A former executive of the Russian oil giant Lukoil says that Trump's sanctions on the company will be “catastrophic” for Lukoil’s operations across the continent.
But will it be enough to bring Russian President Vladimir Putin to the negotiating table?
Trump's sanctions on Lukoil and the state-owned Rosneft energy conglomerate will accomplish what no one has been able to do before: wean Europe off of Russian energy and force it to find alternative sources.
“This is a significant step,” said Kimberly Donovan, a sanctions expert at the Atlantic Council think tank, “and it is going to force … European countries and companies that have been continuing to import energy to reconsider those transactions” by Nov. 21, when the sanctions kick in.
Trump has been jawboning Europe for years to cure their addiction to Russian oil. A month ago, he appeared to be reaching the end of his patience, issuing an ultimatum to Europe, writing on Truth Social, “I am ready to do major Sanctions on Russia when all NATO Nations have agreed, and started, to do the same thing, and when all NATO Nations STOP BUYING OIL FROM RUSSIA.”
A significant consequence of the proposed sanctions is that China and India are suspending their seaborne Russian oil purchases. These are Moscow's two largest customers for oil, although several private operators are likely to continue buying Russian oil, and Russia's pipeline to China will be unaffected.
Trump has other tools at his disposal to ratchet up pressure on Putin, but so far hasn’t taken them. That includes sending long-range Tomahawk cruise missiles to Ukraine, imposing new secondary sanctions on any companies that do business with the sanctioned Russian oil giants, or targeting Russia’s vast so-called shadow fleet of illicit oil tankers with new sanctions to bolster European Union sanctions.
“Trump is leaving some things off the table because he still really wants a deal with Putin,” said Kurt Volker, who served as Trump’s envoy for Ukraine during his first administration. “This shows he’s just frustrated Putin hasn’t gone along with his plans yet.”
Volker said getting Putin to commit to serious concessions will take “a lot more than sanctions,” and that sending Tomahawks to Ukraine would be an important next step.
Putin admits that the sanctions are "serious" while criticizing the move as an “unfriendly act that does nothing to strengthen Russian-American relations.”
We shouldn't trust the EU to go along with U.S. sanctions for the simple reason that the relationship between the Russian oil giants and European countries can't easily be untangled. "Russia’s largest private oil firm [Lukoil] runs hundreds of gas stations across the EU, including around 200 in Belgium; operates giant refineries in Romania and Bulgaria; and retains a 45 percent share of a fuel processing plant in the Netherlands," reports Politico.
Russia supplies Hungary and Slovakia with between 86% and 100% of their imports. Both nations took advantage of an "opt out" from the EU for the mild sanctions the bloc imposed on Moscow. But the EU has been ratcheting up the pressure on both countries to wean themselves off Russian oil.
How the sanctions are enforced will be critical to their success. It appears that Trump is prepared to bring the hammer down on Russian energy.
The U.S. Treasury has said it “may” impose sanctions on anyone working with the Russian firms, meaning no bank will now handle payments for them in Europe, said Donovan, the sanctions expert.
“It’s going to be a huge signal to [European banks and businesses] that they really need to step away from this, or otherwise they’re exposing themselves to sanctions,” she said.
Other European countries are indicating that the Russian stake in their oil industries will have to be sold and the relationship with Russian energy must end. If they follow through on the effort to rid the EU of Russian oil, it will draw Europe closer to the U.S.
Whether they want to be closer or not.
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