it will be interesting.
By oilandgas360.com contributor Dr. Charles Kohlhaas.
“The views expressed in this article are solely those of the author and do not necessarily reflect the opinions of Oil & Gas 360.
