Mikhail Khodorkovsky, a former political prisoner and CEO of Yukos Oil company, is the author of “How to Slay a Dragon: Building a New Russia After Putin” and founder of the New Eurasian Strategies Centre.
Snatching a glass of scotch away from a drunk isn’t going to make them sober. This is an obvious truth of human nature, yet one the West is seemingly oblivious to when it comes to sanctioning Russia.
The truth is, there is not — and never will be — an answer to Russian President Vladimir Putin’s aggression that lies in economic action alone.
What’s required is a demonstrable ability not merely to punish but to deter. Sanctions that are unbalanced by the required investment in, and preparedness to use, defensive force will never succeed — as can be seen with Russian drones now boldly testing NATO defenses.
But the West is as addicted to seeking answers in imposing and enforcing energy sanctions as the drunk is to his scotch. And its approach reflects a fundamental misunderstanding, not only of Putin’s goals but of his mindset.
Fundamentally, the war in Ukraine is not about economic control over a productive country. It is a strategic and ideological play against the notion of thriving democratic nations in Russia’s neighborhood, and for reasserting the dominance Moscow enjoyed during most of the 20th century.
Still, in response, the EU has pursued energy sanctions against Russia along three main lines: reducing imports, imposing a price cap and secondary sanctions. But the effect has been negligible at best — never mind the fact that sanctions have no moral authority when Western governments continue to pay billions for Russian gas annually.
The belief that the Kremlin’s war machine can be gradually bankrupted via energy sanctions doesn’t stack up. It is a conceit borne of Western leaders perceiving Putin’s motives through the lens of their own democratic values and misunderstanding the global oil market.
Europe’s leaders have made the choice of accommodating their domestic political audiences as much as possible, but Putin takes the opposite view. To him, national imperatives completely outweigh any concessions to public opinion.
Also, removing up to 5 million barrels of Russian oil and another 2 million barrels of petroleum products from the market — without creating an oil shock — is a complicated task with a questionable chance of success. That is why Western leaders have shied away from it, and in any case, there are still plenty of markets for Russian oil in countries that see the war as, in Neville Chamberlain’s infamous words, “a quarrel in a faraway country, between people of whom we know nothing.”
That means, the only possible approach is to incrementally ratchet up the pressure through focused, coordinated efforts — but the numbers don’t add up.
Oil at $70 a barrel equates to tax revenue of $60 billion for the Russian federal budget, around 40 percent of which is used to pay for the war. As things stand, the combined measures in place to isolate the Russian energy sector cut this figure to around $30 to 40 billion. On top of this, secondary sanctions on buyers of Russian oil could cut budget revenues by another $10 to 15 billion.
But even a loss of $40 billion a year from the $400 billion federal budget — to which oil and gas revenues contribute at most 17 percent — won’t force Moscow to change course. It is a substantial constraint, to be sure, but nowhere near enough to get Putin to the negotiating table. He can compensate for it easily — by slightly devaluing the ruble, for example — and there are no domestic opponents whose voices he needs to consider.
This is not the case in Europe, of course, which was lukewarm about going cold turkey on Russian energy from the start. Trump has rightly upbraided European leaders for their hypocrisy in this respect.
But while the White House may be hoping Europe replaces Russian energy with American oil and gas, the U.S. president’s transactional approach makes clear this would have a financial price — one that European countries, already pressured by their electorates, don’t want to have to pay.
It is feasible to strengthen technological sanctions by focusing solely on products that can’t be supplied from China — a move reminiscent of the Coordinating Committee for Multilateral Export Controls (CoCom), which controlled the export of strategic goods and technologies to the Soviet Union and other Communist countries during the Cold War. But the world has changed immeasurably in the last 35 years, and even a new CoCom would have limited potential.
Simply put, sanctions will never be a game-changer to Putin. Indeed, they possibly don’t even figure in his thinking, given his regime has been characterized by subterfuge, illegality and deception since the very beginning. Evading sanctions, or mitigating their effect, is just a minor inconvenience to manage.
So, with oil and gas effectively off the table, the only way to force Putin to stop the war is through a massive and sustained military build-up by NATO. Nothing else will be as decisive.
And yet, EU leaders are struggling to convince their electorates that sustained financial and political investment in defense spending is essential. Instead, their dithering and disunity are emboldening China, and they’re surrendering strategic leadership exclusively to Trump — with all the consequences that entails.
The war against Ukraine — a war all of us are participants in, willing or otherwise — is the decisive question of our age. The recent Russian drone incursions into Poland and Romania have demonstrated the existential threat we all face. And such a threat demands an uncompromising response.
It’s time to realize that while energy and other sanctions may be a step in the right direction, they only scratch the surface of the resolve needed to make Putin back down, much less defeat him.
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