Mark Rutte's NATO Plan Is a Strategic Mistake

A popular theory claims Donald Trump’s foreign policy is built on a simple premise: carve up the world into "spheres of influence" with autocratic rivals. Pundits and social media influencers circulate maps dividing the globe between Trump, China’s Xi Jinping, and Russia’s Vladimir Putin.

Headlines warn of this new world order, suggesting a grand bargain is in the works. But a closer look at the evidence reveals a different strategy entirely.

While Trump is fiercely protective of American dominance in the Western Hemisphere, he shows no interest in granting similar power to his main competitors. His approach looks less like a global carve-up and more like a traditional U.S. strategy: secure the homeland's neighborhood while preventing adversaries from dominating key geopolitical regions.

Defining the Debate: Spheres of Influence

The term "spheres of influence" carries heavy baggage. Historically, it was a pragmatic way to manage great power rivalries. After World War II, for example, Washington and Moscow tacitly accepted each other's control over their respective parts of Europe to maintain a tense peace during the Cold War.

Today, the concept is viewed negatively. In a modern liberal system, smaller nations are expected to choose their own alliances and policies without coercion from powerful neighbors. Granting Russia a sphere of influence over Eastern Europe or China one over East Asia would mean consigning nations like Lithuania or Taiwan to subjugation.

When critics accuse Trump of pursuing this model, it’s an accusation, not a neutral observation. But the facts don't support the charge.

The "Donroe Doctrine": America's Backyard First

To be clear, Trump is unambiguous about one region: the Americas. His administration has explicitly called for restoring U.S. "dominance" in the Western Hemisphere, a policy some have dubbed the "Donroe Doctrine."

This isn't just rhetoric. His administration has actively worked to:

• Eject Chinese companies from operating ports in the Panama Canal.

• Seek the removal of President Nicolás Maduro in Venezuela.

• Apply pressure on the Communist regime in Cuba.

Trump's desire for an American sphere of influence is clear. The real question is whether he is willing to grant the same privilege to Russia and China in Eurasia. The evidence says no.

Confronting Putin: Why Trump Isn't Ceding Europe

If Trump truly intended to grant Vladimir Putin a sphere of influence, the playbook would be straightforward. He would withdraw the U.S. from NATO, cut off military aid to Ukraine, and negotiate a peace deal that effectively hands Kyiv to Moscow.

Instead, his administration has done the opposite:

• Strengthened NATO: He has aggressively pushed allies to increase defense spending to as high as 5% of GDP.

• Armed Ukraine: He has provided weapons to Ukraine (with Europe footing the bill) and approved their use on Russian territory.

• Sanctioned Russia: He has ramped up economic pressure on Russia's critical energy sector.

This strategy is far more consistent with containing Putin and preventing a hostile power from dominating a critical region—a core tenet of long-standing U.S. policy.

Containing Xi: The Real U.S. Strategy in Asia

The same pattern holds true in East Asia. A genuine plan to concede the region to Xi Jinping would involve cutting off arms to Taiwan, downgrading diplomatic relations, and weakening U.S. alliances with regional partners.

Again, Trump's actions point in the opposite direction:

• Prioritizing the Indo-Pacific: The National Defense Strategy identifies deterring conflict in the region—a clear euphemism for containing China—as the second-highest priority after defending the homeland.

• Boosting Military Spending: The administration passed the largest U.S. defense budget in history, focusing on capabilities designed for a potential conflict with China.

• Supporting Taiwan: Trump approved the largest arms package to Taiwan in history and the State Department dropped language opposing Taiwanese independence.

• Pressuring Allies: As in Europe, the administration is urging Asian allies to spend more on their own defense.

If this is a plan to grant China a sphere of influence, Xi Jinping is likely both perplexed and displeased. Elsewhere, from bombing Iran's nuclear program to amassing a naval armada in the Middle East, the policy is one of containment, not concession.

A Pragmatic Power Play, Not a Global Carve-Up

Some argue that Trump’s assertiveness in the Western Hemisphere gives a "permission slip" for Putin and Xi to do the same. This misunderstands geopolitics. Putin has already invaded his neighbors, and Xi considers Taiwan part of China; neither is waiting for an excuse. Precedent matters in a courtroom, not in the raw calculus of international security.

While Trump may not be as hard-line as some critics wish—he might seek a trade deal with China or avoid pursuing Putin for war crimes—these nuances are not evidence of a plan to cede entire regions to dictators.

Ultimately, Trump is not an international relations theorist remaking the global order. He is a pragmatist pursuing American self-interest. That pursuit is leading his administration down a well-worn path: ejecting hostile powers from the Americas while working to contain them in their own regions. This has been a central pillar of American grand strategy for decades.

Russia's government oil revenues crashed to their lowest level in over five years in January, as a combination of weaker global prices, steepening discounts for its crude, and a stronger ruble hammered the national budget.

According to finance ministry data, oil-related tax revenues were slashed in half to 281.7 billion rubles ($3.7 billion) compared to the previous year. When combined with gas, total energy revenue also fell by 50% to 393.3 billion rubles.

This sharp decline in proceeds from oil and gas—which together account for roughly a quarter of the budget—intensifies the financial strain on the Kremlin as the war in Ukraine approaches its fifth year. The January oil revenue figure marks the lowest point since June 2020.

The Double Squeeze of Prices and Sanctions

While global Brent oil futures were down 15% year-on-year for the fiscal period, the market downturn was far more severe for Russia due to US sanctions.

The nation's flagship Urals grade traded at a discount of about $26 per barrel below the Dated Brent benchmark at its export point. This is a dramatic widening from the discount of just over $12 a barrel seen a year earlier, according to data from Argus Media.

These discounts expanded significantly after the US blacklisted Russia's two largest producers, Rosneft PJSC and Lukoil PJSC, in October. Further pressure could be on the horizon, as US President Donald Trump announced plans to cut import tariffs for India—a major buyer of Russian crude—if New Delhi stops purchasing oil from Moscow. The practical extent of India's cutbacks remains to be seen.

A Budget Under Mounting Pressure

The revenue collapse starkly contrasts with the government's fiscal planning. Russia's finance ministry based its January revenue calculations on an average Urals price of $39.18 per barrel in December, which was a 38% drop from a year earlier. This price is far below the government's own budget forecast, which anticipated an average crude price of $59 per barrel in 2026.

According to Sergey Vakulenko, a senior fellow at the Carnegie Endowment for International Peace and a former Russian oil executive, the government’s take is highly sensitive to price. He estimates that Russia's budget receives 57 cents from every dollar of the oil price above $13.60 a barrel.

Based on this model, the government received only about $14.50 per barrel in taxes last month. Meanwhile, oil companies kept around $24.70, with an estimated $14-$18 of that going toward the costs of pumping crude and delivering it for export.

The Unexpected Challenge of a Stronger Ruble

Adding to the fiscal pain is the appreciation of the Russian ruble. In December, the currency averaged 78.4368 rubles to the dollar, making it nearly 25% stronger than it was a year ago.

"What really hurts both the companies and the government is the exchange rate," explained Vakulenko, noting that their expenses are primarily denominated in rubles and are tied to domestic inflation. A stronger ruble means dollar-denominated oil revenues convert into fewer rubles, squeezing budgets further.

However, there was one minor positive side effect from the market dynamics. The lower global prices for crude and oil products allowed the Russian government to significantly reduce the subsidies it pays to domestic refiners. In January, these subsidy payments fell by almost 90% year-on-year to just 16.9 billion rubles, the lowest outlay since payments were paused in October 2023.

The European Union is advancing a plan to build a strategic stockpile of critical raw materials, with France, Germany, and Italy slated to spearhead the effort. This move is designed to slash the bloc's heavy reliance on China for resources essential to its industrial and defense sectors.

The initiative, known as RESourceEU, was introduced in December to create a joint reserve of key materials and manage the export of reusable metal scrap and rare earth waste. While the European Commission has not yet released full details, the plan is a direct response to growing supply chain vulnerabilities.

Why Europe Needs a Strategic Minerals Reserve

China's position as the world's top producer of industrial metals gives it significant leverage over global supply chains. Since 2023, Beijing's export controls on materials such as gallium, germanium, tungsten, and heavy rare earths like dysprosium have created significant disruptions for manufacturers outside the country.

With limited domestic refining capacity and long timelines required to develop new supply sources, Europe sees a strategic stockpile as a critical buffer. Such a reserve is considered one of the few immediate tools available to:

• Protect the European economy from sudden supply shocks.

• Safeguard production for its defense and aerospace industries.

• Secure the raw materials needed for its green and digital transitions.

EU's Stockpiling Plan: France, Germany, and Italy Take the Lead

Sources familiar with the matter confirm that concrete roles are being defined for the EU's largest economies. Following a December meeting with EU officials, an agreement was reached for a clear division of labor:

• France will manage the financing for purchasing the minerals.

• Germany will be responsible for sourcing the materials from producers.

• Italy will oversee the logistics and storage of the stockpile.

This collaboration builds on an existing pledge between Italy and Germany to work together on securing vital raw material supply chains for their industries.

Progress and Hurdles in Building the Stockpile

A European Commission spokesperson confirmed that a pilot project is underway with 10 member states. "The European Commission is working closely with several member states on a pilot project to strengthen the EU's stockpiling of critical raw materials," the spokesperson stated.

These countries have been organized into working groups to assess the required mineral volumes, logistical frameworks, and financing needed to cover long-term costs. The December meeting specifically discussed potential storage facilities, including those operated by Italy-based Pacorini Global Services and Netherlands-based C. Steinweg. Both companies declined to comment.

However, not everyone is satisfied with the pace. One source expressed frustration over slow progress, noting that while there are many working groups and discussions, concrete action is lacking. Details on which banks France is consulting or which producers Germany has approached have not been made public.

An Italian source confirmed the country was in "coordination talks with the Commission, and, at a technical level, with other member states, including Germany and France."

Beyond Stockpiling: Diversifying Global Supply Chains

The EU's strategy extends beyond creating a reserve. The bloc has identified 34 critical raw materials, designating 17 of them as "Strategic" due to their importance for green technology, digital infrastructure, defense, and aerospace.

To reduce its long-term dependency, the EU is also actively pursuing international partnerships. In October, Commission President Ursula von der Leyen announced plans to accelerate raw materials agreements with countries including Australia, Canada, Chile, Greenland, Kazakhstan, Uzbekistan, and Ukraine.

European Union lawmakers are restarting work on a trade deal with the United States after halting the process in protest of President Donald Trump’s comments about acquiring Greenland and his related threats of new tariffs.

The European Parliament's trade committee is now set to resume its efforts to implement the agreement, which aims to lower many EU import duties on American goods.

Why the Trade Deal Was Paused

The deal, originally struck with Trump in July, also includes maintaining zero duties on U.S. lobsters, a provision agreed upon in 2020. However, a key vote was suspended last month after Trump threatened new tariffs against European countries that opposed his goal of annexing Greenland, a semi-autonomous territory of Denmark.

The tariff threat was withdrawn after several days, but the pause in negotiations highlighted the tense political backdrop. A significant delay from the European side could have provoked a reaction from the U.S. president, who recently threatened to raise tariffs on South Korean exports over what he described as a failure to implement its side of a trade agreement.

New Safeguards and Next Steps

Work on the trade deal will now resume, with the committee potentially voting on February 24, according to Social Democrat lawmaker Bernd Lange, who chairs the trade committee.

To protect against future volatility, Lange confirmed that EU lawmakers would support new conditions to the agreement, including:

• A Suspension Clause: This would allow the EU to suspend the deal if the United States threatens the security or territorial integrity of any member state. It would also apply in the case of new U.S. tariff threats.

• A Sunset Clause: Lawmakers also agreed to add a clause that would set an expiration date for the deal, although the exact time frame has not yet been determined.

Following the committee vote, the proposals must be approved by the full European Parliament and EU governments. This process involves negotiating a common text, which means final approval is likely still one to two months away.

Lingering Concerns Over a 'Lopsided' Agreement

Even before the recent political friction, many EU lawmakers had expressed concerns that the trade deal was unbalanced. Critics point out that the agreement requires the EU to cut most of its import duties while the U.S. largely maintains a broad tariff rate of 15%. Despite these reservations, lawmakers had previously appeared willing to accept the deal with certain conditions attached.

Nomura Holdings Inc. predicts Turkey's central bank will need to pause its cycle of interest rate cuts at its next meeting, citing stubbornly high inflation that limits the room for further monetary easing.

According to Nomura economist Zumrut Imamoglu, elevated core inflation and a high headline figure are key reasons for the central bank to hold rates steady.

Stubborn Inflation Defies Expectations

Recent data showed that Turkey's annual consumer price growth slowed only marginally to 30.7% from 30.9% the previous month. This figure was higher than analyst forecasts, which had anticipated a rate just below 30%.

The persistence of high prices prompted Nomura to become the first major bank to call for an end to the rate-cutting cycle that began in July of last year. In its most recent move, the monetary authority reduced its policy rate by 100 basis points to 37% in January.

This view contrasts with other market participants. JPMorgan Chase & Co. economist Fatih Akcelik, for example, still anticipates another 100-basis-point cut in March.

Revised Forecasts Signal Higher Inflation Ahead

Imamoglu noted that annual inflation is likely to increase in February, as the month coincides with Ramadan, a period when food prices typically rise.

Reflecting this outlook, Nomura has adjusted its economic projections for Turkey:

• Year-end inflation forecast: Raised to 23% from a previous estimate of 21.5%.

• Central bank target: This compares to the official target of 16%.

• Year-end policy rate forecast: Increased by 100 basis points to 29%.

Despite the call for an immediate pause, Nomura anticipates that the central bank could resume easing later in the year. "We think that food prices will ease in May-June and services inflation will be softer over the summer, allowing the Turkish central bank to increase the pace of its rate cuts," Imamoglu said.

The call for caution follows a sharp acceleration in monthly inflation, which hit 4.8% in January, up from 0.9% the prior month. Driven by food prices and seasonal wage adjustments, this was the highest monthly rate recorded in a year.

The Trump administration is pushing to establish a critical minerals trading bloc with allied nations, using tariffs to set price floors and counter China's dominance over the global supply chain.

The plan aims to prevent China from flooding the market with low-cost materials to undermine potential competitors, a tactic highlighted during the recent trade war.

A New Alliance to Secure High-Tech Resources

U.S. Vice President JD Vance articulated the strategy at a State Department meeting, emphasizing the goal of creating a resilient and cooperative supply zone.

"We want members to form a trading bloc among allies and partners, one that guarantees American access to American industrial might while also expanding production across the entire zone," Vance said. "What is before all of us is an opportunity at self-reliance that we never have to rely on anybody else except for each other."

Critical minerals are essential components in everything from smartphones to jet engines. The trade disputes over the past year exposed how heavily most economies depend on these materials, a market overwhelmingly controlled by China.

"I think a lot of us have learned the hard way... how much our economies depend on these critical minerals," Vance stated at the meeting, which Secretary of State Marco Rubio hosted for officials from dozens of nations.

Project Vault: Building a Strategic Stockpile

This initiative follows President Donald Trump's recent announcement of "Project Vault," a plan to create a national stockpile of rare earth elements. The project is backed by a $10 billion loan from the U.S. Export-Import Bank and nearly $1.67 billion in private capital.

The administration's assertive move comes after China, which controls 70% of the world's rare earths mining and 90% of its processing, restricted supplies in response to U.S. tariffs. While Trump and Chinese President Xi Jinping agreed to a one-year truce in October, China's export limits remain tighter than before the trade conflict began.

"We don't want to ever go through what we went through a year ago," Trump said when announcing the project.

Pini Althaus, founder of USA Rare Earth, believes other Western nations will join the effort, having recognized their vulnerability to China's supply chain leverage.

Public-Private Partnerships Drive the Strategy

To jumpstart domestic production, the U.S. government has begun making direct investments in American producers. Last week, it extended $1.6 billion to USA Rare Earth in exchange for stock and a repayment plan.

Althaus noted that securing government funding has become as rigorous as meeting with private equity investors, with officials demanding terms that ensure a financial return for taxpayers.

Meanwhile, the U.S. Export-Import Bank's board approved the $10 billion loan—the largest in its history—to help establish the U.S. Strategic Critical Minerals Reserve. The reserve is designed to guarantee access for key manufacturers, including:

• Battery maker Clarios

• Energy firm GE Vernova

• Digital storage company Western Digital

• Aerospace giant Boeing

Bank President John Jovanovic described the project as a public-private partnership where "there are no free riders." He explained that manufacturers who benefit most are making long-term financial commitments, while the government's loan helps attract private investment.

Reshaping the Global Market

Industry experts believe the stockpile strategy could foster a "more organic" pricing model that operates independently of China. Wade Senti, president of magnet company AML, said this would directly counter Beijing's practice of using its market dominance to squeeze out competitors with artificially low prices.

The Trump administration is also injecting public funds elsewhere. The Pentagon has spent nearly $5 billion over the past year to secure its own access to critical materials after the trade war exposed the nation's dependence on China.

Bipartisan Support and Long-Term Hurdles

The administration's focus on mineral supply chains has garnered support across the political aisle. A bipartisan group of lawmakers last month proposed creating a new agency with a $2.5 billion budget to spur domestic production of rare earths and other critical minerals.

"It's a clear sign that there is bipartisan support for securing a robust domestic supply of critical minerals," Senators Jeanne Shaheen and Todd Young said in a joint statement.

However, experts caution that success will not be immediate. David Abraham, a rare earths specialist and author of "The Elements of Power," said building up a sufficient stockpile will be a long-term effort, especially while China's export restrictions keep materials scarce.

Abraham also pointed to a potential contradiction in the administration's policy. While working to secure the supply of critical minerals, it has simultaneously cut incentives for electric vehicles and wind turbines—key sectors that drive demand for these very elements in the United States.