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
Hamas has been experimenting with crypto for years
Former CIA counterterrorism analyst Yaya Fanusie discusses Hamas's crypto haul amid the Israel war, arguing terrorists are 'creative folks.' Watching the full interview with ...
By Yaya J. Fanusie
Six steps to disrupt Hamas and other terrorist groups’ finances
The US government should use all available tools of national power to protect the United States and its allies, work toward the recovery of American and partner hostages, and ...
By Alex Zerden
Stricter Verification Laws in the U.S. Won’t Stop International Terrorists from Using Crypto
The realm of terrorist financing is always a cat-and-mouse game....
By Yaya J. Fanusie
Comments on Provisions Pertaining to U.S. Investments in Certain National Security Technologies and Products in Countries of Concern
Submitted by: Sarah Bauerle Danzman (Associate Professor, Indiana University Bloomington; Senior Fellow, Atlantic Council), Tim Fist (Fellow, Technology and National Security ...
By Emily Kilcrease, Tim Fist, Sarah Bauerle Danzman, Ngor Luong & Emily Weinstein