Cutting off Putin’s cash
The West’s sanctions on the Putin regime are said to be the most restrictive ever imposed. That’s the marketing. The reality as Sen. Pat Toomey writes in the Wall Street Journal, is we can do far more.
Among the most obvious moves: ending Russia’s ability to export oil and gas. Which also happen to be its most reliable source of hard currency:
Since the sanctions imposed by the U.S. and Europe purposely allow Russia to continue exporting oil and gas, between $5 billion and $7 billion in hard currency funds Mr. Putin’s war machine each week. Severing this revenue stream now, together with helping Ukraine’s heroic defense, is the best chance the U.S has to convince Mr. Putin that this war was a calamitous blunder that he should immediately abandon.
How would that work?
To cut off Mr. Putin’s oil and gas sales globally, the administration and Congress should impose secondary sanctions on the entirety of Russia’s financial sector. These penalties would effectively prohibit foreign banks anywhere in the world, under the threat of U.S. sanctions, from making payments to Russian banks, including for oil and gas. They would force the world to make a choice: Do business with the U.S. or do business with Russia. But you can’t do both.
This will be a huge step for Europeans, who’ve become addicted to cheap Russian gas over the years. But even there, the reality of what their cash is doing for Putin is becoming an embarrassment:
Europeans have begun to take modest steps toward ending their dependence on Russian energy. But some private companies in Europe can’t cut off their purchases until sanctions are imposed. Ørsted, a Danish power company, said it would like to reduce its intake of Russian energy but is contractually obligated to buy it until 2030. Only sanctions would allow the company to break its contract with Gazprom legally.
The ball is in the politicians’ court. But for the rest of us. Particularly the U.S. Toomey says it’s time to take energy production seriously again:
While President Biden claimed in a recent press conference that the current crisis “should motivate us to accelerate the transition to clean energy” and reduce our dependence on fossil fuels, this can’t—and won’t—happen overnight. It would take decades to develop the technology needed to produce consistent and reliable green energy at such an enormous scale. The administration implicitly acknowledged this by going on bended knee to plead with Venezuela’s dictator to produce more oil.
The administration should instead bolster America’s energy independence by reversing its disastrous anti-fossil-fuel policies: restart the Keystone XL pipeline, expedite approvals of natural gas pipelines and LNG facilities approvals, and repeal its broad and punitive regulations and restrictions on U.S. oil and gas production.
Energy production is not a zero-sum game. We can expand both domestic production and increase the development of renewables at scale (and that includes expanding nuclear power).
Every action we take to making ourselves – and our allies – less reliant on murderous kleptocrats…be they in Moscow or Riyadh…the stronger our economies and our security will be.