EU Enacts Harsher Energy Sanctions On Russia, While U.S. Ponders Them
Smoke rises in the city of Severodonetsk during heavy fightings between Ukrainian and Russian troops ... More at eastern Ukrainian region of Donbas on May 30, 2022, on the 96th day of the Russian invasion of Ukraine. - EU leaders will try to overcome Hungary's rejection of a Russian oil embargo on May 30, 2022 as part of a further tightening of sanctions against Moscow, whose forces are advancing in eastern Ukraine, with fighting in the heart of the key city of Severodonetsk. (Photo by ARIS MESSINIS / AFP) (Photo by ARIS MESSINIS/AFP via Getty Images)
AFP via Getty ImagesRussian propagandists are becoming even more belligerent now that the United States is considering harsher sanctions on Russia, while the European Union enacted them yesterday. This could harm Russia’s oil and gas industry. The war of words is escalating, threatening a “nuclear tsunami” to wipe out the West, and moving its troops to Finland’s borders.
Please make no mistake: economic sanctions are a much better way to resolve this war than forcing Ukraine to surrender to its aggressor. However, sanctions are not the be-all and end-all. They’re a constant mind game coupled with armed prowess while slowly weakening Russia’s power. Major battlefield victories or changes in Russian politics are the most potent weapons, while sanctions can erode morale and resources.
The Atlantic Council emphasizes that sanctions are crucial in countering Russian aggression and are core to deterring future threats. By restricting access to critical technologies, financial systems, and export markets, it said sanctions will gradually weaken Russia’s military might, giving Ukraine a leg up.
“Restrictive economic measures against Russia’s energy sector have caused major restructuring of the global oil market and lengthening of oil trade routes, but Russia is still generating revenue from oil exports to India and China,” the council said. “When the European Union banned seaborne Russian oil imports, the United States stepped in and became the largest supplier of crude oil to Europe.”
The corporate beneficiaries are Cheniere Energy, Energy Transfer, Sempra Energy, ExxonMobil, Chevron Corp., and ConocoPhillips.
However, the Atlantic Council notes that the United States lost half of its Indian market, which Russia then exploited. India and China now purchase Russian oil at reduced prices, helping Russia fund its war efforts. Enter the sanctions implemented by the EU and discussed by hardliners in the United States.
U.S. lawmakers are debating hefty 500% tariffs on any country or company purchasing Russian oil to sidestep the embargo or evade price caps. The tariff would apply to Russia and third-party buyers, particularly those in China, India, and Turkey, using the so-called “shadow fleet” to transport oil.
TATARSTAN, RUSSIA - JUNE 04: A view from the oil company Tatneft in Tatarstan, Russia on June 04, ... More 2023. Tatneft is one of the largest Russian public companies with a market capitalization of more than 1.1 trillion rubles at the beginning of 2022. According to Forbes Global 2000, in 2020 Tatneft ranked 539th among the largest companies in the world in terms of listing volume. The main assets of the company are located on the territory of the Republic of Tatarstan. (Photo by Alexander Manzyuk/Anadolu Agency via Getty Images)
Anadolu Agency via Getty ImagesThe goal is to make it prohibitively expensive for any entity to import Russian oil into this country, similar to what we did with foreign companies that previously conducted business with Iran. It doesn’t completely stop trade, but it significantly raises costs—a move that risks increasing tensions with India and China.
The EU’s latest sanctions package tries to choke off Russia’s oil trade and military supply lines by targeting “shadow fleets”—the reflagged oil tankers helping Russia bypass Western restrictions. However, the EU will not impose secondary sanctions or those on third parties that do business with Russia. Instead, it tightens controls on its own companies.
The EU is tightening its grip while this country talks about it. We cannot equivocate for the sanctions to succeed; we must remain united and committed.
“Time for scorching sanctions, as Putin mocks Trump—and America—by sending low-level minions to supposed peace talks. He’s a murderous thug who understands only force—economic or military,” said U.S. Senator Richard Blumenthal, D-Conn., in a statement. “Putin will continue stonewalling and slow-walking ceasefire efforts till his economy is hit hard.”
Hardening sanctions on Russia may weaken its economy, but it won’t cause it to withdraw its troops willingly. Nevertheless, Russia is feeling the pressure. It must reallocate resources from its domestic economy—funds that would typically go toward education, infrastructure, and pensions—and redirect those resources to support the war. Military spending now constitutes 40% of its budget. That’s unsustainable.
But Putin is shielded from public opinion; anyone opposing his war faces an immediate five-year prison sentence. He views Ukraine as part of Russia, not entitled to independence, and sees it as a means to resist Western influence. His propagandists have drilled this mentality into much of the Russian population, creating a wave of nationalism. As long as China and India continue buying its oil, the country can keep up the pretenses of “winning” its war against Ukraine. Never mind that its gains come in tiny increments over land with little economic worth but plenty of nostalgic value.
“There should be no illusions, not at all: You want to destroy Russia? “Why do we need a world if Russia is not in it?” asked propagandist Vladimir Solovyev.
HELSINKI, FINLAND - JULY 16: (RUSSIA-OUT) U.S. President Donald Trump (L) and Russian President ... More Vladimir Putin arrive for a joint press conference after their summit on July 16, 2018 in Helsinki, Finland. The two leaders met one-on-one and discussed a range of issues including Russian meddling in the 2016 U.S election. (Photo by Mikhail Svetlov/Getty Images)
Getty ImagesWhat the uncompromising Russians fail to fully grasp is that the Soviet Union died in 1991 and is not coming back. They can’t understand the people's desire for freedom. What could change this calculation? Military setbacks on the battlefield, diplomatic isolation, and stronger sanctions—especially those targeting shadow fleets and third-party oil buyers.
Russia is clearly worse off due to Putin’s efforts to revive aspects of the Soviet empire, particularly by flexing its muscles and bombing neighboring nations such as Georgia and Ukraine. His attempts to reassert Russian dominance over former Soviet territories have come at a tremendous cost, domestically and internationally; the country has been cut off from Western capital markets and has no access to advanced technologies, particularly in aerospace, defense, and energy.
That has forced it into the arms of its new big brother, China.
Russia’s best chance is Donald Trump, who continues to express his admiration for Putin and skepticism toward bankrolling Ukraine, which he criticizes as wasteful. Indeed, he frequently portrays Ukraine and NATO more broadly as freeloaders, implying the United States would not defend allies who don’t pay their “fair share.” That undermines NATO, which is critical for Ukraine’s defense. Consider: The United States voted with Russia and North Korea in February concerning a UN Resolution to condemn Russia’s invasion of Ukraine.
Without U.S. weapons and intelligence, Ukraine would have to rely even more on the EU and itself. The EU and the United States contributed approximately 30% each to Ukraine’s defenses, with Ukraine making up the remainder. Since the conflict began, Ukraine has rapidly ramped up drone manufacturing. More than 200 Ukrainian companies produce about 96% of all unmanned aerial vehicles.
Trump could still tip the scales in Putin’s favor. By cutting off crucial support, pressuring Ukraine to make concessions, and weakening Western resolve, he could make it more difficult for Ukraine to fight back. If that happens, Trump will be labeled a loser—the antithesis of Ronald Reagan.
That is a victory for Putin, despite losing 1 million soldiers and suffering significant economic setbacks. He achieves many of his primary goals, such as retaining Crimea.
The best actions are stronger energy sanctions and ongoing military support for Ukraine. While these measures won’t bring an immediate end to the war, they will diminish the resolve of the Russian people and their authoritarian government. Russia is not a fire-breathing dragon; rather, it’s a toothless vampire with nuclear weapons—one now trying to save face.