The White House has made renewing trade ties between the United States and Russia a centerpiece of its latest Russia-Ukraine ceasefire proposal. But without robust security assurances for Ukraine, a peace deal that relies primarily on economic concessions to deter further Russian aggression will fail.
The proposal for a trade restart involves a surge of U.S. capital and expertise to Russia (with a particular emphasis on rare earth and hydrocarbon extraction) and increased flows of Russian energy into Europe. Ukraine, for its part, would cede its crucial fortress belt in Donbas. And American firms would be allowed to utilize $200 billion in frozen Russian assets to stand up infrastructure projects in Ukraine, including data centers that would be powered by the Zaporizhzhia nuclear plant.
The business-forward theory currently animating this offer, wherein economic ties among Russia, Ukraine, and the West would undergird peace and bring the Kremlin back in line with international norms, recalls the Clinton administration’s mistaken belief that trade with China would liberalize Beijing’s regime and diminish the security concerns it posed.
Any agreement that brings Russia’s economy in from the cold without requisite guarantees for Ukraine’s future security therefore rests on a foundation of sand, undermining U.S. long term interests and leaves Ukraine in a gray zone wherein it is not actively fighting but always faces the threat of resumed hostilities.
As I wrote in August, improving trade ties with Russia is a U.S. concession, not a Russian one. Russia’s sputtering, kleptocratic economy has little to offer America. But Moscow needs American finance and Western technology to revive its industry and unlock the value of its natural resources. Russia’s diminished ability to export hydrocarbons, the result of sanctions and Ukrainian strikes targeting refineries, is one of the West’s key levers against the Kremlin. Allowing Russia to rebuild its capacity to wage energy warfare against the U.S. and its allies in exchange for a fragile commitment to peace would be strategic malpractice. Therefore, the administration should approach any deal which rehabilitates Russia’s energy exports with caution.
Further, Moscow knows that any deal it reaches with the White House would not be codified as a treaty and would therefore be subject to change based on political shifts in Washington. For businesses, the economic environment is equally uncertain. While a reopening of Russia’s economy may tempt some Western firms and investors to seek to cash in on a risky market, these gains would likely prove ephemeral. And for the majority of Westerners, the specter of state appropriation, Moscow’s chronic corruption, and the risk of reputational damage would be sufficient to deter investment in Russia.
Uncertainty would also significantly hamper Ukraine’s reconstruction efforts. Western investors would be wary of becoming too entangled in a Ukrainian rump state that lacks the ability to defend itself from its aggressive neighbor and remains subject to Russian corruption, hybrid warfare, and influence operations. In such circumstances, young Ukrainians might decide to forgo starting families and businesses or opt to emigrate in pursuit of stability, depriving Ukraine of the people it needs most to successfully rebuild.
Finally, if the White House were to reverse its economic stance toward Russia, it would risk further exacerbating transatlantic relations. In no small part due to U.S. pressure, European nations have taken great pains to cut their reliance on Russian energy. Seeing Washington happily champion the spigot of Russian resources would no doubt rub many leaders on the continent the wrong way.
Meanwhile fresh inflows to the Kremlin’s coffers would allow for its continued rearming and military recruitment. Putin will not allow its 1.5 million men under arms and heavily militarized economy to remain idle for long. Any Ukrainian reconstruction—like a significant concentration of data centers in Zaporizhzhia—might further incentivize a return to war—this time from inside Ukraine’s best defensive lines.
The US and its allies would then have to face the stark reality of a stronger Russia, a weakened Ukraine, and growing divisions over whether to continue investing in defense.
Restoring business ties with Russia is fraught with peril and not a solid basis for agreement. The only realistic foundation for an agreement is to make renewed war unpalpable for the Kremlin. This means Ukraine needs to keep its best defensive lines in Donbas, and Western allies, with U.S. support, should continue to equip Kyiv’s forces with the arms and intelligence that make Ukraine a hard target.
Economic incentives, contingent on Moscow’s adherence to other terms, could be one part of a peace deal. But the U.S. cannot afford to learn the hard way once again that revanchist, ideological authoritarians like Vladimir Putin cannot be bought off with business alone.