OPINION
Obligation for a structural change in Russia: How to exit from the oil-gas economy?
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Hazal YalınBy analyzing the past, present, and future of Russia’s two major export commodities, I will discuss the impacts of the current developments on the budget and the inevitable need for changes in its economic strategy in this article.
First of all, one of the key notions below, “distant nations,” needs some background. Whether or not they are members of the Commonwealth of Independent States (CIS), all former Soviet countries are still regarded as close foreign countries. The rest of the world is likewise distant foreign countries. Here, we only do calculations and charts for distant foreign countries. After leaving China out, European countries constituted its overwhelming majority. Therefore, the conclusion will reflect the impacts of Western sanctions on Russia’s two primary exports and sources of budgetary income (oil and natural gas).
Let me state something upfront for the sake of the reader who is not a fan of lengthy writings. Using 2021 as a baseline, Russia will lose 35% – 40% of its oil and petroleum product exports and 50% of its natural gas exports this year. However, this is only part of Russia’s financial setback. Before the onset of the deep crisis in the first half of 2022, rising energy prices had significantly boosted the country’s income. However, the situation has now reversed, with oil and petroleum products discounted by nearly half their market price.
Natural gas
We’ll begin by explaining how the graph below was drawn, which data was utilized how and why, and how estimations were made.
In order to avoid “misjudgments, speculations, and inconsistencies,” the Federal Customs Administration (FCA) has not released information since April. Hence there is currently no official data for 2022. Gas exports to Europe (in transit via Ukraine) are projected to reach 30 bcm in 2023. At 80% capacity, gas is plummeted through Blue Stream, which equals a maximum of 16 bcm through this line. The largest volume that can be plummeted to China is between 23 and 24 bcm.
It was not disclosed how much natural gas Turkey purchased from Russia last year. However, on July 18, Yuri Ushakov, an advisor to Putin, reported that 12.8 bcm of gas (7.1 Blue Stream, 5.7 Turk Stream) had plummeted in the year’s first half. In addition, the export amounts to China and Europe (excluding “close countries” like the Baltic) are known. Based on these statistics, I estimated the gas export to Turkey at 21.70 bcm. This figure matches what Kommersant reported to the Turkish Customs Administration: 21.50 bcm.
Data from Gazprom and the FTS do not quite match. Gazprom’s export figures are always greater than FTA’s. This also held true in the year 2021. Novak reported on December 28 that Gazprom had exported 185.1 bcm to distant countries. However, according to FTS, total exports to distant countries were 170 bcm. I derived figures on the graph from Gazprom statistics. Additionally, I referred to the Central Bank’s yearly average natural gas prices. Like the FTA, the Central Bank did not integrate the averages of 2022 and afterward into its statistics. Therefore, I utilized the calculations provided by the RIA based on the ICE data as the average natural gas price in 2022: $1260.8 per mcm.
I picked two sets of prices for 2023. First, the price on December 31, 2022, is $844.3, assuming it remains relatively stable throughout the year. If scenario two plays out, temperatures in Europe will remain above seasonal norms this winter and spring, the wind will continue its record-setting speed, Brussels will strike a long-term oil deal with Qatar, relations with Algeria will improve, and the United States will replace the monopoly profit with reasonable prices. Although not all of them are realistic, I would predict that costs can be cut in half if all take place.
For 2023, I have assumed a decline in exports of 30% and a total decrease to 70-75 bcm. If this occurs, European countries will import more than twice as much natural gas from the United States as they did from Russia this year.
Novak said on December 28 that gas exports totaled 100.9 bcm last year. It is a record low. In 1990, it was 110 bcm. On January 16, Miller reported that 15.5 bcm of gas was sold to China. However, Neftegaz announced on January 2 that this figure might be appraised as 18.2 bcm due to an increase in contractual obligations. The graph relies on this second figure.
Miller also said annual gas shipments to China will reach 48 bcm by 2025. But the graph shows that even in this case, the demand from the East cannot make up for the European market loss (at least for now).
I have omitted liquefied natural gas (LNG) from the charts. This export may increase partially. Nearly 16 million tons of LNG were sent to Asia in 2022, and Europe received 15.7 million tons in total. This amount is approximately equal to 44 bcm of gas. Although this figure is not inconsequential, it is not anticipated to increase beyond this level in 2023 owing to the challenges of insurance-reinsurance in transport and tankers other than dependency on Western technology. Furthermore, it is unlikely that the rise in LNG exports would come close to replacing the 180-200 bcm of the potential capacity of the Russia-Europe pipelines before NATO destroyed Nord Stream 1 and 2.
Even by an optimistic prediction, the total demand of China, Belarus, and Turkey in 2023 would only amount to 60 bcm, less than a quarter of Gazprom’s entire supply capacity. So, this is the picture based on the most optimistic estimates: In 2021, Russia globally sold almost 240 bcm of natural gas. By 2023, however, it will only be able to ship a maximum of 45 bcm LNG and export 30 bcm via pipeline to “unfriendly” countries and 60 bcm to neutral countries.
Oil
Let’s look at oil.
I will prepare the chart for the same time frame (2013-2023); however, I will be excluding the data from China, Turkey, and India. For these three reasons:
1) There are gaps in the dataset. On the bright side, it is at least evident that China had been a reliable purchaser (between 70-72 million tons) until 2022.
2) At least as of 2020, Turkish and Russian sources contradict in terms of figures for Turkey’s purchases.
3) Prior to 2022, India was not a huge market for Russian exports, but after that year, it became one of the most important hubs for Russian oil. The share of Russian oil export to India rocketed from 1% on February 24 to 18% in May. India, Turkey, Singapore, and even the United Arab Emirates (UAE) dilute Russian oil before being sold to obfuscate its origin. It is unclear, however, how they would act after Russia’s counter-sanctions go into effect on February 1. Thus, qualifying the data of these three countries will not provide useful insights.
Nevertheless, we may get insights from the figures of crude oil exports and the total income of the annual average oil price.
Like natural gas, I have completed the chart relying on the data of “distant countries” and my own estimates. Similar to natural gas, I predicted a range of $40 to $60 for the barrel price of Ural oil in 2023. These predictions align with the scenarios the Central Bank announced in May. Considering the $60 maximum price, the likely range for the price of Ural oil is between these two extremes. To “distant countries,” I projected 200 million tons of oil exports in 2023. As a result, Russia will lose 90% of its crude oil exports to Europe due to the sanctions, which may cost the country $40 to $70 billion.
I will not go into technical details of the implementation of the sanctions and embargo. Still, it’s important to know that in its broadest sense (including both land and sea traffic), it will be implemented over the course of 6-8 months. This is why the European market has not been totally lost: Bruegel, a European think tank, has shown that 75% of Russia’s oil and petroleum product exports to Europe are sent offshore, while just 25% are transported via pipeline. Germany and Poland, two main consumers, have reduced their purchases, while the Hungarian government has blocked a full ban. Orbán has ensured that the oil pipelines of Slovakia and the Czech Republic from Russia, in addition to those of Hungary, will remain open.
However, the insurance and reinsurance restrictions directly impact exports to India and China. Unless a stable solution to this issue is found (a partial solution is already available; the Russian National Reinsurance Company carries out the reinsurance), overall exports may fall further. Similar to natural gas, compensating the European market with Asia cannot happen in one day.
My estimations for potential losses are in line with these predictions as well. AlfaBank reported an expected loss of $50 billion; for Reuters, it is $40 billion to $54 billion, and for Energy Aspects, $60 billion. Increasing the amount of oil exported may improve the situation, which is feasible if the methods to circumvent the sanctions are broadened. A significant increase in the $40-$60 range for the sale of Ural oil appears unlikely.
These two charts depict a very critical scenario for 2023: Excluding petroleum products and LNG, we may expect Russia’s oil and natural gas income to be between $89.3 and $149.4 billion. This means a revenue drop of between $106 and $166 billion compared to the previous year.
Budget
Budget revenues determined by the 2022 budget law were 25 trillion rubles, but roughly extra 2.5 trillion rubles actually went into the treasury last year. Yet budget expenditures were above this increase; during the year-end press conference, Finance Minister Siluanov said that “around 30 trillion rubles” had been spent. Despite a significant discount in Ural oil (shown in the third chart), oil prices were much higher than in the previous year, and natural gas revenues were at a record level until December 5. And these are the reasons for the increase in income. The greater rise in expense was owing to, in addition to the direct (military expenditures) effect of the Ukrainian operation, the increase in government subsidies to belligerent individuals and their families, and most usually low-income people. The budget, traditionally having a surplus, ran a deficit for the first time in April and was covered for the rest of the year by Gazprom and Rosneft.
The Ministry of Finance had predicted that the price of Ural oil per barrel would be $70.1 in 2023, $67.5 in 2024, and $65.25 in 2025. However, at least for this year, it is quite unlikely that the forecast will come true. In any case, Ural oil was nearly always sold at a discount, but the price difference was generally little more than a few dollars. However, huge price differences appeared after February 24, and the average discount is roughly 30 percent from that date to the end of the year. The discount rate was relatively stable between July and October at about 20-25 percent, but it spiked sharply once the maximum price was published on December 5. Since December 30, it has fluctuated daily between 45-55% as of January 20. In addition, it is still cheaper than $60, the price cap. In contrast, the last year’s price average of Ural oil was $76.09.
The situation with natural gas is similar. According to the explanatory note in the draft budget for 2023–2025 and the official forecast for the 2024–2025 planning period, natural gas exports (total of distant and close countries) fell by 31% in 2023 compared to the previous year, landing at 142 bcm, and will average 125 bcm annually for the next two years. However, these figures should be considered too optimistic because total exports via pipelines may decrease to 90–93 bcm this year if natural gas exports to distant countries reach 70–75 bcm as expected.
According to the most reasonable estimates of the Ministry of Finance, in 2023, if the price of Ural oil per barrel stays at $50 and daily output does not surpass 10 million barrels, the government would get at least $2.1 trillion less in oil and gas revenue in 2023, and the deficit will rise to $5 trillion, instead of the anticipated $2.9 trillion (2 percent of GDP). (In addition to crude oil, other petroleum products, natural gas, coal, etc., will impact this deficit.)
Suppose Ural oil prices remain at about $62-$63 per barrel. In that case, the Ministry of Finance intends to sell yuan from the National Wealth Fund and issue bonds to cover the deficit without raising the tax burden on the bourgeoisie. Alternatively, the government decides to seize “excessive profit” on carbon and fertilizer (this is the Kremlin’s optimal solution; I looked into it further when analyzing Putin’s September 7 speech at the Eastern Economic Forum), to increase the share of the budget in the dividends of state companies (this is the “financial bloc’s” optimal solution), and to issue a new tax regulation, if it fails, or the discounted oil price drops further. The Kremlin sees raising the tax burden on the great bourgeoisie as the best way to ensure that the welfare of the people remains stable or, if feasible, is elevated by state aid. In contrast, the “fiscal bloc” would rather burden the public by increasing indirect taxes. In other words, the bourgeoisie or the people must contribute to cover the budget deficit. As a result, the “conflicting alliance” between “the potent and the impotent” continues.
Conclusion
These are, of course, just estimates anyway. But one thing is clear enough: The traditional economic paradigm (oil and gas economies) is rapidly becoming obsolete. A structural shift in the economy is inevitable. This can be done in two ways: Medium and large private capital shifts from unproductive trade or the production of raw materials for export to industrial output for the domestic market, or the state expands its role as an economic regulator.
While the first way may help in the consolidation of capitalism but given the comprador nature of private capital in Russia, it is unrealistic to assume that it will serve as the primary means. It will continue to be an alternative for the bourgeoisie is eager to fill in the lacuna created by the foreign money leaving Russia. The local bourgeoisie is flexing its muscles to seize closed and closing foreign financial and industrial institutions, so one of the reasons why the ruble has depreciated in the past month is the demand for foreign currencies for purchases. Yet, the comprador nature of capital still prevails. In the first three quarters of last year, the financial-bloc-backed bourgeoisie managed to invest abroad 2.5 trillion rubles, or 10 percent of the budget’s income. On the other hand, taking the first way for structural shift results in the bourgeoisie’s political power being consolidated and empowered, posing a challenge to Bonapartism. Finally, the greatest exporter of raw materials, the state sees no gain in income through the first way, exacerbating the structural problem. Thus, the state must serve as the driving force of structural change.
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Our people have endured decades of oppression, during which their rights were virtually destroyed and forgotten. In the post-Oslo period, when the Palestinian leadership opted for negotiations, settlement expansion accelerated while the foundations of national independence eroded under partition, isolation and prolonged blockades. Today, the occupation seeks to complete the historic Nakba by exploiting the Palestinian uprising that began on 7 October in response to escalating Zionist extremism, attempts at Judaisation and efforts to marginalise and eradicate the Palestinian entity. This existential challenge, backed by a broad coalition with regional and international dimensions that do not serve the interests of our people, obliges us to unite our efforts around common principles. Despite these barbaric attacks, limited resources and the imbalance of power with the enemy, we stand in solidarity with the resistance and determination of the Palestinian people. If these efforts are coordinated, we can put counter-pressure on the occupation, deepen its political and legal isolation and worsen its economic crisis. This will be an opportunity to force the occupation and its allies to stop the aggression and strengthen the ongoing struggle of our people.
Today, the Palestinian people are facing one of the heaviest Zionist attacks on the Gaza Strip, which reaches the dimensions of genocide and ethnic cleansing. According to unofficial statistics, the number of Palestinian martyrs since the beginning of the war has exceeded 186,000, and the environmental and health destruction caused by the attacks has directly contributed to this number. This scenario could, God forbid, be repeated in the West Bank, with radical settlers attacking Palestinian towns and villages through the occupation army or with the official support of the occupation government.
Historically, the Palestinians have paid the heaviest price for the Western approach to the Eastern question. The consequences of this approach have been disastrous for us: It not only led to the seizure of our land by the Zionist movement, but also paved the way for the establishment of a settler state. In this war, the Arab and Islamic countries acted with great responsibility, rejecting the international categorisation of the resistance as terrorism and insisting on presenting it as a national liberation movement.
Arab and Islamic countries have played a strong role in supporting our cause in international forums, with a growing regional awareness of a common destiny and the need for common security against a common enemy. This solidarity is a very important step in supporting our cause through the work of the Ministerial Committee of the Arab-Islamic Summit convened in Riyadh, which is expected to be an international framework for shaping a solution to the Palestinian issue in accordance with the legitimate rights and aspirations of the Palestinian people.
Internationally, unlike in previous crises, we have seen clear international positions condemning the genocide and crimes against humanity committed against our people, reflected in firm positions at the United Nations. We appreciate these positions of the nations and peoples of the world and see the path to the establishment of a Palestinian state based on international legitimacy as the result of more than a century of Palestinian struggle and the revival of their rights, which have historical and political roots. Since 1922, the foundations of a Palestinian state have been laid, and despite British and Zionist conspiracies, Palestine retains its political primacy on the world map.
Today, more than 150 countries recognise the State of Palestine on the basis of international resolutions such as the General Assembly Settlement Plan (Resolution 181), the Algiers Declaration declaring the State of Palestine in 1988, and Security Council resolutions on the illegality of settlements outside the 1967 borders. The most recent resolution demands that Israel end its ‘illegal presence in the Occupied Palestinian Territory’ within 12 months of the General Assembly’s request to the International Court of Justice for an advisory opinion on the legal consequences of Israel’s policies and practices in Palestine. The resolution was adopted with overwhelming support – 24 votes in favour, 14 against and 43 abstentions – demonstrating the gains made by the Palestinian cause and highlighting the growing political isolation of the occupying state.
Despite the obstacles to sovereignty posed by the occupation, the Palestinian state remains a legal reality. We see current international efforts to revive these historic and entrenched rights, against the post-World War II trend of international powers favouring the establishment of a Zionist political entity at our expense.
These forward-looking initiatives, called the ‘International Alliance for the Realisation of the Two-State Solution’, include direct steps to organise the establishment of a Palestinian state, rather than merely negotiating its right to exist. This is an important step for regional security and international peace, a necessary way to stabilise the global system and prevent the spread of geopolitical conflicts, sometimes with a religious or cultural dimension.
Diplomatic and political efforts to achieve Palestinian statehood must be compatible with efforts to end the war, protect civilians, facilitate humanitarian aid and address the consequences of the aggression through compensation and reconstruction. At the same time, Palestinian efforts to meet the conditions for a sovereign state consistent with the principles of regional security and global peace should be intensified.
In the midst of these efforts, it is clear that the Palestinian forces will respond sincerely to these initiatives and are willing to overcome differences over governance, elections and the so-called ‘day after’ issues. Palestinian behaviour shows that these disputes are now a thing of the past and that focusing on the future enhances the ability to build and govern the Palestinian state on the basis of national spirit and solidarity.
OPINION
Valdai impressions: As the Trump years begin…
Published
3 days agoon
11/11/2024By
Hasan ÜnalThe American elections ended “as expected” with Trump’s victory. The polls were wrong again, often showing Trump and Kamala Harris neck and neck. Trump did well both in the overall vote and in the swing states. At the time of writing, the results for the House of Representatives have not been finalized. If they win a majority there too, the Republicans will have won a huge victory. In addition to the presidency, Trump will give them overwhelming majorities in both houses of Congress, state governorships and state legislatures.
What will Trump do and how will he do it?
This time I followed the American election at the annual forum of the Valdai Discussion Club in Sochi, Russia. The annual forum was attended by a group of about fifty to sixty academics, think-tankers, and experts from around the world, and about twenty to thirty experts from Russia, including, as usual, Russian Foreign Minister Sergei Lavrov (second day) and Russian President Putin (closing session on the last day). Deputy Prime Minister Novak and Kremlin Chief of Staff Oreshkin also attended the Forum, speaking at length and answering questions. As was the case last year, Putin’s introductory speech and subsequent Q&A session lasted more than four hours. He spoke with an incredibly clear content and style, without mincing words.
One of the most striking aspects of the Forum, which I attended for the second time (4-7 November), was that all participants were following the U.S. election with great interest. After Trump’s victory became clear, you could hear different comments from participants depending on which country they came from. For example, while those from Russia and other countries welcomed Trump’s arrival with the expectation that he would put an end to the policy pursued so far by the collective West in the war in Ukraine, guests from China and/or those focusing on China thought that there could be fierce winds between Washington and Beijing.
Similarly divergent views were immediately apparent among participants from Middle Eastern countries. For example, while some Middle Eastern participants were somewhat positive about the serious possibility of an American withdrawal from Syria and Iraq under Trump, Iranian participants spoke of the possibility of war between Iran and a Trump administration that is likely to fully support Israel.
On the other hand, Western participants (such as the UK and Canada) tended to see Trump’s arrival as the beginning of the end of the neo-liberal economic order. The neoliberal economic models, which have catastrophically widened the gap between rich and poor and almost eliminated the middle class, the foundation of democracies, are already being harshly criticized by the experts participating in the Valdai meetings.
First assessments
First of all, the Western participants emphasized the beginning of the end of neo-liberal economic policies. It seems that neoliberal economic policies have been rejected in their home country, America. Especially since the 1980s, neo-liberal economic policies, which the U.S. not only implemented but also imposed almost everywhere in the world, have been turned into an opportunity for their own rapid development by countries like China and Vietnam, which have implemented nationalist and planned development models, while in most developed countries, especially in the U.S., these policies have caused great rifts in societies. The consequences for us are perhaps among the worst in the world…
The main reasons for Trump’s exit were the excessive monetization of the entire U.S. system, the massive retreat from industrial production, and the fact that while the economy grew, it had no positive impact on the lives of a large part of the population. What remains to be seen is how much of what Trump says will be translated into policy and action. For example, will it be possible to force companies that have invested in industry and advanced technology in China, other Far Eastern countries, and Mexico for decades to come back and invest in the U.S.? If not, will Trump be able to impose high tariffs on goods from countries that export massive amounts of goods to the U.S., especially China, as he said during the campaign? And will he be able to maintain public support for such measures?
On the other hand, if Trump, who has promised to cut taxes, does so, how will he deal with the rapidly growing budget deficit and the national debt, which has already exceeded 35 trillion dollars and whose annual interest rate is around one trillion dollars (and will probably continue to rise)? I wonder if he will be able to seriously reduce the country’s defence spending, despite the fact that the arms companies, which are the most important part of the structure we will briefly describe as the Deep State, are engaged in a battle with him to prevent him from winning the elections? Perhaps… Maybe he even has to…
Foreign policy options
Trump has tied himself in knots over the war in Ukraine. There is no doubt that Trump, whose words ‘If I were president, I would not have allowed this war to start, if I were re-elected, I would end it with a few phone calls’ are etched in our memories, will take serious steps to end the war in our north. The opposition will be all the components of the American deep state, especially the arms companies, and the governments in Europe. If Trump, who this time seems to be more prepared for a comprehensive struggle with the Deep State, is not assassinated and consolidates his power, he can turn his statements on the Ukrainian war into policy.
The second opposition he is likely to face on the Ukraine war will be the weak governments in Europe. For the Baltic states, which would like to see Russia strategically defeated in Ukraine and then see that huge country torn to shreds, and for the European states that have turned the historical grievances of the former Eastern Europe into their own Russia policy, Trump’s election is a disaster in the truest sense of the word.
They can say to Trump: ‘Let’s continue the war in Ukraine, you can continue your arms and financial aid, we will fully support you in your China policy, and if you want, we can even go as far as recognizing Taiwan as an independent state’. However, such a policy would mean that Trump would be doing the opposite of everything he has said so far – especially on Ukraine. On the other hand, while Trump may be preparing for a trade war with China, we do not know much about his intention to start a hot war, or rather a proxy war, over Taiwan.
It goes without saying that Trump is totally opposed to wars against overseas countries, which have become a concept of hatred in the eyes of a large part of American society and which cause enormous costs. Therefore, we can say that Trump may engage in trade wars with China while focusing on stopping the war in Ukraine, but beyond that he is more likely to stay away from a proxy war that risks setting the entire world on fire.
Middle East scenarios
We know that Trump wanted to withdraw from Syria and Iraq during his first term, but the deep state elements prevented this with many maneuvers, and in the case of Syria, Ambassador James Jeffrey, who was America’s special envoy after 2019, said in a statement after Trump lost the elections that they deceived the president by pretending to withdraw from Syria. It is even possible to speak of Trump’s determination on this issue. It is even easy to say that the same determination is in question for Iraq. All this can create extremely important opportunities for Turkey, which we will discuss in our articles and Strategic Compass broadcastings in the coming weeks.
The question of Trump and Israel undoubtedly requires extensive analysis. There is no doubt that there is a lot of truth in theses such as that he will be strongly pro-Israel, that he will march on Iran or that he will unleash Israel on Iran. On the other hand, it may be misleading to expect that Trump, who has consistently stated that he will not start a new war in the Middle East, will give Israel or Netanyahu, whom he does not like very much, a blank cheque.
This is because we know that he unilaterally withdrew from the nuclear agreement with Iran, which had been reached in the previous period, in order to please the Israeli lobby, whose help and support he needed in his fight against the deep state, especially in his first term, and that he has made the agreement obsolete and turned to a policy of maximum pressure against Iran. However, all this does not mean that he will now start a war with Iran, especially in a multipolar world order… Since the probability of America and/or Israel winning a war with Iran is low and Iran will not be an easy target, we can assume that Trump’s support for Israel will be subject to certain limitations. All this shows that we are/will be at the beginning of a very extraordinary period.
OPINION
Trump’s overwhelming victory to reclaim the White House: Mixed reactions across the globe
Published
3 days agoon
11/11/2024By
Ma XiaolinOn November 6, Donald Trump, the Republican candidate and former U.S. president, won the 2024 presidential election by an overwhelming margin, reclaiming the White House after a four-year hiatus and becoming the 47th president of the United States. Concurrently, the Republican Party secured a majority in both the Senate and the House of Representatives. The controversial return of Trump as the head of state and the Republican Party’s potential absolute control over the legislative, executive, and judicial branches led global observers to exclaim that “America has changed!” and consequently, “the world is about to change too!”
The 2024 U.S. presidential election was notably dramatic and full of surprises. President Joe Biden, the Democratic incumbent, withdrew from the race mid-campaign due to health issues. Trump, despite facing significant opposition and surviving an assassination attempt, managed a successful comeback. Vice President Kamala Harris, who assumed the Democratic candidacy, initially led in the polls but ultimately suffered a resounding defeat on election day. With this dramatic power shift, prospects of a comprehensive reversal in the established domestic and foreign policies of the Democratic Party have elicited varied reactions—from joy to dismay—within the U.S. and beyond.
Republicans in the U.S. are undoubtedly jubilant, having backed the right candidate in Trump, who, despite initial skepticism during his first campaign, secured at least 312 electoral votes (preliminary figures), cementing a historic victory. Trump is now the second U.S. president to return to the White House through election after previously leaving office. The Republican Party is also poised to secure control over both houses of Congress and numerous state governments, with a Supreme Court already dominated by conservative justices aligned with Republican ideals.
Trump’s victory brings elation to his financial backers, grassroots supporters, industrial workers, and the farming community. These groups resonate with Trump and the Republican Party’s “America First” doctrine and are expected to relish the policies reversing Democratic initiatives and yielding tangible benefits over the next four years.
Conversely, Democrats are facing profound disappointment. Their tenure in the White House was abruptly cut short by the Republican resurgence, culminating in what may be seen as a historic and humiliating defeat, with significant implications for their influence over all three branches of government.
Minority communities, immigrants, leftist progressives, the renewable energy sector, and establishment figures are similarly disheartened by the resurgence of Trump and conservative forces. The return of Trump is expected to stifle minority and immigrant rights, potentially entrenching the U.S. political landscape with a Trumpian ethos. Progressive social movements advocating sexual freedom and the expanding transgender industry are likely to face stringent crackdowns, and the momentum for green and clean energy initiatives may stall. Furthermore, establishment figures fear that the Trump administration could seek to further challenge the American legal system, aiming to consolidate super-executive powers.
Isolationist groups in the U.S. are predictably celebrating, viewing this electoral outcome as a rejection of Biden’s globalist approach and a reassertion of Trumpian and Republican worldviews. The pursuit of “Making America Great Again” and the primacy of “America First” are expected to steer the U.S. away from alliances based on shared values and international obligations, leaning towards mercantilism and self-interest, thus eroding the responsibilities traditionally borne by the world’s leading power and potentially signaling the decline of American hegemony.
In contrast, globalist advocates express profound concern. Trump’s first term already disrupted globalization, alliance networks, and America’s leadership within the Western world. The modest progress made by the Biden administration in restoring these elements is likely to be undone, leaving advocates of “Pax Americana” deeply disappointed.
America’s international allies, too, are split in their reactions, aware of Trump’s policy directions and past actions. Many fear that “Trump 2.0” will push U.S. policies towards greater radicalism and polarization, shunning the compromises and moderation typical of Democratic administrations.
Notably, some U.S. allies and partners who share Trumpian ideology and leadership traits welcome his return. In Europe, far-right movements and Euroskeptics are particularly pleased. Their shared stance on white supremacy, anti-minority and anti-immigrant sentiments, opposition to globalization, and resistance to environmental initiatives align closely with Trump’s platform. Trump’s previous endorsement of Brexit and his initial victory emboldened Europe’s far-right forces. His triumphant return will likely invigorate these groups and even inspire neo-fascist movements with newfound enthusiasm and momentum.
Political leaders in South America who mirror Trump’s ideological style are likely to celebrate his return to power. Among them are Argentina’s President Javier Milei, who came to office a year ago and is often dubbed the “Argentine’s Trump,” and Brazil’s former President Jair Bolsonaro, ousted two years prior but steadfastly strategizing his political comeback. Both leaders anticipate that the resurgence of Trumpism will bolster their political influence and governance models across Latin America.
Traditional European establishment figures, globalists, advocates of European integration, and proponents of transatlantic relations are, in contrast, likely to view Trump’s return with dismay. Memories of Trump’s earlier tenure, during which he undermined the European Union, emboldened far-right movements, pressured NATO members to increase defense spending under the threat of withdrawal, and unilaterally exited various multilateral agreements and international treaties, still linger. Notably, during the COVID-19 pandemic, Trump severed air and sea connections with Europe, effectively abandoning traditional allies. Today, European leaders have two new concerns: Trump could instigate a trade war with Europe through the imposition of tariffs and force European nations to purchase U.S. oil and gas at high prices.
Reactions in Europe to the ongoing Russia-Ukraine conflict are similarly mixed. A second Trump administration might alter the dynamics of U.S.-Russia, U.S.-Europe, and Russia-Europe relations, potentially reducing NATO’s involvement in the conflict and increasing the likelihood that Europe would have to bear greater military responsibilities independently.
Russia, for its part, would likely welcome Trump’s return. Trump has previously expressed admiration for President Vladimir Putin’s strong leadership style and has advocated for a swift resolution to the Russia-Ukraine war, aiming for a normalization of U.S.-Russia and Europe-Russia relations. Should Trump reduce military aid to Ukraine or pressure European nations to sacrifice Ukrainian interests, Russia, currently holding battlefield advantages, could see an expedited path to victory. European nations, sensing this possibility, have proactively signed security pacts with Ukraine to ensure collective defense in the event of diminished U.S. involvement.
Ukrainian President Volodymyr Zelensky may be entering another “darkest hour.” The recently disclosed “peace plan” by Trump, while promising continued military assistance, proposes an 800-mile-long demilitarized zone between Russia and Ukraine and bars Ukraine from joining NATO for the next 20 years. A potential ceasefire modeled after the Korean Armistice Agreement could see both sides halting active combat along current lines, resulting in a prolonged stalemate.
The U.S.’s partners in the Middle East are similarly split, with one clear beneficiary and several discontented parties. The Middle East today differs from its state four years ago, as regional states increasingly emphasize autonomy and seek intra-Islamic dialogue and reconciliation, no longer placing their hopes solely in U.S. involvement—with Israel being the notable exception.
Israeli Prime Minister Benjamin Netanyahu and the powerful Israeli far-right are undoubtedly delighted by Trump’s re-election. Trump’s staunch support for Israel, paralleled by his antipathy toward Iran and Palestine, signals that Israel will find a dependable ally in Washington. This support comes at a critical time, as the Democratic administration’s patience in the region has waned. With Trump back in power, Israel is expected to confidently pursue its objectives across multiple strategic fronts, leveraging U.S. backing for maximum effect. Although Trump is not inclined to entangle the U.S. in Middle Eastern conflicts, he is likely to apply pressure tactics to force concessions from Israel’s adversaries.
For Palestinians, Trump’s return represents a deepening of their plight. They recall that it was Trump who controversially recognized Jerusalem as Israel’s capital, sidelined them with the “Deal of the Century,” downgraded diplomatic relations with the Palestine Liberation Organization, suspended economic and humanitarian aid, and withdrew from UNRWA due to its pro-Palestinian stances.
Iran will also face heightened military, diplomatic, and economic pressure, with an increased likelihood of direct conflict with Israel. Iranians cannot forget Trump’s withdrawal from the Joint Comprehensive Plan of Action (JCPOA) during his first term in office and the subsequent tightening of sanctions. Trump’s directive in 2020 that led to the U.S. military’s targeted killing of General Qassem Soleimani, the commander of the Iranian Revolutionary Guard Corps, which triggered missile strikes against U.S. bases in the Middle East, remains etched in their collective memory.
Saudi Arabia, despite its relatively warm relationship with Trump, may have more reasons for concern than joy. Riyadh faces a complex dilemma between pragmatic and moral imperatives regarding the Palestinian cause. The kingdom has chosen to distance itself from Israel and pursue rapprochement with Iran. Moreover, Saudi Arabia is wary of serving as a “cash dispenser” under U.S. pressure and being coerced into buying American arms, a recurring pattern during Trump’s first term. The potential for a new U.S.-Saudi oil and gas rivalry, spurred by Trump’s plans to flood the market with American energy exports, could exacerbate tensions.
In the Asia-Pacific, responses are similarly mixed, even within individual U.S. partners. Compared to Biden, Trump prioritizes profit over partnership, exhibiting a greater focus on economic and trade benefits for the U.S., while downplaying military alliances and geostrategic commitments.
North Korea may harbor expectations that Trump’s return could lead to a shift from the Biden administration’s policy of strategic neglect, potentially rekindling the momentum of the three summits between Kim Jong-un and Trump. These summits, initially promising steps toward U.S.-North Korea normalization, were effectively stalled due to the COVID-19 pandemic, mutual distrust, and changes in political leadership. A renewed Trump administration could reignite dialogue that has, until now, remained an unfinished diplomatic endeavor.
In contrast, South Korea and Japan are likely apprehensive about Trump’s potential policies that could undermine their military alliances. Trump’s history of pressuring allies to increase defense spending and imposing tariffs on imported goods might compel these nations to recalibrate their strategic positions amidst U.S.-China rivalry, risking a precarious diplomatic balance.
Countries like Australia, New Zealand, the Philippines, Vietnam, Singapore, and India are aware that Trump, known for his transactional approach, might deprioritize their strategic partnerships. This could shift the dynamics in the Indo-Pacific region, where economic interests are placed above security alliances.
China, labeled as the primary adversary by both major U.S. parties, has already experienced the Democratic Party’s assertive policies and Trump’s aggressive tactics during his previous term. Consequently, Beijing has remained composed in response to the White House’s change of leadership, neither cheering nor fearing Trump’s return. China is prepared for Trump’s strategic maneuvers, especially given his doctrine of caution in military engagements but willingness to escalate trade, technology, and financial confrontations. It anticipates that a second Trump term may not lead to military conflicts but could intensify economic warfare, including trade disputes and restrictions on Chinese investments.
On November 7, President Xi Jinping and Vice President Han Zheng sent congratulatory messages to President-elect Trump and his running mate, J.D. Vance, reaffirming China’s consistent principles in handling bilateral relations and expressing expectations for continued engagement. The development of U.S.-China relations under Trump’s leadership is poised to be the focal point of global attention, representing a key determinant of world peace and security.
Proponents of Taiwan independence are among the biggest losers in this shift in U.S. leadership. The Republican Party’s platform has remained silent on Taiwan, omitting any mention of its defense. Trump himself previously demanded that Taiwan contribute 10% of its GDP as a “protection fee,” signaling a transactional approach to its security.
With the Biden administration’s push to transition Taiwan Semiconductor Manufacturing Company (TSMC) into a “Made-in-America” entity, thereby eroding Taiwan’s core industries, further challenges loom. Elon Musk, who maintains a close rapport with Trump and supports the “One China” principle, recently urged his aerospace suppliers to cease sourcing components from Taiwan. This move underscores his recognition of the Chinese market’s importance and implies that Trump’s Taiwan policy may align with Musk’s strategic interests. Consequently, Taiwanese independence leaders, such as William Lai, are left in a precarious position, facing significant political and economic setbacks.
Prof. Ma is the Dean of the Institute of Mediterranean Studies (ISMR) at Zhejiang International Studies University in Hangzhou. He specializes in international politics, particularly Islam and Middle Eastern affairs. He previously worked as a senior Xinhua correspondent in Kuwait, Palestine, and Iraq.
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