Twists and Turns: Ukraine's natural resources wealth and post-war settlement

A game theory-inspired thought experiment

Prelude: Lately, I’ve revisited some concepts in ‘game theory’ to explore dynamics in the Ukraine situation, and in relation to broader global dynamics. What follows is an exploration of an unfolding hypothetical scenario as it relates to the question Ukraine’s natural resources deposits. I was curious to explore some seemingly ‘out of the box’ propositions, which could dramatically shift the negotiating and overall strategic outcomes of global geopolitics. The hypothetical scenario is tackled through progressively adding in new parameters and considerations, over what I call five Acts.

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Context

The US is mounting increasing pressure on Zelensky to sign a ‘deal’ on Ukraine’s natural resources wealth. A ‘deal’ may well have been agreed. Whether it’s rare earths, gas or “anything else”, US President Donald Trump has made it clear he wants it as repayment for American assistance given to Ukraine to date. The fact that this is a fundamental change in the terms of the discussion concerning natural resources, which were totally focused on providing financial support for America’s future security guarantees (not for payment for past gifts) need not detain us here for now. I dealt with this in a previous post in the context of an emerging ‘Trump Apologia’.

In this essay, I use insights from game theory to think through some possible dynamics, inspired by the recent argy-bargy over Ukraine’s rare earth elements and other natural resources. The thought experiment is focused on a hypothetical case, as will become clear. The limitations of game theoretic propositions, when narrowly defined, will become clear. That said, the analysis does throw up a potential ‘out of the box’ move, which is that the Russians or even the Europeans insist that as part of any settlement, Ukrainian natural resources wealth remains owned by Ukraine. The introduction of China into the dynamic adds complexity, which could result in a rejuvenated EU and a consolidation of Eurasia as an economic ‘zone’.

The big ‘if’ is whether the EU and with it Ukraine are capable of grasping the opportunity?

Act 1: Starting game parameters

The principal parameters of the starting base case are as follows:

1. There are three actors: Ukraine (UKR), United States (US) and Russia (RU). (I add more actors later.)

2. The US and UKR were allies; US provided UKR with resources to engage in a conflict with RU.

3. RU has, however, defeated UKR.

4. Now the US wants UKR to give it rights to critical resources. Doing so would enrich the US at UKR’s expense. UKR wants the US to continue providing resources to keep the dispute with RU going. The US refuses. RU and US are now in discussions to settle the dispute between UKR and RU.

5. The first strategic intervention in this context is that RU insists that as a condition of settlement the resources that the U.S. wants for UKR must remain fully owned by UKR. All parties know that RU will prevail in the conflict regardless.

Given these basic parameters, the question I am exploring is: what’s the optimal outcome and strategy for RU and UKR? There are other strategic questions of course, so this exploration should not be taken as comprehensive. It is largely a mental exercise exploring how game theory can help us clarify the dynamics and issues at stake, while also exemplifying the limits of game theory.

Key Strategic Dynamics

So, what are the key strategic dynamics?

For RU, the following are the main features relevant to the game:

1. RU has already defeated UKR and is in a dominant position.

2. RU and U.S. are now negotiating a settlement of the dispute.

3. RU can use its leverage to influence the terms of the post-conflict arrangement.

As for UKR, we have the following:

1. UKR is in a weakened position but wants to continue receiving U.S. support.

2. UKR would prefer to retain its critical resources rather than ceding them to the U.S., but it lacks leverage.

And last but not least, we have U.S.:

1. U.S. no longer supports UKR but wants rights to critical resources.

2. It is negotiating with RU and could trade economic, security, or diplomatic concessions for access to these resources.

RU’s Optimal Strategy

So, what is RU’s optimal strategy? In short, RU should maximise its leverage by playing U.S. and UKR against each other while securing a favourable long-term settlement. The best strategy includes:

1. Ensuring that UKR retains full ownership of its critical resources as a condition of the settlement, preventing U.S. from extracting wealth at UKR’s expense. This accomplishes two objectives. Firstly, it reinforces RU’s narrative that U.S. abandoned UKR after using it in the conflict. This is helpful to UKR as it seeks to rebuild empathetic support or mitigate the risk of abandonment by other erstwhile allies. Secondly, it secures a level of economic dependence between UKR and RU, potentially allowing RU to exert greater economic influence over UKR’s resources in the future. This is some thing that UKR would resist ceteris paribus, but it may be the price it is willing to pay to keeping all the resources (and income from the development of these) for itself.

2. Negotiating concessions from the U.S. in exchange for settlement terms. RU could offer U.S. some limited economic or strategic benefits (e.g., energy agreements, diplomatic resolutions, or security guarantees) in exchange for U.S. agreeing to a settlement. This seems unlikely at this stage given the extent to which RU holds the upper hand on the battlefield. If the U.S. insists on securing resource rights from UKR, RU can extract further concessions by positioning itself as the ‘protector’ of UKR’s sovereignty over those assets. This is ironic, and due to ‘irrational’ considerations, may be rejected by Ukraine. (This is one of the limitations of a hyper-narrow conceptualisation of ‘rational’.)

3. Keeping UKR strategically dependent on RU. UKR remains vulnerable and still needs resources to function post-conflict. RU could position itself as the primary economic and security partner for UKR, thereby strengthening its regional control. This is a challenge given the depth of ill-feeling and bad blood between RU and UKR. In this set of conditions, given UKR reluctance to concede its resources to the US and concede to RU, there may be room for a third party eg., the EU or China, or a combination of both acting in concert, to provide the economic security guarantees that may be acceptable to UKR. These possibilities were outside the parameters of the starting scenario, but this mental process certainly helped identify these as possibilities to explore further. These actors are introduced in Act 2 below.

UKR’s Optimal Strategy

We now turn to UKR. UKR is in a very weak position but can still pursue the best of bad options, namely:

• Aligning with RU on the resource issue. UKR can use RU’s stance against U.S. claims on its resources as a bargaining chip. By agreeing with RU that U.S. should not take the resources, UKR strengthens RU’s position while preserving more economic independence for itself. This could lead to better post-war economic terms with RU instead of losing resources to U.S. without continued support. UKR is trying to force the U.S. to provide security guarantees in return for access to resources, but the U.S. has no compulsion to do so. Therefore, acceding to the offer from RU may well be a better outcome. This is a bitter pill to swallow, and therefore creates an opening for third parties to enter the dynamic. The Europeans could see this as an opening to insert themselves in ways that preserve their reputation as ‘defenders of UKR’ while refashioning a post-U.S. status for the Europeans.

• Seeking a post-war settlement that maximises UKR’s survival. UKR can attempt to negotiate post-war reconstruction aid or favourable trade terms with RU. If U.S. is unwilling to provide further support, UKR has little incentive to prioritise U.S. economic interests. At this stage, this seems improbable, but as Ted Snider has wondered, perhaps one day, Ukrainians may end up hating the Americans more. The sense of betrayal cuts deeply for some Ukrainians.

Conclusion Act 1: The Optimal Outcome

So, what are the preliminary conclusions from this albeit limited mental exercise? The optimal outcomes given the parameters would be the following:

• RU ensures that UKR retains full ownership of its critical resources, preventing U.S. economic exploitation and keeping UKR within its sphere of influence. The mere act of proposing that this be the case could catalyse responses from UKR and the U.S., which may drive further wedges between the two. This is likely to be in the interests of RU. At the same time, doing so would put U.S. in a difficult position; it would be seen to be exploiting UKR when an objectively better option is on the table. Lastly, given bad blood and ill-feeling, even if accepting the RU offer would be in material terms the optimal choice for UKR, it may seek to activate alternatives including bringing in third parties eg., Europe and China.

• RU extracts diplomatic or economic concessions from the U.S. in exchange for agreeing to a broader settlement. This is definitely on the cards, as my more detailed essays have discussed.

• UKR aligns with RU on the resource issue, strengthening its post-war economic position rather than conceding to U.S. demands without ongoing support. As noted, this seems far-fetched at this stage, but may create new openings for others to enter into the negotiations.

Ultimately, in these strategic scenarios, RU emerges with both military and economic dominance, while UKR avoids outright economic subjugation to the U.S. However, the price it pays is making concessions to RU. This may be unpalatable at this moment in time. The U.S. may have to settle for a negotiated resolution that includes some concessions to RU rather than full access to UKR’s resources. This is suboptimal for the U.S., suggesting that while the U.S. started the negotiations with a strong hand, its hand was actually quite fragile and open to being watered down.

Act 2: Adjusted Parameters

Ok, let’s explore this scenario by adjusting the parameters.

• I will add two new actors: EU and China.

• EU is a UKR ally, trusted by UKR. EU feels U.S. is withdrawing and senses betrayal. Of course the U.S. rejects the allegation of betrayal but it is the EU’s behaviour that matters.

• Lastly, China has been neutral though EU views China as tacitly supporting RU. However UKR is open to China’s assistance. When RU insists that UKR resources stay in UKR hands, UKR is worried about falling in RU’s orbit too much.

We now wonder, can the EU and / or China intervene and offer to husband the resources for Ukraine? China has the capacity to mine and downstream value add. The EU could provide political guarantees that UKR would find comfort in. Distance is therefore put between UKR and RU. Is this optimal for EU and / or China? How would the U.S. seek to respond to these counter proposals?

With the introduction of EU and China, the strategic landscape shifts significantly. Let’s analyse how each actor’s interests and leverage evolve and whether EU or China can intervene effectively.

Key Adjustments to the Strategic Landscape

With the addition of these actors, the strategic landscape will need to be updated. In summary, from the point of view of each of the actors, we have the following:

1. RU’s Position: RU still insists that UKR retains full ownership of its resources, preventing U.S. from exploiting them. RU now faces a potential challenge: EU and China may step in as alternative partners for UKR, weakening RU’s post-war influence. RU must decide whether to tolerate EU or China’s involvement or push UKR into deeper dependence.

2. UKR’s Position: UKR doesn’t want to be fully dependent on RU post-war but also fears losing sovereignty over its resources. UKR is open to China’s assistance but needs assurances that China won’t just align with RU. UKR trusts the EU politically and may prefer a deal brokered by the EU.

3. U.S. Position: U.S. wants access to UKR’s resources, but RU blocks it. U.S. now faces the risk of losing control over UKR entirely if EU and China step in. U.S. may try to discredit China’s involvement and pressure EU to stay aligned with U.S. policy.

4. EU’s Position: EU feels betrayed by U.S. withdrawal and is now looking to assert its own geopolitical agency. EU is politically aligned with UKR and could offer political guarantees (security guarantees, reconstruction funding, trade deals) to keep UKR from falling into RU’s sphere. EU does not have China’s industrial capacity to extract and refine critical resources, meaning it may need China’s involvement.

5. China’s Position: China has the industrial capacity to extract, refine, and downstream process UKR’s resources, making it an ideal economic partner. China has maintained neutrality, but EU perceives China as tacitly pro-RU. If China plays its cards well, it could position itself as UKR’s economic saviour while balancing ties with RU.

Can EU and China Intervene?

The obvious question is to wonder whether the EU and China can intervene. In short, the answer is, yes, both EU and China can intervene. However, their approaches would be different.

Scenario 1: EU-Led Arrangement (Political Guarantees for UKR)

In this scenario, the EU offers a political and economic protection agreement for UKR’s critical resources. The EU may propose a European-based mining and refining consortium that keeps UKR’s resources within the European framework (e.g., investments from Germany and France). This creates distance between UKR and RU, satisfying UKR’s concerns. However, EU lacks the ability to fully exploit the resources without external help.

There are, therefore, a number of challenges that this scenario would confront. The EU lacks mining and processing capacity, meaning it still needs China or another industrial partner. If China is excluded, EU is reliant on U.S., which may refuse to help, wanting direct control over the resources instead. RU may resist EU’s role, seeing it as another Western attempt to limit its influence.

Scenario 2: China-Led Arrangement (Economic Leverage for UKR)

In this scenario, China offers to invest in mining and processing infrastructure in UKR. This helps UKR avoid economic dependence on RU while ensuring that RU doesn’t gain control over resources. China gets a strategic foothold in European critical minerals, enhancing its own supply chain.

All scenarios involve challenges, and this is no different. Challenges include the fact that the EU is wary of China’s influence and may try to limit Chinese involvement, and that the U.S. may launch an aggressive counter-strategy, warning UKR that Chinese involvement means ‘selling out’ to a new power.

Scenario 3: EU-China Joint Custodianship of UKR’s Resources (Hybrid Model)

This is the most pragmatic yet complex solution. In this scenario, the EU provides political guarantees (security, governance, and economic oversight), while China provides industrial capacity (mining, refining, supply chains). UKR gets economic benefits while staying politically tied to the EU, preventing full dependence on RU or U.S.

However, it is more than likely that the U.S. will oppose this, fearing that EU is breaking away from U.S. policy and that China gains influence. On the other hand, RU might tolerate this if China is involved (as RU maintains strong ties with China) but could resist if it feels UKR is drifting too far westward.

How Would the U.S. Respond?

So far, much of the analysis has focused on the actions of the RU, UKR, EU and China. But, the U.S. has a major stake in all of this, so how would the U.S. respond? Firstly, the U.S. would view both EU and China’s involvement as a direct challenge to its post-war strategy. The U.S. is clear in its policy commitment to stymying China, and has no interest in aiding European re-industrialisation, when it sees this as a threat to its own industrial ambitions. The likely responses from the U.S. include:

1. Attempting to pressure the EU. The U.S. may pressure EU to block China’s involvement, arguing that China cannot be trusted with critical mineral supply chains. It might offer EU better trade deals or security arrangements to dissuade it from working with China.

2. Discrediting China’s role in UKR. The U.S. may use diplomatic, media, and intelligence channels to paint China as an opportunist that would exploit UKR’s resources just as much as RU. The U.S. may also highlight China’s human rights record to turn EU public opinion against Chinese involvement. These issues were successfully leveraged in the past to scupper the EU-China investment agreement.

3. Offering UKR an alternative deal. If U.S. sees its influence slipping, it may offer UKR a new deal (limited financial support or investment in exchange for partial resource access). However, this would be difficult since RU has already blocked U.S. direct access to the natural resources. It is clear that RU has a strong hand of ‘denial’ in this configuration, even if it does not have a strong positive hand to play.

4. Sabotaging a EU-China Partnership. If EU and China move forward with a joint plan, the U.S. may try to exploit EU-China tensions, pushing EU to distrust China. This could include sanctions, trade restrictions, or diplomatic manoeuvres to split EU and China apart before they can finalise a deal.

Conclusion Act 2: The Optimal Outcome for UKR, EU, and China

Act 2 introduced more actors into the game, which unsurprisingly gave rise to more possibilities. We are interested ultimately in what course of actions may constitute the most optimal outcome for different actors.

The best outcome for UKR is a EU-China hybrid arrangement, where EU provides political guarantees and China provides industrial capacity. For EU, the best outcome is leadership over the resource strategy, keeping UKR politically aligned while securing access to critical minerals. For China, the optimal outcome is securing long-term economic deals in UKR without overly antagonising the EU.

RU may see China’s involvement as acceptable, and therefore tolerate the arrangement as long as it doesn’t shift UKR entirely into the EU’s sphere. However, if RU sees EU as a threat, it may push UKR into deeper dependence to counterbalance EU’s role. Thus, modulating RU’s perspective is key to this set of outcomes taking place.

As for the U.S. it faces a lose-lose scenario if EU and China succeed in taking over UKR’s resource management. The only way for U.S. to reassert influence is by driving a wedge between EU and China or offering UKR last-minute financial incentives. This would not be the kind of ‘win’ that the U.S. is presently angling for.

A EU-China resource custodianship offers the most balanced outcome, limiting RU’s dominance over UKR while blocking U.S. extraction efforts. However, this requires EU and China to resist U.S. pressure and navigate RU’s reactions carefully. UKR benefits from retention of sovereignty over the resources and their economic value.

Act 3: EU Priorities

Given that the EU is in desperate need to re-industrialise, it could seek to entice Chinese capital to set up downstream value chains in sectors associated with rare earths and critical minerals. This would be a highly strategic move for the EU. Given its urgent need to re-industrialise and secure resilient critical mineral supply chains, the EU could leverage Chinese capital and expertise to establish downstream value chains in rare earths and other critical mineral-dependent industries. This approach aligns with EU's broader goals of reducing dependence on the U.S. and RU while maintaining autonomy in strategic sectors.

Why This Strategy Makes Sense for the EU

There are a few reasons why such a strategy would be beneficial to the EU. These include:

1. Re-industrialisation Imperative: The EU’s green transition and high-tech sectors (EVs, wind turbines, semiconductors, etc.) require stable access to processed critical minerals. Decades of outsourcing have weakened Europe’s industrial base—this is an opportunity to rebuild domestic supply chains.

2. China’s strength in processing & refining: China dominates 80%+ of global rare earth refining and has extensive experience in integrated value chains. Rather than relying on imports, the EU could bring Chinese capital and technology into Europe to build joint ventures for refining and manufacturing. This keeps more value-added economic activity inside the EU, rather than just importing refined minerals from China.

3. Reducing dependence on U.S. and RU: The U.S. is increasingly using economic pressure to control allies’ access to critical minerals, as seen with the Inflation Reduction Act (IRA). The EU does not want to be solely dependent on U.S.-controlled supply chains and needs a counterweight—Chinese investment could help as an offset or as a ‘hedge’. RU remains a major resource supplier, but post-UKR conflict, the EU cannot rely on RU and must diversify.

4. China gains a stronger foothold in Europe: China wants to expand its economic influence in Europe, particularly in sectors where it is already a leader (EV batteries, solar panels, rare earths). If Chinese firms set up refining and processing plants inside the EU, they would circumvent trade restrictions that might be imposed on China-based exports, gain political goodwill from European governments and further reduce their vulnerability to U.S.-led economic restrictions.

How This Could Work in Practice?

All this sounds good in theory, so what does this begin to look like in practical terms.

For starters, the EU could initiate discussions for EU-China joint ventures in critical minerals processing. The EU could invite Chinese firms (e.g., Baotou Rare Earths, Shenghe Resources) to invest in European-based refining and processing plants. Locations could include Germany, France, Poland, or Scandinavia, where there are existing industrial hubs. This keeps the entire value chain inside the EU, reducing dependence on China’s domestic facilities.

The EU could promote co-investment opportunities in European EV and Battery Supply Chains. European automakers (Volkswagen, Renault, Stellantis) need rare earths, lithium, and nickel for EV production. China’s CATL and BYD could partner with European firms to establish processing hubs inside Europe, ensuring a stable supply of battery metals.

Thirdly, the EU could promote opportunities to develop rare earth refining capacity in EU-linked Countries. The EU could promote the building of refining capacity in North Africa or Eastern Europe, using Chinese technology and capital. Again, this keeps supply chains closer to Europe while diversifying sources.

Lastly, the EU could facilitate strategic agreements with UKR on critical minerals. If UKR resources are to stay in UKR hands, the EU could offer UKR political and economic guarantees in exchange for priority access to its mineral output. China could fund the infrastructure, but refining could be done inside the EU under an EU-controlled framework.

How the U.S. Might React

Should the EU act in the manner described, the U.S. would likely oppose it aggressively. The U.S. would be concerned about losing control over EU supply chains. If EU-China collaboration succeeds, the EU would not need U.S. critical minerals policies or investments. This threatens U.S. efforts to bind Europe to U.S.-controlled supply chains under the Inflation Reduction Act and other policies. Of even greater concern is that tighter EU-China links would undermine the U.S. strategy against China. The U.S. wants to isolate China from high-tech supply chains, and EU-China critical minerals cooperation weakens this effort. American pressure would likely increase on Brussels, Berlin and Paris to limit Chinese involvement.

The U.S. pressure could escalate to include economic retaliation measures. The U.S. could respond by threatening tariffs on European EVs and batteries, limiting tech-sharing agreements with European firms that cooperate with China and blocking U.S. funding for EU energy and industrial projects.

Can the EU Resist U.S. Pressure?

The million dollar question is whether the EU could resist U.S. pressure. The short answer is, who knows? There are plenty of historical reasons that suggest that the EU would be easily pressured by the U.S. to not pursue deeper economic inter-relations with China. All other things being equal, one would think that this would underpin EU reluctance to contemplate, let alone pursue, this path. However, things are no longer equal, which may open up new ways for the EU to think about its current and medium term economic and security interests.

There’s also likely to be differences in willingness to resist U.S. pressure across the member states of the EU. Perhaps a compromise would be forged, keeping U.S. involved in some aspects, such as allowing U.S. firms to participate in financing or governance of new projects.

Conclusion Act 3: A Strategic Opportunity for the EU

If executed carefully, this could be a turning point for European industrial policy—allowing the EU to regain technological independence from both the U.S. and RU, while maintaining economic pragmatism with China. The EU gains industrial capacity, supply chain security, and economic resilience. China gains a stronger economic presence in Europe and secures mineral partnerships outside its own borders. UKR benefits by keeping sovereignty over its resources while integrating into a European-led supply network. The U.S. is the main loser unless it finds a way to stay engaged without controlling the process outright.

The assessment so far indicates that far from being unable to exercise ‘agency’, there is plenty of potential scope for the EU to pursue alternative policies that could bring significant benefits. The barriers to this are, in the first instance, largely twofold:

1. First, the Europeans need to come to terms that the war against Russia is in effect lost, or to put it less painfully, cannot be won. The U.S. has admitted this already, giving them ‘first mover advantage’ in framing the post-war settlement.

2. Second, and related to the first point, is that the Europeans will need to come to terms with centuries-old Russophobia. This is, perhaps, the greatest impediment to Europe’s ability to pursue a new policy direction. Suspending or ‘parking to one side’ dislike of one’s neighbours enables the EU to recalibrate its posture on more ‘professional’ terms.

The ‘agency envelope’ is conditional on material resources on the one hand, and the conceptual frames that are mobilised on the other. The conceptual frames determine the ‘field of the visible’, including the strategic pathways that are possible. These two barriers seriously constrain the European ‘agency envelope’, but clearly do not constrain that of the U.S.

Act 4: American lock in

Interestingly, the U.S. may actually be compelled to give up attempts to extricate itself from Europe and possibly UKR should these sorts of scenarios begin to unfold. This would satisfy European hawks, while still enabling RU to force a new security architecture on the U.S. and the EU / NATO along the lines of the draft treaty and agreement put forward by RU on 17 December 2021. American ambitions to free up resources from Europe to target the Pacific would thus be thwarted as well.

Should such a scenario unfold, it could trap the U.S. in Europe, preventing its long-term strategic pivot to the Pacific. If the EU and China successfully deepen critical mineral and industrial cooperation, it could trigger a cascade of geopolitical consequences that force the U.S. to recommit to European security, even as RU reshapes the security order in its favour. The U.S. commitment is likely on reduced terms, as the Europeans themselves respond to the challenge by stepping up their own commitments. The U.S. can hardly complain about that.

How This Could Unfold: A Step-by-Step Breakdown

Let’s think through a possible sequence of events, to illustrate how something like this could unfold.

First, EU and China achieve an economic detente involving a EU-China critical minerals partnership. This fundamentally shifts EU’s strategic position. The EU’s need for re-industrialisation leads it to accept Chinese investment and technology for rare earth processing and other critical supply chains. This reduces EU dependence on the U.S., making European policymakers more assertive in seeking strategic autonomy. European hawks—who want greater security commitments against RU—might use this shift to demand greater U.S. involvement in Europe, contradicting the U.S. desire to pivot to Asia.

In this context, the U.S. realises it cannot withdraw from Europe. If the EU-China cooperation proceeds, U.S. leverage in Europe weakens. European hawks (e.g., Poland, Baltic states and Nordic countries) demand that the U.S. maintain its military presence in NATO, fearing that an emboldened RU will reshape European security. This undermines U.S. plans to shift military and economic focus toward the Pacific, especially against China.

Meanwhile, RU exploits the shift to push for a New Security Architecture. It has long sought a new European security framework that limits NATO expansion and enshrines RU’s influence over post-Soviet states. The RU draft treaty (December 17, 2021) called for:

• No NATO expansion to Ukraine or Georgia;

• No U.S. or NATO military deployments in Eastern Europe, Ukraine, or former Soviet territories; and

• A rollback of NATO’s military presence to its 1997 boundaries.

If the U.S. is bogged down in Europe due to EU pressure and the China factor, RU could force negotiations on this new security architecture, especially if NATO is divided on how to respond.

If the U.S. pulls out of Europe, it leaves NATO vulnerable, creating deep political rifts. RU dominates Eastern Europe, achieving many of its strategic goals without direct confrontation. The EU might still expand its ties with China, making the U.S. even less relevant in Europe’s economy.

The U.S. Faces a Dilemma: Europe vs. the Pacific.

If the U.S. stays in Europe, it weakens its Pacific strategy, which was supposed to focus on containing China. At the same time, RU consolidates its influence over Ukraine and the former Soviet space. The EU gains more economic independence through its China partnerships. In effect, the EU begins to find a pathway away from being what I have previously called the ‘fag end’ of a transatlantic power relationship, and towards being the western bulwark of a Eurasian economic continent.

China wins either way. If the U.S. remains in Europe, the U.S. cannot focus fully on the Pacific, allowing China greater strategic flexibility in East Asia. If the U.S. leaves Europe, China deepens economic ties with the EU, while RU reshapes the security architecture in its favour.

Final Outcome: RU Achieves Its Long-Term Objectives

RU doesn’t need to ‘win’ militarily in Ukraine outright—it only needs to ensure the U.S. remains entangled in Europe, but on revised terms, while RU and China build alternative global alignments. John Mearsheimer has talked of RU wanting the Americans to remain in Europe as a balancing force; this analysis suggests that there are other reasons why RU may prefer this without assuming the U.S. would fulfill such a balancing role.

The U.S. strategic pivot to Asia is thwarted, weakening its position against China. This enables the fashioning of a new security architecture for the eastern end of the Eurasian continent, which involves partners in North and South East Asia at a minimum.

NATO faces new fractures between hawkish members (e.g., Poland, Baltic states) and those open to a new security arrangement with RU (e.g., Hungary, Slovak Republic).

Key Strategic Takeaways

Europe’s need for industrial recovery can unravel U.S. strategy. The EU needs critical minerals and downstream supply chains for green tech and re-industrialisation. If China fills this gap, the EU becomes less dependent on U.S. supply chains, reducing U.S. influence over European economic policy. The U.S. can’t really help EU achieve its re-industrialisation aims, as they are competing for the same industrial capacity going forward.

The U.S. faces a no-win scenario. If it stays in Europe, it delays its Pacific strategy, benefiting China. If it leaves Europe, RU gets its long-sought security guarantees, and China consolidates economic influence in Europe.

RU benefits from U.S.-EU divergence. RU could use U.S. distractions and NATO fractures to negotiate a security framework limiting U.S. military influence in Eastern Europe. This could legitimise RU’s sphere of influence, fulfilling its pre-2022 strategic objectives.

China’s position becomes stronger. China secures economic footholds in Europe while keeping RU as a strategic partner. The U.S. is stuck managing European security instead of focusing on countering China in the Pacific.

Conclusion Act 4: A Strategic Defeat for the U.S.?

If the EU and China deepen economic ties around critical minerals, industrial supply chains, and infrastructure, the U.S. cannot extricate itself from Europe without suffering strategic losses. This would fulfill RU’s objective of reshaping Europe’s security architecture while China benefits from a distracted U.S.

Essentially, RU and China use the EU’s industrial needs to prevent the U.S. from fully executing its Pacific pivot—forcing Washington into an extended European commitment that weakens its global strategy.

Act 5: Just the threat of China is enough

Even the mere threat of China deepening strategic ties with the EU would be enough to force the Americans to rethink their preference to pivot away from Europe. Meanwhile, China could work closely with individual European states such as Hungary to build downstream capacity in any case. At the same time, due to its victory in Ukraine, RU can dictate a new Eurasian security architecture along the lines of its draft treaty presented in late 2021. The U.S. is ensnared in Europe but weakened; the U.S. cannot pivot to Asia in the way it wants.

This strategic uncertainty would effectively trap the U.S. in Europe, preventing it from concentrating its resources on countering China in the Pacific.

Meanwhile, RU, having secured a victory in Ukraine, would be in a position to dictate a new Eurasian security order—one that aligns with its December 17, 2021, draft treaty—forcing the U.S. and NATO to accept new security constraints.

Key Strategic Developments in This Scenario

1. China’s “Threat” of Economic Engagement with the EU Forces a U.S. Rethink

The U.S. does not want China to gain a strategic foothold in Europe, particularly in critical minerals, EVs, and industrial supply chains. Even if China does not fully integrate with the EU, merely signalling an intent to do so could panic Washington into maintaining its European security focus. The U.S. then cannot afford to fully pivot to Asia, since it would leave Europe open to Chinese and RU influence.

2. China Works with Key EU States Like Hungary to Build Strategic Infrastructure

Even if the broader EU is cautious, China could deepen bilateral ties with Hungary (a pro-China, pro-RU EU member) and other strategically positioned European states. This could include:

• Joint downstream processing facilities in Hungary, Serbia, or other receptive European states.

• Infrastructure investments in logistics, energy, and advanced manufacturing.

• Technology transfer agreements that make Europe less dependent on U.S.-controlled supply chains.

This creates a wedge inside the EU, making it harder for the U.S. to coordinate a unified anti-China stance.

3. RU’s Victory in Ukraine Enables It to Reshape European Security

With the U.S. reluctantly bogged down in Europe, RU is free to negotiate a new Eurasian security order based on its December 2021 proposals:

• No NATO expansion eastward (effectively blocking Ukraine and Georgia from NATO).

• No NATO military presence in Eastern Europe, rolling back forces to 1997 levels.

• Recognition of RU’s sphere of influence over post-Soviet states.

The EU, already divided, would struggle to resist, particularly as Germany and France focus on economic recovery. NATO would be weakened, with internal divisions growing between hawkish members (Poland, Baltics) and those willing to reach a settlement with RU.

4. The U.S. is Trapped in Europe but in a Weaker Position

Instead of executing a clean pivot to Asia, the U.S. is forced to maintain a European commitment to prevent RU from reshaping the continent’s security order. But this is not a strong U.S. presence—it’s a reactive and defensive one, as the EU diversifies its economic partnerships and NATO struggles with internal divisions.

This ensures that China faces less U.S. pressure in the Pacific, as U.S. resources remain tied up in Europe.

Strategic Outcomes: Who Wins? Who Loses?

Under the unfolding scenario considered in this exercise, the winners would be:

• RU, which achieves its pre-2022 strategic objectives, reshaping Europe’s security order while NATO weakens.

• China, which uses economic leverage to manipulate U.S. strategy, preventing a full pivot to Asia while deepening select European economic ties.

• Hungary & Other Pro-China EU States, which would benefit from Chinese investment and infrastructure projects, gaining influence within the EU.

• UKR, by securing control over its natural resources as part of post-war reconstruction.

As for losers, they are:

• The U.S., which becomes trapped in a weakened European security role, unable to focus fully on the Pacific.

• NATO, which is divided between hawks and pragmatists, weakening its collective resolve.

• Pro-U.S. EU States with countries like Poland and the Baltics left vulnerable as NATO’s commitment wavers, and is circumscribed by the new agreement with RU as part of the post-war settlement.

  

Final Verdict: A Strategic Defeat for the U.S.?

The U.S. wanted to pivot to Asia but now cannot afford to do so. Instead, RU and China have created a geopolitical environment where the U.S. is forced to stay in Europe, but in a weakened state, while China expands its global economic influence and RU cements its regional dominance.

The EU is able to begin to rediscover strategic autonomy, and UKR retains greater control over its mineral wealth as part of its reconstruction. UKR also receives reconstruction support.

Of course, these hypothetical event and analytical ‘predictions’ are based on explicit and implicit assumptions about the overall context, preferences for different actions amongst the actors not to mention the potential intervention of ‘unknown factors’. The aim of this mental exercise was to do no more than sketch out possibilities to help explore areas of relative strength and vulnerabilities.

Interestingly, it does suggest that the U.S. has far fewer cards to play that it would like others to believe, and the EU and UKR itself have more cards to play than they perhaps presently believe. To do so would require thinking ‘wider’ than is the case at present. The EU and UKR ‘agency envelope’ can be widened at their own volition, though this won’t be easy. It means controlling the temperaments occasioned by its historic Russophobia and coming to terms with the fact that the war against Russia is lost and the challenge isn’t to perpetuate the war, but to find ways to win the peace.