Stiffening the Screws on Putin: EU's Plea to Trump for Tougher Sanctions
By Lea Verstl
Trump deliberates extensively on imposing sanctions against Putin
The European Union's latest sanctions package aims to constrict Russia's economy, but it relies on U.S. President Trump's goodwill to be effective. Trump could potentially scuttle the entire plan with the backing of an ally in the Brussels Council.
With Russia already selling its oil below the proposed oil price cap, the European Commission has suggested reducing the price cap for Russian oil from $60 to $45 per barrel. This proposal forms part of the EU's 18th sanctions package against Moscow. To enforce a new cap, EU coordination with G7 nations including Donald Trump is essential, set to occur next Sunday.
Trump may be swayed by the belief that low oil prices could hasten the end of Russia's war against Ukraine. Although his trade policies have weakened the global economy, thereby depressing oil prices, the question is whether Trump will pressure Russian President Vladimir Putin.
Politics: EU Proposes Stricter Oil Price Cap
Trump holds significant sway in determining the overall impact of Western sanctions on Russia. The U.S. can impose secondary sanctions on companies dealing with Russia, making international business challenging for Moscow. In contrast, the EU cannot levy such measures due to legal concerns, such as violations of international law and the sovereignty of other states.
US Economy: Isolation or Advantage?
The U.S. is currently debating secondary sanctions, with over 80 senators backing a corresponding bill by Republican Senator Lindsey Graham. Trump, however, seems conflicted, pushing for bill weakening despite not entirely opposing it. The US economy could suffer if the amendment is implemented. The draft proposes a 500% tariff on countries purchasing Russian energy, which could impact European countries, some of which still acquire Russian gas.
Economy: US-China Agree on New Trade Framework
Despite concerns, Graham’s sanctions package could isolate the U.S. from other major economies, such as India and China, the largest buyers of Russian oil. Implementing a 500% tariff would halt U.S. trade with these nations at a particularly inopportune time, as China and the U.S. move closer in their trade dispute. Underhand negotiators from both countries have agreed on a framework agreement for mutual export restrictions, currently under consideration by Trump and Chinese counterpart Xi Jinping.
According to Alexandra Prokopenko, an expert on Russian economic policy at the Carnegie Endowment for International Peace, harsh secondary sanctions against Indian or Chinese companies may undermine any progress made on a bilateral level.
Politics: Potential Stumbling Blocks
The EU's planned 18th sanctions package includes the reduced oil price cap, sanctions against more tankers and additional Russian banks, and a ban on the Nord Stream gas pipelines. The German government has ruled out gas supply resumption following the conflict, but rumors persist of renewed gas supplies as part of an American-Russian agreement to conclude the invasion.
If such rumors are confirmed, Trump’s influence would be pivotal. However, decision-making occurs in Brussels without Trump's involvement. Hungarian Prime Minister Viktor Orban, who enjoys good rapport with Trump, could potentially block the sanctions package. Orban has threatened a veto against previous sanctions extensions and has cited Trump's anticipated return to office as a reason for his stance.
Orban's ties with Putin also raise concerns, as Orban has repeatedly threatened to obstruct decisions on new sanctions packages. Rumors suggest Orban receives instructions from Trump in these matters, raising the possibility that the sanctions package may ultimately fail due to Trump's disapproval.
Commodity: Oil Prices and Sanctions
- Oil Prices
- Russia
- Vladimir Putin
- USA
- Donald Trump
- Sanctions
- EU
- Viktor Orban
- Hungary
- The EU's proposed stricter oil price cap, aimed at constricting Russia's economy, relies on U.S. President Trump's goodwill for enforcement, as Trump holds significant sway in determining the overall impact of Western sanctions on Russia.
- Hungarian Prime Minister Viktor Orban, who enjoys good rapport with Trump, could potentially block the EU's planned 18th sanctions package, raising the possibility that the sanctions package may ultimately fail due to Trump's disapproval.
