Ever since the Russian invasion of Ukraine in the final week of February, four major international forums have taken place one after another that have all featured three common points in their agendas and themes: Stopping the Ukraine war by making it more financially unviable for Moscow through sanctions, providing Kyiv generous support packages and finding a solution to the simmering energy and food crisis across the globe. However, besides the material and financial support promised to Ukrainian President Volodymyr Zelenskyy’s government, very little has been done at these forums when it comes to the other two points. The G-7 summit, the European Union gathering, the NATO summit in Madrid and the G-20 summit in Bali have so far failed to deliver anything concrete or tangible to deflate Moscow and assuage the growing uncertainty about the global energy and food crisis. At the very outset of the G-7 summit, the Americans started talking about two proposals to tighten the noose around Russia’s neck, with the first seeking to introduce sanctions on Russian gold, the country's second biggest export after the energy sector. The Americans initially tried to sell this idea to Britain, Japan, Canada and other European partners, however, there were serious reservations about the technicalities of its execution and the Europeans, in particular, were quite reluctant, insisting on deferring the idea until further consultations with the rest of the members of the EU before joining the Americans in sanctioning Russian gold exports.
The second proposal was related to capping the prices of Russian oil and gas. However, this idea was also shot down due to the differences between German Chancellor Olaf Scholz and French President Emmanuel Macron, which again had to do with the “technical aspects” of the proposal. Scholz was actively campaigning for a price cap, while Macron refused to move forward on the matter until work was completed at the technical level. The Europeans are trapped in a vicious cycle. Their overdependency on Russian oil and gas has been hurting them in two ways, financially and politically. All those countries that cut off their imports from Russia have been severely hit financially by surging energy prices. The fact is that some countries that are providing financial and hardware support to Ukraine are also inversely dependent upon Russian energy and are paying billions of dollars to Moscow. Ironically, in the first two months of the Ukraine war, Russia earned more than $66.5 billion from its energy exports, while Germany alone paid some $9.5 billion. The Americans’ proposed oil price cap does not appear to be workable at the moment because oil trading is being done in the open market and Russians will find many buyers elsewhere. The only viable solution could be to implement a kind of price cap through Western insurance and shipping companies that can refuse to transport Russian oil being traded outside the capped price. Banning the services associated with the transportation of Russian oil beyond the capped price is the only option Washington and its allies have left to frustrate Russian President Vladimir Putin.
But this is not an easy option either. It also involves a long list of technicalities to ensure its proper enforcement. In addition, there is a parallel channel of undocumented oil trading that can be exploited by Moscow in an extreme situation. Another viable and working option for the Russians is trading oil-for-yuan-for-gold with the Chinese, which is very much at work with Russians trading oil with Beijing through this arrangement outside the petrodollar domain. Russia further exacerbated the problem by increasing oil production in May and June to preempt possible energy sanctions – the Russians delivered the biggest quantity of oil in the OPEC. Putin was playing his hand very well until now. He knows that Europe’s dependency on Russian energy is the key to moving the pieces on the board where he wants – and this is the most dangerous part of the whole game. Washington and its allies, knowing fully well that they cannot afford to stop the war by physically intervening and sending troops to help the Ukrainian army push back the invading Russians, are trying to hurt and exhaust Moscow financially by controlling oil prices and sanctions. But the problem is much more complicated than U.S. President Joe Biden and his associates anticipated at the start of the war. They all underestimated and misjudged Putin’s plan this time. More than four months have passed since Russia started its invasion of Ukraine, but Washington and its allies have not been able to knit together a comprehensive, unanimous plan to wriggle and frustrate Putin. They should start paying heed to American political scientist Henry Kissinger and French President Emmanuel Macron, who advocate for the resumption of table talks with Moscow. Nonetheless, the acrimony witnessed between the Russian entourage and other participants at the G-20 summit in Bali suggests that the two sides are still far from the point where negotiations can be resumed. So far, to the utter frustration of Washington and its Western allies, it seems Putin is playing his energy card very well to keep them from devising a unanimous strategy to deal with the matter. His recent trip to Iran, just after Biden’s Middle East yatra, is a reflection of the fact that Putin is further flexing his muscles to muffle and out-compete the new economic sanctions being proposed by the U.S.
