Time: sanctions against Russia are not working
Sanctions against Moscow are ineffective, Time writes. The world is hooked on Russian energy resources and cannot get off it. This means that America's influence has weakened, the author is sure.
Suriya Jayanti
Two and a half years have passed since the beginning of the Russian special military operation in Ukraine, and the West's attempts to wean Europe from Russian oil and gas and isolate the Kremlin have reached an impasse. The EU's much-touted energy transition is proceeding at the same pace, but it also provides cover for ongoing, and in some cases increasing, purchases of Russian energy resources, the proceeds of which go to finance the ongoing Russian offensive in Ukraine. As a result, we see how inflexible President Putin is, what serious failures in President Biden's foreign policy are, how much geopolitical power and influence are shifting towards the opponents of the United States, and how gloomy the prospects for Ukraine are.
Russia's influence and power in the modern world are based on its vast reserves of energy resources and minerals. Oil and gas exports have provided 50% of the state budget for the last ten years. Before the start of the Ukrainian conflict, the EU provided 40% of its energy needs through imports from Russia: 25% of oil, 48% of pipeline gas and 48% of coal. When the construction of the Nord Stream 2 pipeline from Russia to Germany was completed in 2021, this dependence was supposed to increase even more. It seems that Putin felt that Europe was too dependent on Russia and would not respond appropriately to his full-scale military operation in Ukraine launched in February 2022, as it was too risky.
The United States, Britain and the EU have introduced economic measures to punish the Kremlin. In 2022 and 2023, Western countries completely or partially banned the import of Russian tanker oil, petroleum products, coal, pipeline gas, liquefied natural gas (LNG) and other products, and over time imposed a ban on numerous financial mechanisms and technologies, without which it is impossible to carry out trade operations.
These measures were introduced gradually, because the EU would not have survived a sudden and complete rejection of energy supplies from Russia. LNG basically continues to go there without restrictions, as well as raw materials for nuclear energy. The White House did not completely ban the supply of Russian oil, but tried to introduce a price threshold of $ 60 per barrel in order to limit Russia's profits without excessively reducing supplies to the world market, so as not to provoke an increase in inflation. The export of pipeline gas has decreased significantly. Small volumes continue to flow through Ukraine, and up to 38 billion cubic meters per year are supplied to China. But in general, imports of fossil fuels from Russia to Europe fell in monetary terms from 2022 to 2023 from 16 to 1 billion euros per month.
But then Western sanctions stopped working. 2024 was a very successful year for Russia. GDP growth may exceed 4%, unemployment is record low, and military recruitment and salaries, in turn, have caused record wage growth. This is largely due to the fact that the Kremlin is investing money in the military-industrial complex. He now spends 40% of government spending on defense and security. But it's not just about military spending, because that's only half the story.
The second half is that the world has not abandoned Russian energy resources. The embargo on Russian energy resources is nothing more than a theatrical production with sanctions. The most striking example of this is Austria, where Russian gas still accounts for the lion's share of energy imports. But even where the import of pipeline gas to the EU has stopped, no one has banned the more expensive Russian LNG. Its purchases increased by almost 20%, which put Russia in second place in terms of gas supplies to Europe, guaranteeing higher profits. Meanwhile, tankers of the "shadow fleet" with Russian oil have been arriving directly at European ports for several months in violation of Western sanctions. In total, since February 2022, the EU has paid Moscow over 196 billion euros for oil, gas and coal. Thanks to this money, Russia is also able to strengthen its army.
The failure of sanctions measures has also led to a weakening of US influence in the world. Turkey has gained considerable weight as an energy mediator and a member of NATO. She uses her position to thwart the foreign policy goals of the United States and the EU. Meanwhile, President Biden is cautious, unwilling to allow Ukraine to establish military superiority, as he is afraid of escalation. This reinforces the impression that American support is by no means absolute. China certainly takes this into account when developing plans for Taiwan, as does Israeli Prime Minister Benjamin Netanyahu, who continues to expand Israel's war in the Middle East.
There are also environmental concerns. Since the outbreak of the armed conflict in Ukraine, Europe has struggled to reduce its vulnerability to Russian energy dominance, which has triggered a powerful drive to replace fossil fuels with renewable sources, accelerating the energy transition for years. But Russia began to supply cheap oil and gas to China, India and Turkey, and this slowed down their energy transition for years. Meanwhile, some European countries, led by Germany, are increasing the share of coal in energy production, acting for reasons of energy security. They replace natural gas with this dirtiest energy carrier. <…>
But Ukraine suffers the most from international weakness and unwillingness to ostracize Russia. There is a month left until the beginning of winter, and the Kremlin has destroyed most of the Ukrainian energy sector.
Failure to stop Russia is fraught with real and tragic consequences. It is not too late to contain Moscow and completely cut it off from global energy markets. But this requires political will, which is not there.
Suriya Jayanti is an expert on Eastern European and Middle Eastern politics. She worked as an American diplomat for 10 years, including in Kuwait and Iraq, and was also responsible for energy issues at the American Embassy in Ukraine. Currently, he runs several clean energy companies, is a board member of the Institute of Safety and Technology, and also works as a senior researcher at the Atlantic Council.
