May 17, 2022
The Right Way to Sanction Russian Energy
Western sanctions are beginning to hit Russia where it hurts most: its energy exports. Over the last few weeks, the European Union, the biggest buyer of Russian oil, has been working on a plan to ban imports by the end of this year, although objections by Viktor Orban of Hungary have slowed progress.
For energy sanctions to work, however, they must be carefully designed to hurt Russia more than they hurt Western states. Their primary goal should not be to cut the volume of oil and gas leaving Russia, which would further drive up world energy prices and endanger domestic support, but to reduce the dollars and euros flowing into Russia. Moving forward, the EU should therefore focus collective efforts on a more ambitious approach: partnering with the United States and other allies to impose a global regime, backed by the threat of secondary sanctions, to cap the price of Russian oil and slash the Kremlin’s revenue.
Allied states must figure out how to slash Russian energy revenue without damaging the global economy.
Prior rounds of sanctions against Moscow restricted investment and technologies destined for Russia’s energy sector, targeting the country’s refineries and its construction of liquefied natural gas infrastructure. Canada, the United Kingdom, and the United States also banned Russian energy imports, but this had limited impact because all three were small consumers of Russian oil and gas. Until recently, the biggest buyer of Russian energy—the EU—not only declined to sanction energy exports but also designed its financial sanctions to explicitly allow Russian fuel to keep flowing.
But now, the Russian-European energy relationship is unraveling. On top of its discussions about phasing out Russian oil imports, the EU also announced plans to completely end Russian natural gas imports over the coming years. Europe buys slightly over half of all Russian exports of crude oil and refined products such as gasoline, diesel, and jet fuel. Taxing these exports, meanwhile, currently provides around a quarter of Moscow’s budget. The EU effort to halt Russian oil purchases therefore represents a dramatic and welcome shift in the global response to Russia’s invasion.
Read the full article from Foreign Affairs.
More from CNAS
-
The Trouble with America’s Oil Deal in Venezuela with Francisco Monaldi
Podcast
Energy expert Francisco Monaldi joins Emily and Geoff to discuss the U.S. government’s unusual oil deal in Venezuela. They get into the decades of missteps and corruption that...
By Emily Kilcrease & Geoffrey Gertz
-
What Will the Latest Trump-Xi Summit Bring? Four Experts Set the Stakes.
Commentary
Both leaders want a big show, and their teams are going through the motions of staging one....
By Liza Tobin
-
Not the Best Place to Resolve Conflict, BRICS Summit Shows How Countries Are Hedging: Expert
Video
Rachel Ziemba, adjunct senior fellow at the Center for a New American Security, joins CNBC's Squawk Box Asia to discuss why some BRICS countries may be the next target of U.S....
By Rachel Ziemba
-
How China Is Stealing America’s AI
Commentary
Sometimes the fingerprints are obvious: Kimi K3 has identified itself as “Claude,” Anthropic’s model; it was trained on so much of its rival’s output that it mistakes itself f...
By Liza Tobin
