Russia’s Great Energy Heist

H istory includes a long list of audacious acts of plunder. There was Saddam Hussein’s $1 billion theft from the Bank of Iraq in the waning days of his dictatorship. On a similar scale was the 2016 North Korean hack of $1 billion from Bangladesh’s national bank. Most of that was returned, but $81 million is still missing.

Art is also fertile ground for theft. Thieves broke into Boston’s Isabella Stewart Gardner Museum in 1990 and pilfered $500 million worth of paintings, the whereabouts of which are unknown to this day. And then there was the 2003 Antwerp diamond heist that netted $100 million; not bad for a day’s work.

Yet these pale in comparison to the crime being perpetrated today in broad daylight. Russia’s invasion of Ukraine puts at risk trillions of dollars’ worth of its natural resources, including fossil fuels, minerals, crops, infrastructure, and human capital. If successful, this blatant resource grab would rank as the largest heist in human history.

Because this war is rarely framed in such stark economic terms, digging into the details is eye-opening. The International Energy Agency (IEA) estimates that Ukraine’s hydrocarbon reserves amount to 9 billion tonnes equivalent (Btoe) of crude oil. At today’s prices, that’s more than $5 trillion worth of fossil fuels, 87 percent of which is in occupied or disputed territory. To put the enormity of this number in context, the U.S. and China are the only two nations that have an annual GDP greater than $5 trillion.

Breaking down these fossil fuels by type, Ukraine has an estimated 5.4 trillion cubic meters of natural gas, 1.1 trillion cubic meters (tcm) of which are known reserves, second only to Norway in Europe. It also has 6.3 billion barrels of crude oil, 400 million tonnes of natural gas condensate, 3 tcm of coalbed methane, 1.2 tcm of shale gas, and 49 gigatonnes of coal (ranked sixth in the world).

As far as minerals are concerned, it’s estimated that Ukraine has 7 percent of the world’s titanium, 10 percent of its iron ore, and 20 percent of its graphite. Perhaps most important, buried beneath the “Ukrainian Shield” (a vast swath of land that cuts across the middle of the country from Belarus in the north to the Azov Sea in the south) is an estimated 500,000 tonnes of lithium, one of the largest unexplored deposits in Europe and a critical component in the burgeoning global electric-vehicle-battery industry.

All told, SecDev estimated in 2022 that the total value of Ukraine’s natural resources exceeded $26 trillion, $12 trillion of which is located in Russian-controlled or disputed territory.

In addition to fossil fuels and minerals, Ukraine’s four nuclear-power plants have 13 billion watts (GW) of power capacity, including Europe’s largest, the Zaporizhzhia Nuclear Power Plant. It also has the most farmland in Europe, feeding much of the population in Africa, the Middle East, and Europe. Vegetable-oil and meat exports alone were over $28 billion in 2021. Ukrainian agriculture also has an unfortunate history of being weaponized by Russia, most infamously in the early 1930s, when the Stalinist regime forcibly appropriated large quantities of Ukrainian grain both for export and to feed other regions of the Soviet Union, leaving most Ukrainians without adequate food. The result was a genocidal, man-made famine, known as the Holodomor, that led to the death of millions.

Which brings us to the paramount question: Why did Russia invade Ukraine?

The most common excuse offered by Putin’s propagandists is that Russia had to defend itself from NATO expansion. Yet when Finland, with its 832-mile border with Russia, joined NATO in April 2023, Putin’s response was to remove military assets from the Finnish border to go fight in Ukraine, leaving it absent of significant Russian forces. Russia has shown by its actions that it clearly understands that NATO is not a threat. More realistically, the Kremlin understands that the existence of a democratic, Western-oriented Ukraine on its doorstep represents a threat not to the integrity of Russia but rather to its authoritarian regime.

A second excuse given was that Putin had to defend Russian-speaking Ukrainians in Donetsk and Luhansk, just as Hitler claimed he had to defend German-speakers in the Sudetenland in 1938. Many Russian-speaking Ukrainian citizens actually did support close ties and friendship with Russia — that is, until Putin’s first invasion of Ukraine in 2014. Since then, they have experienced the brutal reality of being “liberated” by Russia, and most now firmly support total independence from Russia, reaffirming Ukraine’s original 1991 independence referendum.

A third reason is that Putin himself is hoping to reframe his historical legacy as a great czar — a modern Ivan the Great, the “gatherer” of the Russian lands, or Peter the Great, who in Putin’s distorted view restored to Russia territory to which it was always entitled. It is a vision that blends both nationalistic and imperial thought. Russians and Ukrainians are, he claims, one people, with Ukraine as a quasi-colony, merely another Russian region like Siberia, the Far East, or the Urals. A view, it goes without saying, fiercely denied by both Ukrainians and the broader international community.

All of this leads to a straightforward conclusion: that by invading a neighbor to steal its resources, Russia is behaving like a gangster state. And although Putin’s excuses for his illegal war of aggression do not stand up to scrutiny, there are, however, very compelling reasons why the West should support Ukraine.

Following the breakup of the Soviet Union, the U.S., U.K., Russia, and Ukraine signed the Budapest Memorandum in 1994. In exchange for Ukraine giving up its massive nuclear arsenal (inherited from the USSR), the signatories “affirmed” their commitment to Ukraine’s sovereignty and territorial integrity. Technically, this was not a formal treaty compelling the U.S. or U.K. (or Russia) to come to Ukraine’s defense. But there can be no doubt that should the West fail to honor the spirit of this agreement today, China and other authoritarians will be emboldened to further aggression. Indeed, bellicose activity has already spread to the South China Sea and elsewhere.

Ultimately the question is whether Ukraine’s resources should belong to Ukraine, or if Moscow should be allowed to forcibly appropriate them. Res ipsa loquitur might be a lawyer’s response to this question. Beijing and others hostile to democratic values are watching intently to see how we answer it.

One issue continues to find itself at the heart of nearly every 21st-century geopolitical situation: energy resources. And in this case of Russia’s war of choice, Ukraine’s natural resources are text much more than subtext.