Former President Donald Trump has started a trend of additional sanctions against Russia. These sanctions are the deepest blows yet against two of the nation’s largest oil companies, Rosneft and Lukoil. The goal of the sanctions is to develop a level of economic pressure on Moscow to force it to end its unwarranted war in Ukraine. As the conflict continues, Trump has consistently endorsed proposals for a ceasefire along current frontlines, but Russian President Vladimir Putin remains steadfast in his refusal to halt what Trump describes as a “senseless war.”
Those newly enacted sanctions fulfill two, seemingly opposite needs, says Dr. Stuart Rollo, a geopolitical expert. Initially, these sanctions are meant to ratchet up pressure on the Russian government to reverse its aggressive course in Ukraine. Second, they seek to shake the foundations of Russia’s economy. This boom fuels a burgeoning economy and is the backbone of the country’s national budget, with oil and gas exports composing nearly a third of its federal budget.
“Every time I speak to Vladimir, I have good conversations and then they don’t go anywhere,” Trump remarked, highlighting his ongoing dialogue with the Russian leader amid the conflict.
These actions are especially significant given China and India continue to be two of Russia’s largest oil and gas customers. Trump calls on both countries to halt importation of Russian oil. He further underscores that their collaboration is crucial for the successful enforcement of the sanctions.
“Was not going to buy much oil from Russia,” – Narendra Modi (reported by Donald Trump)
Despite these sanctions, experts like Michael Raska express skepticism about their immediate effectiveness in altering the military balance in Ukraine. He noted that while the sanctions will likely hurt Russia’s economy, they may not lead to a significant shift in the conflict in the near term.
“These sanctions are an indication to President Putin that he has to come to the table,” said Bill Taylor, adding that they signal the international community’s determination to hold Russia accountable for its actions.
The effects of these sanctions go well beyond Russia. The U.S. and its allies have been very cautious about targeting the Russian energy sector. They fear that these steps would imperil the world economy. Reprieve’s Edward Fishman was worried that this would open the door for the United States to develop so-called secondary sanctions. He specifically named Chinese banks and Indian refiners financing Russian barrels transacted through Rosneft and Lukoil.
“Will the US actively threaten secondary sanctions on the Chinese banks, UAE traders, and Indian refineries that transact with Rosneft/Lukoil?” – Edward Fishman
As the debate over these sanctions continues, some trade experts are convinced that the short-term impact will result in long-lasting shifts in foreign trade relationships. Fishman stated, “I expect, at the very least, some pullback from dealings with Russian oil in the short term.”
Advocacy organizations have raised fundamental human rights concerns about the long-term consequences of these sanctions. Ambassador John Herbst warned attendees not to assume immediate resolution of the conflict through economic steps taken in isolation. He commented on the socio-economic sustainability of Russia becoming a growing concern. That’s a real possibility as profit margins are being eroded due to these sanctions.
“But I think it’s naive to expect this step alone [will] push Putin to actually make peace in good faith,” – John Herbst
Heard of this market timidity, but heralded the importance of sustained pressure over the longer term. “We have to maintain major pressure for many months. But this is a good start,” he asserted.
As things develop, everyone will be watching to see what sort of effects these sanctions have. Most importantly, they’ll discuss how these measures are influencing Russia’s military strategy and its relationships with key allies such as China and India. The U.S. hopes that by limiting Russia’s oil revenue, it can force a reconsideration of its aggressive policies in Ukraine.