IGP Carnegie Distinguished Fellow Wally Adeyemo Leads Roundtable on International Security and the Energy Transition

"After Russia's invasion of Ukraine, our challenge was that we didn't want to reduce the oil supply globally, but neither did we want Russia to profit," explained Wally Adeyemo, former Deputy Secretary of the Treasury in the Biden administration. He recently joined the Institute for Global Politics (IGP) as a Carnegie Distinguished Fellow and the Center on Global Energy Policy (CGEP) as a Distinguished Visiting Fellow.

Adeyemo's observation captured a key theme during a February 13 roundtable that also included Dave Turk, CGEP Distinguished Visiting Fellow and former Deputy Secretary of Energy in the Biden administration; Eddie Fishman, SIPA professor and former member of the State Department Policy Planning Staff; and Erica Downs, CGEP Senior Research Scholar. Robert Johnston, CGEP Senior Director of Research, moderated the wide-ranging discussion, which included questions from students across IGP, SIPA, CGEP, and Columbia Climate School.

Adeyemo outlined the application of sanctions during Russia’s 2022 invasion of Ukraine. “We decided Iran-style sanctions were counterproductive,” he explained. He rated the sanctions regime they implement as “modestly effective” because Russia sold oil at a loss. As they found other sources of oil, they began going after Russian energy companies and their shadow fleet. His biggest takeaway was to “try to multilateralize sanctions as much as possible” to make them most effective.

“This is the age of economic warfare. This is how great powers compete today,” stated Fishman, who described economic warfare as both offensive and defensive. Offensively, states use choke points around areas of the global economy where they have exclusive control of goods, such as China’s control of their mineral supply for batteries. Downs illustrated how China is also developing tools for economic statecraft, and they are becoming increasingly willing to use them. “China has export controls on critical minerals, which they used in December on the US,” she explained. They also maintain an “unreliable entity list," prohibiting certain companies from investing in China. 

The scholars noted growing concerns about China's economic statecraft, especially that China is constructing a parallel financial system to rival US dominance of financial markets. However, Adeyemo asserted it will not happen overnight. “I am not concerned about a weakened role for the US dollar in the global economy,” he said, citing how, even after sanctions, Russian banks still did most of their transactions in US dollars. “My fear is we may not see it happen when it does, and when the country that provides the world’s reserve currency creates uncertainty, it will be much easier to switch.”

Fishman explained that the best defense to economic warfare is industrial policy, protecting a nation's key industries. The Biden administration implemented this policy in the form of the CHIPS and Science Act, creating innovation hubs in underserved regions of the US and boosting advanced manufacturing. Secretary Turk affirmed that the strategic petroleum reserve acted as a similar defense against global shocks. “Affordability of oil plays an outsized role in politics,” he stated. He tied these measures to the green transition, placing industrial policy as central to reducing US dependence on foreign minerals and increasing its own production.

One student asked how best to position themselves to work on the energy transition given challenges in the US job market and hiring freezes in the US government. “We need people who make it their career to solve climate change, now more than ever,” emphasized Turk, who listed multiple avenues where students can make a difference, including state government, foundations, and energy finance.