Despite Monday’s amicable White House meeting between Donald Trump, Volodymyr Zelensky, and several European leaders, a new gap in the West’s Russia strategy is set to open up. The European Union is poised to approve its 19th sanctions package next month, while the United States is considering a partial lifting of sanctions, especially in the energy sector.

At first glance, it might appear that Trump has gone soft on Vladimir Putin. But it could also indicate that the current US administration understands the Russian economy better than the Europeans do. Trump remarked last month: “I don’t know that sanctions bother [Putin].” This stands in stark contrast to Kaja Kallas, the EU’s top diplomat, who believes that “thanks to EU sanctions, Russia has lost tens of billions of euros in oil revenues.” She added that Moscow’s “sovereign wealth fund declined by €6 billion only last month. Sanctions work.”

While the sanctions have obviously had negative effects on the Russian economy, they did not “work” in the sense of accomplishing their main goal: the crippling of the Russian arms industry. According to Nato Secretary General Mark Rutte, “in terms of ammunition, Russia produces in three months what the whole of Nato produces in a year.”

If your enemy produces four times as many weapons as you, then your sanctions are not having the desired effect. One reason for this is that by making Russian oil and gas more expensive, Moscow can partially make up lost volume via price. The logic behind this is that the world needs energy, so trying to keep Russian supply off the market drives up prices, and Moscow can use loopholes, shadow fleets, and its relations with the Global South to make money via higher prices, despite lower export volumes.

The Trump approach of potentially allowing Russian energy back into the market could lead to a collapse of global energy prices, caused by more production among Opec, Russia, and the United States. Counterintuitively, lifting sanctions could do more harm to Putin than maintaining them. This is especially true if the US keeps producing domestically while also putting pressure on Saudi Arabia and others to maintain or even increase production.

What’s more, lower energy prices would be a boon for European industries, and reviving production capacities could also help to close the gap in armaments production between Nato and Russia. It would most likely also have a positive effect on price developments, as more affordable energy can reduce inflationary pressures, which in turn would have beneficial effects on domestic politics.

Needless to say, this would be a gamble — but it is not without promise. The Russian economy can keep running at $30 per barrel of oil, but could it go on at $10 per barrel? If the Trump administration creates a premature glut in energy markets, the consequences would be devastating for Moscow and make a comprehensive peace agreement more likely. After 18 sanctions packages which failed to have the desired effect, perhaps it’s time to try something new.

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Ralph Schoellhammer is assistant professor of International Relations at Webster University, Vienna.

Raphfel

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