NATO/Ukraine: Not *that* different under Trump

• This week’s NATO summit is a good opportunity to parse the reality vs. myth of how a (non-basecase) Trump 2.0 administration would likely change the organization and the future of the Ukraine war:

• NATO:
  • Ways in which NATO would remain resilient:
    • The US Congress has already made it illegal for Trump to pull out of NATO.
      • In fact, the former president would argue he has no intention of doing so anyway.
    • The countries most vulnerable to a Russian attack (i.e. Eastern and Northern Europe) are also those that already fulfill Trump’s defense spending demands, and are therefore safe with US support.
      • In fact, it’s noteworthy that countries such as Poland say they are not worried about Trump being too pro-Russian, with quite a few datapoints backing that argument:
        • The former president himself points to his record of blocking Nord Stream 2.
        • “Trump also broke with Obama administration policy by sending lethal military assistance to Ukraine, including Javelin antitank missiles, which were invaluable to Ukraine in the early stages of Russia’s 2022 invasion”.
        • Separately, “Kremlin officials are convinced that Donald Trump personally made [the] decision [when] […] the first post-Cold War clash between Americans and Russians occurred [with] [e]ighty Wagner Group fighters […] killed, and about 200 […] wounded” in Syria in 2018.
  • Ways in which NATO would be fragilized:
    • While Trump could not formally pull out of NATO, reducing support to the organization (e.g. limiting military exercises, turning it into a ‘dormant NATO’) would materially weaken the alliance’s preparedness.
    • Trump could unilaterally move the goalpost from a 2% defense spending requirement to a 3% demand.
    • While Trump could not formally pull out of NATO, Article 5’s language is vague about how much support he would have to commit to defending any ally in the event of a crisis.
      • Among other challenges, “"Ultimately, [NATO’s military chief known as] SACEUR is answerable to the president of the United States," […]. "So he [SACEUR] can start slowing things down, or prevent things from happening””.
  • The bottom line:
    • Trump is unlikely to pull out of NATO.
    • Russia is unlikely to attack any NATO countries.
    • But:
      • In the short term, Russian sabotage operations are likely to become evermore brazen.
      • In the medium term, if Russia continues to invest in expanding its army and war economy whereas Europe fails to match those efforts, the net result will be a power imbalance favoring Moscow and giving it room to potentially blackmail an abandoned Europe into submission.
      • Both of these dynamics will likely have tangible market impacts:
        • Already, “Russia’s invasion of Ukraine has hit sovereign borrowing costs for the EU’s 10 eastern members, raising the cost by around half a percentage point since the war began”.
        • Indeed, “would I want to invest in a country whose leaders are saying “we are next” and that planes flying to Estonia will literally fall out of the sky [as a result of Russian GPS jamming]? I think not”.

• Ukraine:
  • What is ‘objectively’ known (from here, here, here) about Trump’s alleged peace plans:
    • Tell Ukraine:
      • I will stop giving you weapons unless you agree to negotiate.
      • If you agree to negotiate, I will continue giving you weapons, to make sure Russia cannot take an inch more territory.
    • Tell Russia:
      • If you do not agree to talks, I will send Ukraine more weaponry than Biden did, and may increase sanctions on you.
    • Terms of the deal:
      • Ukraine foregoes Crimea and the Donbas forever.
      • Ukraine foregoes NATO membership for the foreseeable future.
      • The frontline is frozen ‘as is’ during the talks, but:
        • 1) not necessarily forever: Russia will be asked to give back some of the territory it occupies,
        • 2) even those territories which Ukraine does not get back, Kiyv will not be asked to acknowledge as formally lost.
      • Carrots to Russia:
        • Sanctions relief in exchange for reducing its ties with China.
      • Carrots to Ukraine:
        • Security guarantees (‘armed to the teeth’).
        • Potential EU membership.
        • Potential reconstruction funds.
  • Worrying signs for Ukraine:
    • Trump will have no hesitation to ‘go over Ukraine’s head’ to negotiate directly with Russia.
    • Trump will not be eager to spend more US funds toward Ukraine.
    • Some say Trump sees Ukrainian President Volodymyr Zelensky as responsible for his impeachment.
  • Reassuring signs for Ukraine:
    • Trump’s desire to end the war in Ukraine is likely driven more by his A) isolationism, and B) preference to focus on China, than by any real hatred of Ukraine or love of Russia.
    • While Trump may not agree to spend new US funds on Ukraine, that does not mean he will necessarily refuse to spend the funds already appropriated by an outgoing Biden administration, which would remain non-negligible.
      • Indeed, even Trump’s most hawkish advisors do not argue for automatically or irreversibly cutting off Ukraine’s support entirely…
      • And the former president himself might be sensitive to the argument that “[h]elping Ukraine gives jobs to Americans”.
    • In fact and instead, Trump and his team have overtly and covertly made clear that they intend to put as much or more pressure on Russia as on Ukraine as part of their negotiation plans.
  • The bottom line:
    • A) While it is clear former president Trump would have no qualms pressuring Ukraine into bargaining its territorial sovereignty, it is not clear that he would do so ‘at all costs’ or ‘without reservation’ as is often portrayed.
    • B) While the odds of an early end to the Ukraine war would likely go up dramatically under a Trump presidency, we remain skeptical this would become basecase, for two reasons:
      • 1) Reasonably or not, Ukraine may well prefer to ‘die fighting’ (calling Trump’s bluff and relying evermore on European support) rather than agree to sign away concessions to Russia.
      • 2) More underappreciated: there is a strong possibility that Russia – far from welcoming Trump’s plan as a boon – may see no reason to make concessions to Kiyv given its upper hand in the war and limited perceived credibility of US threats.