Atlantic Council

In recent months, growing tensions in the Taiwan Strait as well as the rapid and coordinated Group of Seven (G7) economic response to Russia’s invasion of Ukraine have raised questions—in G7 capitals and in Beijing alike—over whether similar measures could be imposed on China in a Taiwan crisis. This report examines the range of plausible economic countermeasures on the table for G7 leaders in the event of a major escalation in the Taiwan Strait short of war. The study explores potential economic impacts of such measures on China, the G7, and other countries around the world, as well as coordination challenges in a crisis.

The single most important challenge facing the United States and the democratic world in the twenty-first century is the rise of an increasingly authoritarian and aggressive China under Xi Jinping. China has long had an integrated, operational strategy for dealing with the United States. The United States has so far had no such strategy with regard to China. This is a dereliction of national responsibility. US strategy and policy toward China must be laser-focused on the fault lines among Xi and his inner circle–aimed at changing their objectives and behavior and thus their strategic course. Communist Party elites are much more divided about Xi’s leadership and vast ambitions than is widely appreciated. The foremost goal of US strategy should be to cause China’s ruling elites to conclude that it is in China’s best interests to continue operating within the US-led liberal international order rather than building a rival order, and that it is in the Chinese Communist Party’s best interests to not attempt to expand China’s borders or export its political model beyond China’s shores.

This report assesses the defense policies of Canada, Denmark, Finland, Norway, and Sweden as they apply to the Arctic. Russia’s annexation of Crimea, its militarization of the Kola Peninsula, and its opposition to the liberal international order forced Arctic states to revisit their defense policies. Some focused attention on the Baltic Sea. Others focused on territorial defense. Still others focused on the Arctic. By 2021, however, each state had a relatively well-defined defense policy for the Arctic. This report details each policy’s content, trends over time within each country, and areas of convergence or divergence across countries. The report then places the concept of domain awareness within the context of Arctic defense strategies. The report concludes with recommendations on acquiring and using manned and unmanned systems, data links, distributed basing, and military exercises to ensure a secure and stable Arctic.

The urgency of climate action has clouded the future of oil and gas in the energy transition. Pressure on oil and gas producers to adapt their operations to fit into a net-zero world has grown, from both policymakers and the investment community. But a supply crisis and price spikes have illustrated the danger of moving away from these fuels without a sufficient corresponding uptake of cleaner alternatives. Most models of the energy transition also suggest that continued petrochemical demand and use in transportation will ensure a considerable level of oil and gas demand, even in a net-zero scenario. Oil and gas will thus continue to play a key role in the energy transition. It will be incumbent on the industry, policymakers, and investors to walk a precarious tightrope, keeping markets stable through sufficient continued oil and gas production while pursuing ambitious decarbonization targets. Technologies like clean hydrogen and carbon capture, utilization, and storage, with the potential to lessen oil and gas’ traditionally emissions-intensive footprint, could help. So could carbon offsetting. But clarity is needed, and without it, supply-demand mismatches could rage on without any meaningful emissions reductions to speak of. For the transition to be both smooth and comprehensive, oil and gas will require both rigorous accountability and support for the practices and technologies that can help make them compatible with a net-zero world.

An energy mix enabled by clean technologies will be far more mineral-intensive than its hydrocarbon-based predecessor. Demand for minerals like lithium, nickel, and cobalt is projected to skyrocket over the coming years, with supply chains largely unprepared to scale up accordingly. And procurement of these minerals has been plagued by concerns over environmental impact, human rights violations, and state monopoly over specific parts of the value chain, posing both moral and strategic issues. The onus now falls on policymakers in the United States and Canada to develop resilient, sustainable, and transparent mineral supply chains. As two of the world’s most advanced economies, the US and Canada have the opportunity to take the lead in preempting the emergence of some of the hazards that characterize the oil and gas-based system. It will not be easy; value chains are full of choke-points, and mining operations have not always followed best practices. But to both enable a smooth energy transition and ensure that procurement does not negate minerals’ carbon-reducing benefits, the US and Canada must act now.

Achieving US climate goals requires the development and widespread deployment of all available clean energy solutions. Geothermal energy, while currently only a marginal component of the US energy economy, can contribute significantly to the climate action effort. It has the potential to support deep decarbonization through clean baseload generation, efficient heating and cooling, lithium co-production, and a host of other applications. However, current policy towards geothermal energy has, thus far, prevented the emergence of a vibrant market that would stimulate sector growth. To realize the potential of geothermal energy, public- and private-sector leaders must support policies that encourage geothermal industries and address regulatory, technical, and economic barriers. This report and accompanying two-pager make several recommendations with the potential to optimize US geothermal policy to set the sector up for a central role in the fight against climate change.

Russia and China are often mischaracterized as allies. There is a perception that their revisionist preferences for international order align, and that their desires for a less US-centered international order mean they are collaborating toward this end. The challenge they pose to the United States has been acknowledged by the Obama, Trump, and Biden administrations, and “great power competition”’ (GPC) or “strategic competition” has replaced counterterrorism at the center of US strategy. The Biden administration’s 2021 Interim National Security Strategy Guidance states that “we face . . . growing rivalry with China, Russia, and other authoritarian states.” It describes China as “the only competitor potentially capable of combining its economic, diplomatic, military, and technological power to mount a sustained challenge to a stable and open international system,” and Russia as “determined to enhance its global influence and play a disruptive role on the world stage.” The Pentagon’s “2+3” framework for GPC has China and Russia as the two primary threats, and North Korea, Iran, and terrorism as the three secondary threats, reinforcing a two-tiered system that implies that “China and Russia are similar threats while the others are lower in priority.” In the Middle East and North Africa (MENA), their behavior-tandem vetoes on Syria at the United Nations, mutual anger about Libya, arms exports to traditional US allies, and cooperating with Iran despite multilateral sanctions5—feeds into the perception that they have a coordinated agenda to push out the United States, or at least to challenge its preponderance there. In a February 2021 speech by General Kenneth F. McKenzie, commander of the US Central Command overseeing MENA and Central Asia, he noted that “the United States faces increasing competition in the region from Russia and China, both vying for power and influence through a combination of diplomatic, military, and economic means. This adds another layer of tension and instability to an already complex and challenging region.” This report provides a comparative analysis of the approaches that China and Russia have adopted to develop their regional presence in MENA across four realms of influence: political, economic, security, and public diplomacy.