Issue Briefs

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The US-Danish relationship has proven itself remarkably flexible and effective throughout the post-Cold War era, and it is once again on the cusp of evolution with new challenges and opportunities. In the midst of the ongoing debate among NATO allies about burden-sharing, Denmark has consistently punched above its weight, contributing substantially to collective defense for a small country.

Indeed, at the start of 2019, the Danish government released a supplemental defense agreement committing Denmark to increase defense spending to 1.5 percent of GDP by 2023. The agreement demonstrates Denmark’s continued aspiration to contribute to the NATO Alliance and provides a needed influx of resources for defense and deterrence. These developments have the potential to profoundly affect a deep but often overlooked security relationship—that between the United States and Denmark.

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As energy markets and technologies rapidly change, international oil companies (IOCs) are facing a set of interconnected challenges that will fundamentally affect their business models. From changes in the supply and demand picture, to shifts in how energy is produced and consumed, to public pressure to decrease greenhouse gas footprints, companies have a wide range of issues to consider as they decide how to prepare for an unpredictable future. In a new issue brief, “Navigating the Energy Transition: International Oil Company Diversification Strategies,” Global Energy Center Senior Fellow David Koranyi provides a macro picture of select IOC’s strategic (re)thinking and explores some of the strategies IOCs have undertaken to diversify their portfolios and prepare for the unfolding energy transition.

IOCs have diverging views on many of the issues at hand and have chosen to address the energy transition in different ways, so which strategies will ultimately be successful? Only time will tell which companies will benefit from the current energy transition and which ones will struggle to cope with the disruptions to come, and to what extent the oil industry can play a constructive role in developing a new, more climate friendly energy system for the twenty-first century.

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North Central Europe has become the central point of confrontation between the West and a revisionist Russia. Under President Vladimir Putin, Russia is determined to roll back the post-Cold War settlement and undermine the rules-based order that has kept Europe secure since the end of World War II. Moscow’s invasion and continued occupation of Georgian and Ukrainian territories, its military build-up in Russia’s Western Military District and Kaliningrad, and its “hybrid” warfare against Western societies have heightened instability in the region have made collective defense and deterrence an urgent mission for the United States and NATO.

The United States and NATO have taken significant steps since 2014to enhance their force posture and respond to provocative Russian behavior. Despite these efforts, the allies in North Central Europe face a formidable and evolving adversary, and it is unlikely that Russian efforts to threaten and intimidate these nations will end in the near term. Now, ahead of NATO’s seventieth anniversary there is more that can and should be done to enhance the Alliance’s deterrence posture in the region. In this vein, the government of Poland submitted a proposal earlier this year offering $2 billion to support a permanent US base in the country.

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The murder of journalist Jamal Khashoggi thrust an otherwise little-known sanctions program into the spotlight—the Global Magnitsky Human Rights Accountability Act (or GloMag in sanctions parlance). On November 15, the US Department of the Treasury’s Office of Foreign Assets Control used the GloMag authority to designate seventeen Saudi citizens for their role in the Khashoggi killing. In “Global Magnitsky Sanctions: Raising the Human Rights and Anti-Corruption Bar” author Samantha Sultoon, a visiting senior fellow at the Atlantic Council’s Global Business & Economics Program and Scowcroft Center for Strategy and Security, argues that the GloMag sanctions offer a targeted response to human rights violations and corruption. The author adds that this sanctions authority has far-reaching implications for international businesses because it creates the need for companies to shift to a proactive corporate risk and due diligence strategy to account for human rights and corruption issues. Sultoon points out that this sanctions authority opens the door for multilateral sanctions actions with US allies, partners, and international human rights groups seeking to raise awareness of human rights violations and corruption. Finally, the author provides specific recommendations of how to maintain the integrity and value of the GloMag authority:

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Russian President Vladimir Putin’s persistent efforts to influence the domestic politics of his neighbors and countries well beyond Russia’s borders have posed enormous challenges in Europe and across the Atlantic. More than any other country, Ukraine has been the unwanted recipient of Moscow’s attention, particularly during the past five years. The Kremlin has sought to place a pliable client in command in Kyiv and block Ukraine’s Euro-Atlantic aspirations, including by pressuring the previous Ukrainian leadership against signing. The March 2019 presidential election will be a pivotal event in Ukraine’s history.

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The rapid uptake of disruptive technologies in Africa, such as mobile and financial technologies, is prompting speculation among tech investors about whether artificial intelligence (AI) applications will also take root on the continent.

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On November 5, 2018, the United States completed the re-imposition of nuclear related secondary sanctions on Iran. US President Donald Trump had announced in May that the United States would withdraw from the Joint Comprehensive Plan of Action (“JCPOA”) with Iran. To re-impose the sanctions, the US Departments of State and Treasury have revoked licenses that authorized certain activity with Iran as well as the waivers that were issued to lift the threat of secondary sanctions against non-US persons engaged in certain transactions involving particular Iranian individuals or entities. In “A Road-Map of the Re-Imposed Sanctions for Iran” authors David Mortlock, a senior fellow with the Atlantic Council’s Global Energy Center, and Nikki M. Cronin, an Associate at Willkie Farr & Gallagher LLP, provide a detailed, technical overview of the secondary sanctions on Iran that took effect on November 5, 2018.

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As a second and more punishing wave of US sanctions hits Iran, the Islamic Republic is dusting off an old playbook for circumventing such penalties and maintaining a crucial level of oil exports and other trade. A new issue brief by Holly Dagres and Barbara Slavin -- How Iran Will Cope with US Sanctions – discusses the myriad techniques Iran developed before negotiating the Joint Comprehensive Plan of Action, when sanctions had wider international support. The Islamic Republic is already redeploying many of these techniques, from turning off tracking devices on tankers to co-mingling oil with that of other exporters to the use of barter with key trading partners.

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In recent years, US economic and financial sanctions have become favored tools of US power. The centrality of the US financial system and the ubiquity of the US dollar in the global financial marketplace make sanctions a powerful tool to have on hand when confronting foreign policy challenges. The great danger is, however, that sanctions become a substitute for actual policy, rather than merely a tool of foreign policy. In “US Sanctions: Using a Coercive Economic and Financial Tool Effectively” authors David Mortlock and Brian O’Toole, who are both senior fellows at the Atlantic Council’s, explain what sanctions are and why they are used. The authors assess the Trump Administration’s use of sanctions and outline the conditions under which sanctions are most effective. Finally, Mortlock and O’Toole provide specific recommendations on what steps the US government must take to ensure sanctions remain a key component of the national security toolkit.

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Growing anxiety about China’s dominance of emerging markets spurred a rare bipartisan effort to pass the Better Utilization of Investments Leading to Development (BUILD) Act of 2018. The BUILD Act delivers a needed overhaul of US development finance capabilities and commercial diplomacy by subsuming the Overseas Private Investment Corporation (OPIC) and other development finance agencies into a single, streamlined entity: The United States International Development Finance Corporation (USDFC). The USDFC will provide policymakers with new tools for supporting US commercial diplomacy and promoting US corporate success in fast-growing foreign markets, including equity and grant making capabilities.

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