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Weekend Reads
How Sanctions Can Slow the Russian War Machine
The Trump administration struck a major blow to Russia’s war economy on Wednesday, announcing sanctions on Rosneft and Lukoil. These two firms constitute a significant share of the Russian energy industry, which is the main source of funding for Vladimir Putin’s invasion of Ukraine. Moreover, this new sanctions package indicates that President Donald Trump may be taking a more aggressive stance against Russia in response to Putin’s intransigence.
Below, read Hudson’s Peter Rough, Thomas Duesterberg, and Luke Coffey on the importance of Trump’s posture change, how tightened sanctions could halt the Russian war machine, and why Europe needs to do its part to squeeze Moscow’s economy.
Key Insights
1. Trump is giving Russia a choice: ceasefire or economic pain.
Peter Rough, Senior Fellow and Director, Center on Europe and Eurasia
These newly sanctioned entities are the two biggest Russian oil producers, which together export about half of the country’s crude—a couple million barrels a day. The fact that the Department of the Treasury took this step suggests the United States is prepared to strike at the heart of Russian economic power. These oil producers are to the Russian economy what Volkswagen and Siemens are to Germany. Moreover, the threat of secondary sanctions is significant. Finally, it’s important to note that the US is back to calling for a ceasefire. That’s the Ukrainian and European position, whereas the Russians wanted a full-blown political settlement. Trump went into the Alaska summit in August asking for a ceasefire but was prepared to entertain a broader political framework. Now he’s putting a choice before the Russians: ceasefire or economic pain.
2. Stronger sanctions will further strangle Putin’s sputtering economy.
Thomas J. Duesterberg, Senior Fellow
Western sanctions have not only cut Russian revenues derived from fossil fuel exports; they have also slowly undercut new oil and gas development (notably the Arctic 2 liquefied natural gas facility) and limited some weapons production. Much of Moscow’s commercial airline fleet is grounded because sanctions have created shortages of key parts. Without Chinese, Iranian, and North Korean military technology, as well as some other assistance, Putin’s war machine would be in even greater danger of severe shortages. For example, the Russian military has had to cannibalize commercial appliances and autos for computer chips needed for weaponry.
3. Europe also needs to do its part to squeeze Russia’s economy.
Luke Coffey, Senior Fellow
It is estimated that stricter measures by Europe and the US could slash Moscow’s income from crude oil by up to $80 billion a year. Obviously, this would have a huge impact on Russia’s economy and its ability to wage war against Ukraine. Trump knows this, which is why he posted his blunt message last month urging Europeans to end their imports of Russian energy. Cutting off the revenue source allowing Russia to continue the war is just as important as European countries arming Ukraine with weapons. But to squeeze Moscow and finally force Putin to the negotiating table, Europeans will need to reduce their dependence on Russian energy. The US should increase production to meet this new demand.
To learn more, read “Europe Must Do More to Reduce Its Dependence on Russian Energy.”
Quotes may be edited for clarity and length.
