One would think, three and a half years into Russia’s invasion of Ukraine, that the West could come up with a way to choke off Russia’s energy exports, still the biggest single source of money for the Kremlin. And one would be wrong.
Little by little, the United States and Europe and the West have tried to tighten the screws on Russia’s ability to fund its war from revenues accrued in the energy business. There have been sanctions and oil price caps, individual designations of Russian businessmen and Kremlin cronies, and many angry social media posts. The West has gone after tankers and bankers, to little avail, for two main reasons.
One would think, three and a half years into Russia’s invasion of Ukraine, that the West could come up with a way to choke off Russia’s energy exports, still the biggest single source of money for the Kremlin. And one would be wrong.
Little by little, the United States and Europe and the West have tried to tighten the screws on Russia’s ability to fund its war from revenues accrued in the energy business. There have been sanctions and oil price caps, individual designations of Russian businessmen and Kremlin cronies, and many angry social media posts. The West has gone after tankers and bankers, to little avail, for two main reasons.
First, the Russian energy sector, from oil and natural gas to uranium exports, is surprisingly resilient. And second, especially this year, the United States has proved expectedly supine.
Russia’s earnings from energy exports have painted a flat line for the last two years. There was an initial dent just after Russia’s invasion, when sanctions kicked in, but Moscow still makes some $600 million a day, every day, from selling coal, oil, and natural gas to buyers around the world.
For all the bluster and the blare, and the videos that make the rounds of Russian refineries on fire, neither Europe (and Britain) nor the United States has yet stepped on the hose. That may explain Monday’s visit by European Union sanctions envoy David O’Sullivan to Washington, to see if a fresh huddle can come up with a more effective play. Europe, which is deeply allergic to “secondary sanctions” on third countries as a way to coerce them, is now reportedly toying with precisely that to put additional pressure on Russia, but it cannot do it alone. And it is just that kind of pressure that would make a teetering Russian economy so bad that Russian President Vladimir Putin had to come to the table.
“Without the United States and without secondary sanctions,” it would be very hard to bring Russia’s energy earnings to heel, said Petras Katinas, an analyst at the Centre for Research on Energy and Clean Air, a Finland-based nonprofit. He has been tracking the impact and evolution of Western sanctions on Russian energy exports for several years, and he is gloomier than most.
“I definitely think there was a missed opportunity, and people remain hesitant to tackle this issue,” he said.
The problem seems simple enough. Russia makes, mines, and pumps lots of fossil fuels, and most of those have to be sold abroad. There are a few ways to tackle that, and the West has tried them all. One could go after some of the banks and energy companies that pump the billows of Putin’s war machine, as the United States and Europe did in fact do. That didn’t work because Russia, like China and Iran, has become adept at sidestepping sanctions and because the financial and energy sector sanctions were not comprehensive enough.
One could go after the technology used to chest-pump tired Russian oil and gas fields, as the Obama administration did starting in 2014 but which the Trump administration is now seeking to unwind. That didn’t work either, but at any rate it was a future measure.
One could, as the Europeans have donetarget the ships that sell illegal Russian oil with sanctions and blacklists and sometimes boarding parties. The United States used to do that as well.
Or one could go after the buyers of Russian product, as U.S. President Donald Trump has tried to do with secondary tariffs on India for its continued purchases of about 1.8 million barrels of Russian oil a day. Sure, China is a much bigger buyer of Russian oil, but China has four aircraft carriers and a lot of nuclear missiles, as well as leverage in trade talks that India does not. So far, and those tariffs only took effect late last month, that has not worked either. (Also, China is now doing deals to import Russian natural gas explicitly to subvert EU sanctions and keep Moscow and Arctic pipe dreams afloat.)
There are additional things on the margin, including dampening Russia’s trade in liquefied natural gas, which is absolutely on the EU’s to-do list by 2027. (It takes a while to unwind long-term gas trade contracts, even when there is political will.) Further, there are other problems, such as the perennial Hungarian veto threat on continued EU sanctions. As one European energy veteran said, there are 27 countries at the table, and until 2027 nothing will be tabled.
Ukraine itself has intensified its own drone air war on Russian refineries, a campaign launched last year and thrown last month into the highest gear. There are lots of Russian refineries in flames and much heated talk about 20 percent of Russian refining capacity being sidelined, but those claims seem premature, experts say. Knocking out Russian cracking units for a spell does slightly complicate the front-line fight and makes life marginally harder for some Russians, but it does not empty the Kremlin’s coffers.
The missing ingredient in all of this is the United States.
Trump has, since taking office a second time, often threatened Putin with sanctions, and the Senate went so far as to draft a draconian sanctions bill that would directly target Russia’s ability to earn rubles by selling barrels. But Trump has not pulled the trigger, despite a failed summit in Alaska and six months of Russian stalling, and the Senate has paused Sen. Lindsey Graham’s Sanctioning Russia Act at Trump’s behest. There have been no additional U.S. sanctions on Russia’s shadow fleet of illicit oil tankers since outgoing President Joe Biden’s farewell sanctions on the Russian fleet.
“If the U.S. were onside, regarding the shadow fleet, this would all be a lot more effective,” Katinas said.
There are of course many steps yet to be taken, from seizing the nearly $300 billion in frozen Russian Central Bank assets to blocking all Russian energy companies, and not just the little ones, from the global financial world, as well as tagging and tapping every hull in Russia’s still-growing shadow fleet.
But for many diplomats, politicians, and policymakers in Europe, and perhaps for some in Washington, it remains disheartening that this long into the war, the kill button for Russia’s cash cow has yet to be found.
