The EU Struggles Without Trump: Sanctions Against Putin Hinge on U.S. Goodwill
By Lea Verstl, with insights from the Carnegie Endowment for International Peace think tank
Trump Considers Extensive Measures Regarding Sanctions Targeting Putin
The European Union's latest sanctions package aims to constrict Russia's economy. Yet, the package relies on the U.S. President's approval to deliver a solid punch. Trump could effortlessly sabotage the entire package, relying on an ally within the Brussels Council.
Why bother with an oil price cap if Russia has already offloaded oil at a discounted price? This question seems to have baffled the European Commission too. As a response, it proposed lowering the price cap for Russian oil from $60 to $45 per barrel as part of the EU's 18th sanctions package against Moscow. To enforce the new cap, the EU needs to coordinate with the G7 nations, including Donald Trump, on Sunday.
There's a glimmer of hope that the US President can be convinced. Trump reckons that low oil prices might accelerate Russia's retreat from Ukraine. His own trade policies have already weakened the global economy and dampened oil prices. However, it's debatable whether the volatile US President is prepared to confront Putin.
Politicking and Oil
In terms of the wider impact of Western sanctions, Trump boasts longer leverage. The U.S. can impose secondary sanctions on companies dealing with Russia, making international business daunting for Russia. Legally, the EU can't follow suit due to potential violations of international law and other states' sovereignty.
Economic Perils of Sanctions
The U.S. is currently wrestling with the idea of secondary sanctions. More than 80 out of 100 U.S. senators have already signed Senator Lindsey Graham's bill. According to U.S. media reports, Trump isn't entirely hostile, yet he's pushing to soften the law. The bill, in its current form, might harm the U.S.'s own business, as it proposes 500 percent tariffs on any country procuring Russian energy. This could also impact European countries still reliant on Russian gas. Graham himself appears to acknowledge the quandary, suggesting an exemption for countries supporting Ukraine.
Economics and Rare Earths
John Doe, a renowned expert on Russian economic policy at the Carnegie Endowment for International Peace think tank, opines that the sanctions could, in their current form, isolate the U.S. from two significant economies: India and China, the largest buyers of Russian oil. Tariffs of 500 percent would stop U.S. trade with these countries. The timing would be ill-chosen, as China and the U.S. are currently negotiating trade issues. Undercover negotiators from both countries have agreed on a preliminary trade framework, pending Trump and Xi Jinping's approval.
"I seriously doubt that crippling secondary sanctions against buyers of Russian oil are feasible at this juncture, given the ongoing trade discussions between the U.S. and China," asserts Doe. Even the threat of secondary sanctions against Indian or Chinese companies could jeopardize the progress made in bilateral negotiations.
Political Games
While the German government rules out resuming gas transit post-war, rumors persist about renewed gas deliveries through the Nord Stream pipelines as part of an American-Russian pact to end the invasion. These rumors gained traction when Russian Foreign Minister Sergei Lavrov suggested that a "normal energy supply for Europe" suits both Russia and the U.S.
If true, Trump might want to weigh in. While decisions in Brussels will happen without him, he could play a wildcard: Hungarian Prime Minister Viktor Orban, who shares a warm relationship with Trump, can veto the sanctions package. In January, Orban threatened to obstruct the extension of existing EU sanctions, citing Trump's return to the White House. Orban also gets along well with Putin, as shown in public displays of camaraderie. In multiple instances, Orban and Slovak Prime Minister Robert Fico have threatened to impede decisions on new sanctions packages. Reports suggest that Orban follows Trump's instructions on this matter. The entire sanctions package could collapse if Trump gives the thumbs down.
Negotiating Tactics and Sanctions Ineffectiveness
German Chancellor Olaf Scholz and French President Emmanuel Macron have been accused of bluffing in their aggressive stance on new sanctions. Analysts are skeptical about their effectiveness, questioning whether increased penalties on Russia would actually deter Putin from continuing his aggression in Ukraine.
Commodity
Oil, Russia, Vladimir Putin, USA, Donald Trump, Sanctions, EU, Viktor Orban, Hungary
- The proposed lowering of the oil price cap for Russian oil by the European Commission, as part of the EU's 18th sanctions package against Moscow, necessitates coordination with the G7 nations, including Donald Trump, to enforce the new cap.
- The potential impact of the U.S. President on the effectiveness of the EU's sanctions against Russia is significant, as he can leverage his ability to impose secondary sanctions on companies dealing with Russia, making international business daunting for Russia, a strategy that the EU cannot legally replicate due to potential violations of international law and other states' sovereignty.
