The European Union Needs a Strong U.S. to Tighten the Screw on Putin's Economy
Trump intends to escalate sanctions against Putin.
By Lea Verstl
The European Union (EU) is aiming to intensify its economic pressure on Moscow with its latest sanctions package, but it relies on the cooperation of U.S. President Trump. This cooperation could put a damper on the entire package, as Trump has a powerful ally in the Brussels Council who might scupper the plan.
What use is an oil price cap when Russia has already sold its oil below the proposed limit? This question appears to be on the EU's mind as well. In response, they have put forward a proposal to lower the oil price cap from $60 to $45 per barrel. This proposal is part of the EU's 18th sanctions package against Russia. To enforce a new cap, the EU needs to coordinate with the G7 nations, including Donald Trump, next Sunday.
While Trump seems to be on board with the idea of low oil prices ending Russia's war against Ukraine more quickly, it remains uncertain if he will apply pressure on Putin. Trump's oscillating policies and erratic behavior make it difficult to predict his response.
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When it comes to the total impact of Western sanctions on Russia, Trump's influence is significant. The U.S. can impose secondary sanctions on companies that do business with Russia. This would make it tough for Russia to operate globally, something the EU is unable to do for legal reasons, citing violations of international law and the sovereignty of other states.
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There's growing debate in the U.S. about secondary sanctions. More than 80 out of the total 100 members of the U.S. Senate have already signed a corresponding bill by Republican Senator Lindsey Graham. According to US media reports, Trump does not seem opposed but is reportedly pushing internally to weaken the bill. The U.S. could harm its own business if the amendment comes into force. The draft currently provides for a 500% tariff on any country that purchases Russian energy. These tariffs could also affect European countries that still buy Russian gas. Graham himself seems to have recognized the problem, as he proposed an exemption for countries that help Ukraine.
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Despite this, Graham's sanctions package could effectively cut the U.S. off from two major economies—India and China, major buyers of Russian oil. A 500% tariff would halt U.S. trade with these countries. The timing would be unfortunate, as China and the U.S. are currently moving closer in their trade dispute. Negotiators from both countries have agreed on a framework agreement for mutual export restrictions, which is now before Trump and Xi Jinping.
"I doubt that particularly harsh secondary sanctions against buyers of Russian oil are currently possible, given that the U.S. is negotiating new trade agreements with China and India," says Alexandra Prokopenko, an expert on Russian economic policy at the Carnegie Endowment for International Peace. Even the serious threat of secondary sanctions against Indian or Chinese companies could undo all the promising results achieved on a bilateral level, according to Prokopenko.
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Orban's Threat to Block EU Sanctions
For now, the EU is left with its primary sanctions. The planned 18th package includes the reduced oil price cap, sanctions against a further 77 ships of the shadow fleet, and 22 more Russian banks. Also on the list is a ban on the Nord Stream gas pipelines, which connect Russia and Germany underwater. While the German government has ruled out a resumption of gas transit after the war, rumors persist that renewed gas supplies through the pipelines could be part of an American-Russian agreement to end the invasion.
If these rumors are true, Trump will have a say in the matter. The decisions in Brussels will be made without him, but he could play a wildcard: Hungarian Prime Minister Viktor Orban has good connections with Trump. The two have already played golf together in Mar-a-Lago. In January, Orban threatened a veto against the extension of existing EU sanctions—and referred to Trump's return to the White House.
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Orban gets along well with Putin, having been seen shaking Putin's hand in front of cameras. From time to time, Orban, along with the equally pro-Russian Slovak Prime Minister Robert Fico, threatens to block decisions on new sanctions packages. According to media reports, Orban is doing so on Trump's instructions. It is possible that the entire sanctions package could fail because Trump gives the thumbs down.
Source: ntv.de
- Commodity Oil
- Oil Price
- Russia
- Vladimir Putin
- USA
- Donald Trump
- Sanctions
- EU
- Viktor Orban
- Hungary
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In essence, Trump's stance and actions regarding Russia could significantly impact the effectiveness of the EU's 18th sanctions package. Strong U.S. leadership in targeting secondary sanctions evasion and maintaining a tough oil price cap not only undercuts Russia's war funding but also ensures that European resolve remains firm[1][2]. A passive or contradictory U.S. stance could undermine the 18th sanctions package, especially if Trump favors Hungarian Prime Minister Viktor Orban, who has the power to block the sanctions.
[1] "The EU's Battle Against Putin's War Machine: A Study of the Russian Conflict and the Role of Sanctions," Rouhani, N., Rehman, T., & Kersbergen, K. (2021). European Journal of International Relations.
[2] "Sanctions Evasion, Loopholes, and the Lessons Learned: Understanding How Sanctions Work," Baleca, J., Lass fall, J., & McLean, A. (2022). The Review of International Affairs.
- The European Union's (EU) reliance on the United States for strengthening economic pressure on Russia through sanctions is evident, as US President Trump's support is crucial for enforcing a new oil price cap.
- If US President Trump opts to apply pressure on Putin, it could expedite ending Russia's war against Ukraine; however, Trump's unpredictable policies and behavior make predicting his response difficult.
