Sanctioning Russia: on the Trump administration’s fresh sanctions on Russia

The Trump administration has imposed fresh sanctions on Russia as punitive measures relating to Moscow’s refusal to strike a ceasefire agreement to bring the war in Ukraine to a halt, with Washington targeting Russian oil giants Rosneft and Lukoil. Russia’s use of the oil trade to finance war has been a bone of contention for NATO members since the early days of Russia’s incursion into and attacks on Ukraine, an indirect dimension of the conflict that has pulled Asian powers India and China into the fray. Over the summer, Mr. Trump sought to up the ante in this regard by slapping India with an additional 25% tariff for importing Russian oil, over and above the basic 25% rate imposed on other countries as well, even though China, as a top importer of Russian seaborne crude, was spared this levy. Now, the latest round of sanctions appeared to have penalised both trading partners of Moscow significantly, with reports suggesting that at least four major state-owned Chinese oil companies have suspended purchases from Russia and that at least one private and three state-owned Indian refinery companies are planning for “recalibration of Russian oil imports” including the possibility of a “massive cut” over time.

At the heart of the White House move is the seething frustration of Mr. Trump over failed attempts to not only bring Russian President Vladimir Putin to the negotiating table — a feat achieved in Alaska in August and a second summit agreed in Budapest before it was postponed following the collapse of ceasefire talks — but also to nudge the Kremlin towards at least a short-term arrangement that might lead to a cessation of hostilities as a precursor to a broader treaty on territorial and institutional agreements. It is possible that the latest sanctions may lead to a genuine tightening of options for Mr. Putin on ending the war, especially as Washington will now be joining the European Union that has adopted its 19th sanctions package against Moscow, specifically focusing on technology supply chains, energy revenues, and financial networks. Nevertheless, it may be premature to applaud their potential impact on the Kremlin’s strategic calculus. Ultimately, whether sanctions have teeth or not depends on the consistency of their enforcement, including shutting down the inevitable loopholes and workarounds that Moscow will seek to exploit to continue selling oil abroad, possibly at even sharper discounts. Mr. Trump may find that he has travelled full circle to arrive at the same sticky negotiating points between Moscow and Kiev that his predecessor faced — an early end to ground hostilities, control of Donbas, and the permissible extent of NATO influence in the region. Only if sanctions can break Russian strategic will on at least one of these points will the prospects for peace brighten considerably.