This week is a significant one for the world with both a G-7 nation summit that concluded on Tuesday in Bavaria, Germany, and a NATO summit in Madrid, Spain that starts today.
The leading nations are struggling to further respond to the Russian threat in Ukraine and neighboring European nations, related threats of regional (if not world-wide) food shortages and the high cost of energy, and growing security threats from China, Iran, and North Korea.
So what are the key outcomes leading up to, and following the discussions so far? Here is a quick rundown of the most significant:
U.S. NATO Expansion in the European Theater
The United States announced that it will expand its presence in the European theater including the establishment of a permanent "Forward Command Post" in Poland; an additional rotational Brigade Combat Team, this one placed in Romania; enhanced rotational deployments in Baltic countries (armored, aviation, air defense, and special operations forces); working with Spain to increase destroyers stationed in Rota from four to six; adding two squadrons of F-35 aircraft to the United Kingdom; and, stationing additional air defense and other enablers in Germany and Italy. About 20K troops have so far been added to Europe since Russia's invasion of Ukraine, bringing the total number of U.S. troops in Europe to 100K.
Finland, Sweden, and NATO
Turkey has apparently dropped objections to Finland and Sweden membership bids for NATO ahead of the NATO summit. Both Finland and Sweden submitted letters to NATO (May 17th) formally requesting membership, but Turkey previously expressed concern that these countries harbor what Turkey considers to be Kurdish terrorists. Reporting indicates that Turkey “got what it wanted” from negotiations with Finland and Sweden, though the details of any agreement have not been made public.
NATO Defense Spending Commitments
NATO participants reiterated support for the Wales Pledge on national defense spending, including NATO’s benchmark nation goal of 2 percent of Gross Domestic Product (GDP). The White House claims that 9 NATO Allies will meet or exceed this commitment this year, another 19 have clear plans to meet the benchmark by 2024, and an additional 5 have made "concrete commitments" to meet it thereafter. By the end of 2022, the White House claims that European Allies and Canada will have spent an additional $350 billion on defense in real terms since 2014.
Ukraine & EU Candidate Membership Status
The European Union (EU) granted candidate membership status to Ukraine. Besides Ukraine, current nations with candidate status include Albania, the Republic of North Macedonia, Montenegro, Serbia and Turkey. Kosovo and Bosnia and Herzegovina are currently considered “potential candidates.” Moving from being a mere candidate to an EU member can take years, sometimes decades; for example, Turkey has been a candidate member since 1999.
Russian Gold Sanctions
The United States, the United Kingdom, Canada, and Japan agreed to ban imports of Russian gold as a follow-on sanctions measure for Russia’s invasion of Ukraine, though this ban does not include gold that was previously mined and exported from Russia. It is not currently known if remaining G-7 nations will join this ban (i.e., France, Germany, and Italy.) The likely impact of such a ban is not clear, as both India and China continue to purchase Russia’s other sanctioned commodities, albeit likely at a market discount.
Russian Oil Price Cap
G-7 nations agreed to “explore” the implementation of a price cap on purchases of Russian oil. The U.S. had proposed a Russian oil price cap that could be enforced by lifting sanctions on insurance for cargo ships transporting Russian oil if they agree to buy the oil at a settled maximum price. While the U.S. no longer purchases Russian oil, other European nations continue to do so for the near term. And, India and China also purchase Russian oil, which undermines sanctions. Ultimately, analysts believe the Russian oil sector is doing well, if not better, than before the war given the increasing price of oil on world markets.
Decarbonization Backsliding
Environmental organizations are concerned about a perceived backsliding by G-7 countries this week on previous commitments to decarbonize. While the G-7 re-affirmed prior commitments to a “fully or predominantly decarbonized power sector by 2035,” they qualified this a bit by stating that because of circumstances arising from the war in Ukraine, “publicly supported fossil fuel investments can be appropriate as a temporary response.” This will be particularly relevant to Europe, especially Germany, as it tries to wean itself off Russian gas and makes infrastructure investments to support obtaining natural gas from other sources.
World Food Insecurity
G7 nations agreed (June 28th) to actions to help relieve worldwide food insecurity in the wake of the situation in Ukraine, worldwide inflationary pressures, and a shortage of fertilizer. Its overarching action was a commitment to provide $4.5 billion towards food insecurity covering 47 affected countries.
Half of the total assistance, $2.76 billion, will be provided by the United States. U.S. support will likely be drawn in large part from a $40 billion Ukraine military and humanitarian assistance response package signed into law in May. Of the U.S. assistance, $2 billion will be used to help save lives through “emergency interventions,” likely direct food supply support. Another $760 million will be for sustainable near-term food assistance to help mitigate further increases in poverty, hunger, and malnutrition in vulnerable countries impacted by high prices of food, fertilizer, and fuel.
Iran Nuclear Negotiations
The European Union is leading the restart of Iran nuclear control talks this week in Doha, Qatar. The United States is participating indirectly given Iran’s opposition to direct U.S. participation. This restart is considered to be critical, and perhaps will mark the end of any negotiations if a deal cannot be struck.
Iran is reportedly just weeks from having enough nuclear material to develop a bomb, though this claim was made earlier this year when the last round of negotiations in Vienna, Austria broke down (February). Having enough material does not necessarily mean a bomb is ready; successfully building a bomb could take months after production of the required material.
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