{"id":53230,"date":"2023-03-20T16:53:02","date_gmt":"2023-03-20T15:53:02","guid":{"rendered":"https:\/\/libmod.de\/?p=53230"},"modified":"2023-03-21T15:01:14","modified_gmt":"2023-03-21T14:01:14","slug":"western-energy-sanctions-against-russia-the-next-steps","status":"publish","type":"post","link":"https:\/\/libmod.de\/en\/western-energy-sanctions-against-russia-the-next-steps\/","title":{"rendered":"Western Energy Sanctions against Russia: The Next Steps"},"content":{"rendered":"

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Foto: Imago<\/figcaption><\/figure>\n

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The West must consis\u00adtently punish sanction viola\u00adtions, lower the price ceiling for Russian oil and make itself independent of the Russian nuclear industry \u2014 Sergiy Petukhov on the effect and future of sanctions against Russia.<\/h2>\n

<\/h2>\n

The Russian aggression against Ukraine has global dimen\u00adsions, one of them being a hybrid attack against European energy security. While the Russian army started bombing peaceful Ukrainian cities on Feb 24, 2022, the Kremlin continued its hybrid warfare against Europe with the aim of under\u00admining EU support for Ukraine and trying to divide the Union.<\/p>\n

Gazprom decided to rescind its gas supply contracts to European gas suppliers and hoped that Europe would \u201cfreeze\u201d during the winter. The Russian propa\u00adganda channel RT even aired a commercial, where an impov\u00ader\u00adished European family had to cook their hamster to still their hunger.<\/p>\n

The Kremlin\u2019s plan did not work out<\/h3>\n

The abrupt cutting of gas supply clearly aimed at desta\u00adbi\u00adlizing the European energy market. Russia hoped that gas prices of European house\u00adholds would skyrocket, and the industry would be forced into rationing. Russia expected that that combined effect would lead to a great uproar among citizens and business in the EU and weather down the willingness to support Ukraine. As we know, that did not work.<\/p>\n

Europe proved to be resilient and remained united in the face of Russian aggression. However, now is a good oppor\u00adtunity to evaluate the effec\u00adtiveness of the EU\u2019s response in the energy sphere and its preparedness for any future Russian actions.<\/p>\n

Mutual depen\u00addence on energy supply through gas and oil pipelines has long been considered a pillar of EU security in its relations with Russia. Trade was seen as a bridge that would not only stabilize these relations but also lead to the democ\u00adra\u00adti\u00adzation of Russia. A concept known as \u201cWandel durch Handel\u201d. This concept proved to be wrong, at the latest when Putin decided to break it.<\/p>\n

Decline in Russian revenues from energy exports<\/h3>\n

Russia\u2019s budget income from energy exports in Jan-Feb 2023 decreased by 46%, which is a signif\u00adicant blow to Kremlin\u2019s ability to finance its military spendings. Even decreasing its social expen\u00addi\u00adtures would not be enough to balance the budget without decreasing its military spendings. While Western oil sanctions only became effective in December, they already have a powerful impact. If they would have been agreed and intro\u00adduced right after Feb. 24, 2022, Russia would be much weaker already and maybe forced to negotiate itself out of the war.<\/p>\n

However, European depen\u00addence on Russian energy prevented sooner EU sanctions. As a result, in 2022 Russia earned more than $200 billion through energy exports and increased its production by 2%. European consumers paid a signif\u00adicant part of this amount. The Kremlin used this money to finance its war in Ukraine, quell opposition within Russia and spread its propa\u00adganda and fake news around the world.<\/p>\n

Lower the price cap for Russian oil<\/h3>\n

The intro\u00adduction of the price cap on oil and oil products from Russia is an effective measure to decrease Russian profits from the inter\u00adna\u00adtional sale of its fossils, while ensuring that the same amount of Russian oil still reaches inter\u00adna\u00adtional markets. Moving cautiously, Western govern\u00adments made sure that sanctions would not send shock\u00adwaves to the global economy.<\/p>\n

Now is the time to decrease the price cap further to ensure Russia does not profit from inter\u00adna\u00adtional sales but rather only covers its production costs. Appar\u00adently, average production costs for oil in Russia are about USD40 per Barell. Therefore, with the current price cap Russia can still make profit. Lowering the price cap to USD50 in March 2023 is feasible. This would be a strong signal to Russia\u2019s government that it cannot rely on energy exports to finance its war against Ukraine.<\/p>\n

The current sanctions against Russia have no prece\u00addence in history in their number and extent. Never has a country with the size of Russia been subjected to sanctions, which aim at excluding it from Western technology, finance markets and inter\u00adna\u00adtional trade.<\/p>\n

Russia has success\u00adfully circum\u00advented sanctions in the past<\/h3>\n

What we have learned from the last 9 years (the first sanctions were intro\u00adduced in 2014 after the annex\u00adation of Crimea and attacks on Donbas) is that Russia has become a skillful sanctions evader. Assets are trans\u00adferred to newly estab\u00adlished companies in obscure juris\u00addic\u00adtions. Murky deals through third parties ensure supply of necessary tools and spare parts. Russians are ready to double the price for things they need or lower the price of their raw materials to lure customers and contractors into breaching sanctions.<\/p>\n

Secondary sanctions are crucial<\/h3>\n

While not all of Russia\u2019s trade with third countries can be controlled directly, the EU and G\u20117 have effective tools to enforce sanction regimes. Be it through regulating financing or insurance services, or through agree\u00adments that are beneficial for both the EU and G7 as well as for third countries, they can make sure that no one abuses their position to help Russia evade sanctions.<\/p>\n

Secondary sanctions \u2013 sanctioning those who help circum\u00adventing primary sanctions \u2013 is a powerful tool that has not been properly used yet. For example, Russian oil and oil products can be mixed with products from other countries and then sold in the EU market under a new disguised origin. A real danger of losing a lucrative EU market due to secondary sanctions will discourage businesses from these practices.<\/p>\n

The EU must consis\u00adtently punish a violation of sanctions<\/h3>\n

Most impor\u00adtantly, viola\u00adtions of sanctions are a crime. Hence, violators must be prose\u00adcuted, be it European companies or individuals or third countries. Enforcement has long been a weak part of EU sanctions, mostly due to the complexity of inves\u00adti\u00adgation and the unwill\u00adingness of European countries to prosecute their own companies and citizens. That control of imple\u00admen\u00adtation lays with the Member States and not the EU, additionally hinders enforcement. This should be changed. Best practice examples of sanction enforcement should be analyzed and applied by all EU countries.<\/p>\n

Sanctions against the Russian nuclear industry<\/h3>\n

Russia has seized control over Ukraine\u2019s nuclear stations Chernobyl and Zapor\u00adizhzhia, the latter being the biggest operating station of its kind in Europe. In direct violation of the inter\u00adna\u00adtional human\u00adi\u00adtarian law, which mandates that armed activ\u00adities should not be pursued in or around nuclear stations, Russia made them a corner\u00adstone of its occupation plan for Ukraine. Not only were they taken under control, but heavy weapons were stationed there, and Ukrainian personnel were subjected to threats and inhuman treatment.<\/p>\n

Rosatom, a Russian state-owned monop\u00adolist in nuclear energy production and building of nuclear plants, played an integral role in this. Its personnel were shipped to Ukraine to replace local staff which refused to obey to Russian orders.<\/p>\n

The depen\u00addence on Rosatom<\/h3>\n

Rosatom has been active around the world and within the EU. It possesses an exclusive technology which the EU depen\u00addents on. It is only a question of time until the Kremlin will use it against Western countries. Russia has 8% of the world\u2019s uranium resources, and even more crucial, the world relies on Russian uranium enrichment. In 2021, Rosatom\u2019s subsidiaries provided 31% of nuclear fuel enrichment services to EU\u2019s nuclear companies and 28% to the United States.<\/p>\n

EU sanctions on Russian nuclear industry were blocked recently by those member states who have strategic cooper\u00ada\u00adtions with Rosatom. The sanctions are mainly opposed by Hungary, as it is not only heavily dependent on energy supply from Rosatom\u2019s nuclear plants but also issued Rosatom a construction permit for two new power units in Hungary. Conse\u00adquently, the EU needs to rethink its nuclear strategy and ensure that it is in line with the current security threats from Russia.<\/p>\n

The first steps could entail individual sanctions against key Rosatom officials and employees who have inter\u00adfered at Ukrainian NPP\u2019s and taken actions endan\u00adgering nuclear safety, followed by a supply ban on raw uranium from Russia.<\/p>\n

Europe has freed itself from depen\u00addence on Russian energy imports<\/h3>\n

The Russian hybrid energy war against Europe shows how dependent the EU was on Russian oil and gas supply. Contrary to its own policy of diver\u00adsi\u00adfi\u00adcation, some EU countries became criti\u00adcally dependent on Russian supplies. Last winter became a turning point where the EU managed to overcome its great depen\u00addency, though at great costs.<\/p>\n

Energy transition in Europe and knowledge transfer to the global South<\/h3>\n

Now Europe must accel\u00aderate its transition to a green economy. That would make the EU less reliable on Russian energy and will ensure that the exclusion of Russian oil and gas from the global market will not lead to skyrock\u00adeting prices, which would harm devel\u00adoping countries, who still rely on oil imports. Sharing green technologies with devel\u00adoping countries will make these countries more resilient and sustainable and would de-couple their foreign policy from author\u00adi\u00adtarian oil-exporting regimes.<\/p>\n

Overall, the green transition will not only help tackle global climate change but will make the world safer and more just by decreasing economic power of oil rich regimes.<\/p>\n

Security guarantees for Ukraine<\/h3>\n

In the mid-term, future Russian gas and oil supply should come exclu\u00adsively through Ukraine, including the EU negoti\u00adating a purchase at the Russian-Ukrainian border and making use of the Ukrainian under\u00adground storage capacity. This would be an important security guarantee to Ukraine against any future Russian attacks.<\/p>\n

A combi\u00adnation of the diver\u00adsi\u00adfi\u00adcation of EU imports of energy, the price-cap on Russian oil and gas exports and maintaining strong sanctions, should force Russia to stop manip\u00adu\u00adlating markets for its political goals.<\/p>\n

Even if the sanctions alone cannot make Russia withdraw its troops from Ukraine, they can seriously undermine its capacity to finance the war and help Ukraine win it.<\/p>\n

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