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Analysis of Profits Gained by the United States of America in the Russia-Ukraine Conflict

Before the outbreak of the Russia-Ukraine Conflict, the United States kept fanning the fire, tracking and monitoring Russia’s military deployment, to aggravate the tension between Russia and Ukraine. After the conflict broke out, the western countries led by the United States accelerated the delivery of weapons and ammunition to Ukraine and launched multiple rounds of sanctions against Russia. As the driving force behind it, the United States has achieved multiple preset strategic goals and benefited from the conflict between Russia and Ukraine. From the unscrupulous pre-war tension builder between Russia and Ukraine to “watching the fires burning across the river” after the war, the attitude of the United States has attracted the attention of the whole world. This paper tries to analyze the profits harvested by the United States during the Russia-Ukraine Conflict from multiple perspectives.

I. The war between Russia and Ukraine made the United States profitable in the international energy market. As early as February this year, Russia began to take special military action against Ukraine. The United States and Europe then unilaterally announced the sanctions against Russia with the European energy balance disrupted completely. In March, the price of European natural gas futures soared to 1,636 dollars per 1000 cubic meters. In addition, the certification procedure of the Nord Stream 2 natural gas pipeline project, also known as the lifeblood of Russian-German relations, was also urgently suspended by the German side as part of the energy sanctions against Russia. Most analysts said the conflict between Russia and Ukraine may further worsen the already grim European energy dilemma. European countries will most likely be forced to buy US shale oil and gas at high prices after imposing energy sanctions on Russia, making the latter the biggest winner in the energy market.

According to the statistics of S&P Global Commodity Insights, in the second and third quarters of this year, the total net profits of listed oil and gas companies operating in the United States reached US $200.24 billion, which was the most profitable six months in the US oil and gas industry since there are records. The profit of LNG operators in the United States is expected to reap US $59 billion this year, double that of last year, easily covering the loss of US $45 billion between 2013 and 2020. After the outbreak of the Russia-Ukraine Conflict, with the withdrawal of Russian gas from the European market and the sharp rise of local natural gas prices, the export volume of liquefied natural gas from the United States to Europe has surged. At present, it has become the second-largest natural gas supplier in the EU after Norway.

In 2021, the total export volume of LNG in the United States was 80 to 90 billion cubic meters, which is forecasted to soar to 130 to 140 billion cubic meters by 2030. After the outbreak of the Russia-Ukraine Conflict, the United States took the initiative to promote the export of LNG to the European market, especially Poland, Greece, Italy, Lithuania, and other eastern and southern European countries. Their imports of LNG from the United States surged. Poland, among other eastern European countries, even signed a 24-year LNG purchase and sales contract with the United States. Many EU countries have also decided to invest in constructing LNG terminals. The stance of the US government is to support the construction of all pipelines and LNG-receiving projects that can help Europe replace Russia’s natural gas. The purpose of the United States is more than evident. It aims to help its enterprises expand their shares of the European natural gas market and ensure that its enterprises take over the European market while squeezing the Russian pipeline natural gas market share.

II.The Russia-Ukraine War, to some extent, prompted European capital to flow to the United States. With the scale of the military conflict between Russia and Ukraine exceeding expectations, European enterprises are cornered to face two insurmountable challenges: first, the increasingly high energy costs, which have become more inextricable due to the escalating warfare; Second, the increasingly high labor cost, which is inevitably rising due to the price hike. This forced European enterprises to run into losses rapidly, thus further enhancing their desire to move out of Europe. At the same time, all states in the United States are actively pitching the idea that “the United States has always been a crucial investment destination for European companies”, to attract foreign enterprises to move in or scale up investment there. According to statistics, Oklahoma alone has attracted more than 60 German enterprises to invest or expand their original businesses, including the famous Lufthansa Airlines, Siemens, Aldi, and Fresenius. European automobile manufacturing industry is also actively increasing its investment in the United States. In June, the well-known German company Volkswagen launched a battery laboratory in its factory in Tennessee, with an estimated investment amount of 7.1 billion dollars. Similarly, Mercedes Benz also opened a new battery factory in Alabama, whereas BMW announced a new round of electric vehicle investment in South Carolina recently.

It is believed that European industry may have suffered permanent corrosion. Once the European economy is gradually “hollowed out”, today’s European industrial structure will be permanently changed. At present, some high energy-consuming enterprises in Europe have announced production suspension or reduction. The largest aluminum manufacturer in the Netherlands recently declared that it would cease production. Yara International ASA of Norway, the top fertilizer producer in Europe, has closed a large fertilizer plant in Sluiskil, the Netherlands. Eurometaux said that half of Europe’s zinc and aluminum production has been at a standstill, while almost all European metal smelting enterprises are facing a life-or-death threat. Under the pressure of high energy and labor costs, industries of the chemical, paper making, metal manufacturing, rubber and plastic products, glass, and ceramics sectors have become the first to take the hit from the corrosion.

Seeing all this, it seems that we should be aware that in the context of the escalating conflict between Russia and Ukraine, although the United States military-industrial complex can make a lot of money in arms sales and energy, for the United States as a whole, the interests in arms and energy may be temporary and limited. And its greater interest may lie in forcing European manufacturing enterprises to flee to the United States, to complete its plan of “re-industrialization”. First, it can boost the sluggish growth in the United States, making the consumption brought by total investment and employment an important engine driving its economic growth. Second, the hollowed industry structure of the US economy gradually formed after the 1980s can be dismantled, adding a new fulcrum to the US economy and the hegemony of the US dollar.

III. The fire in the “European granary” further consolidated the “food hegemony” of the United States. As the world’s major exporters of wheat, corn, sunflower seeds, and other crops, the Russia-Ukraine War will generate incalculable consequences on the world food market and the global supply chain. Although the sanctions imposed on Russia by Europe, the United States, and other countries do not include food, this does not pose any barrier for the United States, which is home to three of the world’s four largest grain merchants, namely Archer Daniels Midland (ADM), Bunge, Cargill, and Louis Dreyfus, to manipulate the food market through various means and to profit from it.

With the support of the United States government, the globally recognized four-grain merchants, shortened as ABCD, control 80% of the world’s grain trade. Its business covers the whole industrial chain of agricultural products all over the world. Through their strong supply chain management expertise, they can influence the global grain supply change, grain transportation progress, and thus the global grain price. The four major international grain merchants, including ADM, Bunge, and Louis Dreyfus, have set amazing revenue records in this round of grain price rise. The financial report data shows that the profit of ADM in the second quarter of 2022 increased by 74% year on year, with its performance in the second half of the year continuing to remain strong. Bunge’s second-quarter revenue showed a 15% year-on-year increase in profits. In March, Louis Dreyfus reported an 82% surge in profits from last year.

During the Russia-Ukraine Conflict, to ensure that the cycle of high profits was prolonged as far as possible, the grain traders were not in a hurry to speed up the transportation, instead, they blamed the countries in conflict for it. In a recent interview, ADM’s CEO Luciano said that after the Russia-Ukraine Conflict broke out, the company helped Ukraine with its grain export. But all it tried were inland river transportation, which was quite limited, so it still expected Russia and Ukraine to sign a grain export agreement. In addition, after the outbreak of the conflict, the United States asked Western enterprises to withdraw from the Russian market, but the branches of the four major grain merchants in Russia were immune to this order. Even ADM and Cargill said that it was reasonable to continue their agricultural businesses in Russia. Though the businesses of these companies were affected by the conflict, the indirect increase in food prices was more than enough to make up for their losses. It even facilitated the United States to make more money in food imports and exports than ever before.

As early as six years ago, after a large number of agricultural products from grain-producing countries such as Russia and Ukraine entered the world market, the four major grain merchants noticed that their interests were harmed, and the hegemony of the United States in the food sector was threatened. Supported by a consortium comprises of American farmers and arms dealers, the United States government leveraged the discord between Russia and Ukraine to provoke conflicts between the two countries and fan the fire for the conflict between the two. After the outbreak of the conflict, the “European granary” was on fire, and the grain exports of Russia and Ukraine were severely damaged. Massive profits were made from it by the four major grain merchants, which also further strengthened the “food hegemony” of the United States.

IV.This conflict to some extent helps the United States to realize its geopolitical strategy. From “fanning the flames” before the war to “watching the fire from afar” after the war, the United States pushed European countries represented by France and Germany to the forefront of the confrontation with Russia at the expense of Ukraine but managed to withdraw itself successfully. More importantly, the doings of the United States have virtually once again demonstrated its role as the “first responder”. As Stephen Walt wrote in Foreign Policy, “This conflict has strengthened the muscle memory of European countries, that is, Europe cannot rely on itself to maintain its security. Uncle Sam will always provide protection when a crisis breaks out in the east.” After the crisis, out of fear of Russia, European countries (especially the Baltic countries) will rely more on the United States in terms of security.

The crisis in Ukraine has significantly worsened the security and geostrategic situation in Europe, and has strengthened the EU’s willingness to seek “strategic autonomy”. The Russia-Ukraine Conflict has already become a catalyst for the EU to strengthen its common security and defense system. In late March, the EU approved the Action Plan of the Strategic Compass for Security and Defense, drawing a blueprint for EU’s security and defense in the next five to ten years, including establishing a strong EU Rapid Deployment Capacity of up to 5000 troops by 2025, conducting regular live exercises on land and at sea to enhance its defense system in emerging battlefields, increasing investment in military equipment and research and development of high-tech weapons, and strengthening military cooperation with allies and partners. After the outbreak of the Russia-Ukraine Conflict, the members of the EU have become significantly more united. Facing the threat of war, the EU and its member states have made a series of united responses to Russia, such as imposing economic and political sanctions, closing airspace, and blocking the Russian media, with extraordinary speed. It demonstrates the other side of the EU defending its foreign policy autonomy.

To remain deeply involved in European affairs, the United States does not want to see the EU’s goal of “strategic autonomy” further promoted. In 2018, Macron called for the establishment of a “European Army”, while then US President Trump immediately tweeted that this was an “insult” to the US. The current Russia-Ukraine Conflict has given the United States a “once-in-a-lifetime” opportunity to re-strengthen its influence on Europe. In the NATO summit in March, the United States became the biggest winner. On the one hand, European countries agreed to increase military expenditure, which finally met the requirements of the United States for military expenditure sharing. On the other hand, the US has tightened its control over Europe by sending more troops to NATO. While the EU has to rely more heavily on the United States in energy, security, and other aspects due to its participation in the US sanctions against Russia, its “strategic autonomy” process has suffered major setbacks. The United States has reached a goal in its geopolitical strategy of imposing sanctions on Russia and balancing the EU simultaneously through the Russia-Ukraine Conflict.

V.Prediction of the trend of the Russia-Ukraine War. The continuation of the Russia-Ukraine War is in line with the interests of the United States. After the Cold War, the United States, as the only superpower in the world, had no rival country to contain it. In recent years, the United States has stationed troops all over the world, known as the “world police”, and has also launched wars in Iraq, Syria, and other countries to steal oil, minerals, etc., seizing tremendous benefits for itself. The United States plans to exacerbate the Russia-Ukraine War and continuously provide military assistance to Ukraine. In addition to earning money from military supplies, its purpose is to weaken Russia’s national strength, or even drag it down. If Russia is dragged down, there will be one less country that can contain the hegemony of the United States. So its hegemony and interests will be further maintained. Therefore, regardless of the outcome of the mid-term elections in the United States, the views of the American political circles will not change, and they will continue to prolong the Russia-Ukraine War.

The United States is a capitalist country, which determines that its nature is to pursue profits. The desire of the US government and the consortia behind it can never be fulfilled. War serves as an instrument for them to gain profits, so they will not let the war end easily. As a military group, NATO’s interests are also interlinked with the war. To stop the war is to cut off its financial supply. The fundamental goal of the United States is to dominate the world, and the Russia-Ukraine War could drag down Russia and clear away obstacles for its ultimate goal.

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