Berlin-The Biden administration plans to suffocate further Russian oil income With the long-term goal of destroying the country’s central role in the global energy economy, current and former U.S. officials say it is a major escalation step that could put the United States into political conflict. I am. ChinaIndia, Turkey, and other countries to buy oil from Russia.
The proposed measures include imposing a price cap on Russian oil backed by so-called secondary sanctions, preventing foreign buyers who do not comply with U.S. regulations from doing business with U.S. companies or partners. Punish by doing.
As President Vladimir Putin wages war in Ukraine, the United States and its allies impose sanctions on Russia and hurt its economy.But Russia continues to earn about $ 20 billion a month Oil sales According to officials and experts, it could maintain a sort of terrible conflict in eastern Ukraine and fund future aggression.
US officials say the main problem now is how to make Moscow starve its money while keeping the world’s oil supply from declining. With the US elections approaching, President Biden said dealing with inflation was a top priority.
US officials say they don’t want to remove Russia’s large amounts of oil from the market right away, but are trying to urge countries to cut off these imports in the coming months. The US ban on the sale of critical technology to Russia is partly aimed at ruining its oil company for many years. US officials say the market will eventually adjust as Russia’s industry declines.
Russia’s oil industry is already under pressure. The United States banned Russia’s oil imports in March, and the European Union hopes to announce similar measures soon. The foreign minister discussed a potential embargo in Brussels on Monday. A group of seven industrialized nations, including the United Kingdom, Japan and Canada, have agreed this month to phase out Russia’s oil imports, and its Finance Minister will discuss details in Bonn, Germany this week.
Secretary of State Antony J. Blinken said in Berlin on Sunday when asked about future energy sanctions at a NATO press conference: “It doesn’t end overnight, but Europe is clearly in that direction. We are on a decisive path. ” Atlantic Treaty Organization.
After speaking in Bonn Thursday after the story was published online, Treasury Secretary Janet L. Yellen said she and her foreign counterparts were Russian oil income outside the full European embargo. He said he talked about options to reduce.
“The purpose is to keep Russian oil flowing into the market to keep global prices down and not to overwhelm third countries,” Yellen told reporters. rice field.
Yellen pointed out price caps, tariffs and secondary sanctions as possible ways to reduce Russia’s oil revenues without raising prices globally.
Russia’s oil exports increased in April, with prices rising in Russia Earned 50 percent more According to this year’s earnings compared to the same period in 2021 New report From the International Energy Agency in Paris. NATO member countries India and Turkey are increasing their purchases. Like China, which criticizes US sanctions, South Korea has few purchases, but remains a major customer. The result is a Russian war machine still powered by Petrodler.
U.S. officials said, “What can the Kremlin do in the short term to reduce the income generated from oil sales and prevent countries outside the sanctions coalition, such as China and India, from falling below sanctions? Said Edward Fishman, who oversaw sanctions policy at the State Department after Russia merged the Kremlin in 2014.
The Biden administration is considering various types of secondary sanctions and has not yet decided on a clear course of action, according to officials who have discussed policies that are still under internal consideration on anonymous terms. The United States has imposed secondary sanctions to block Iran’s exports in order to reduce its nuclear program.
Large foreign companies generally comply with US regulations to avoid sanctions when engaging in commerce with US companies or partner countries.
Richard Nefeu, a scholar at Columbia University who was a senior sanctions officer in the Obama and Biden administrations, said: “That is, tell other countries. If you do business with Russia, you cannot do business with the United States.”
However, there are various records of sanctions. Severe economic isolation rarely changed government behavior from Iran to North Korea, Cuba and Venezuela.
One measure that US officials are discussing will require foreign companies to pay prices below the Russian oil market price, or will be subject to US sanctions. Washington allocates Russian oil prices far below the global market value. This is currently over $ 100 per barrel. Russia’s final budget set the break-even price for oil above $ 40. Price caps will reduce Russia’s profits without increasing global energy costs.
The US government could also block most Russian access to oil payments. Washington does this by issuing a rule that requires foreign banks dealing with payments to deposit money into their escrow accounts if they want to circumvent sanctions. Russia has access to money only to buy essentials such as food and medicine.
And when these mechanisms are introduced, US authorities will pressure countries to gradually reduce Russian oil purchases, as well as Iran’s oil.
“Russia’s oil and gas itself will not be banned,” said Maria Snegobaya, a visiting scholar at George Washington University who studied sanctions against Russia. “This is because prices are skyrocketing. Russia can benefit from soaring prices.”
However, it can be difficult to apply escrow payments and price caps globally. Under the new measures, the United States will have to confront countries that want to maintain good relations with Russia, such as India and China, rather than being part of an existing sanctions coalition.
2020, Trump administration Sanctions imposed We thank companies in China, Vietnam and the United Arab Emirates for their role in the purchase or transportation of Iran’s oil.
Experts say measures could be announced in response to new Russian provocations such as chemical weapons attacks, or to empower Kyiv more if Ukraine begins serious negotiations with Moscow. I am saying.
US officials want to ensure that European and Asian partners continue to unite with Washington on new sanctions. However, some European officials have stated that certain measures, such as Russian oil price caps and tariffs, are either ineffective or too complex to enact.
In Bonn, Yellen admitted that all proposals show “practical difficulties” and that European countries have not yet united their solutions.
“I think a lot of people, including myself, find it attractive from a general economic point of view, but it’s difficult to actually make it operational,” Yellen said. rice field.
U.S. officials say they reduced the number to see how much income Russia was hungry for if major buyers paid only a fraction of the oil market price.
If the European Union decides to impose a price cap rather than a complete embargo, Russian oil buyers in Asia and the Middle East may insist on paying the same low prices, US officials said.
“The advantage of straight price caps is that they go to Chinese or Indians. You say you’re going to force them to save money!” Daniel, a former diplomat who was the coordinator of the State Department’s sanctions policy.・ Fried said.
So far, the strictest sanctions imposed on Russia by the United States and the European Union have prevented the Central Bank of Russia from accessing foreign exchange reserves in global accounts. That led to a plunge in the value of the ruble. However, banks have collected foreign currency from Russian companies that are paid in dollars and euros for commodities that contain energy.
US and European officials have focused on the debate on oil sanctions, excluding the nasty problem of Russia’s natural gas exports. European countries rely on Russian gas to heat their homes and electricity businesses and cannot be easily replaced.
A major state-owned oil company in China Refrain Regarding signing a new oil contract with Russia, given the uncertainty of sanctions. U.S. officials say China is giving Putin diplomatic and rhetorical support, while Chinese businesses and governments are not sending economic or military assistance to Russia.
Chinese companies may wait until Russian commodity prices fall further before signing new contracts. Alexander Gabuev, senior researcher at the Carnegie Endowment for International Peace, also said he would like to avoid secondary sanctions. He added that executives tend to be cautious because Chinese companies are not familiar with sanctions compliance.
The Biden administration is also discussing other ways to hurt Russia. U.S. officials say it is to legally seize the assets of Russia’s central bank and the assets of big Russian tycoons frozen in foreign accounts during the war and hand them over to Ukraine for reconstruction.
Similar to the proposed energy sanctions, the United States is exploring ideas with European countries and members of Group 7.
Edward won Reports from Berlin, Paris, Washington, and Michael Crowley From Washington. Alan Lapeport Contributed to the report from Königswinter in Germany, Matina Stevis-Gridnev Contributed from Brussels.
