Looking to deepen pain for Putin, West studying oil and gas

The United States unleashed some of its toughest actions against Russian President Vladimir Putin right after he rolled his troops into Ukraine. Polls in the U.S. find that people want Washington to do more. So what’s left, financially, diplomatically and militarily, to step up the pressure?

The U.S. could get strong results from any number of next steps, economists and current and former U.S. officials say. It could simply persist in pouring cash and potent weaponry into Ukraine — a likely course. It could even commit to shutting down some of the inroads the Kremlin has made into U.S. political and financial systems, also conceivable.

But the mightiest trigger the West can pull now on Russia, many experts agree, is the one on a gas pump nozzle. Cutting off Russian profits from oil and natural gas sales has become a main topic among world leaders looking at what else they can do to force Putin to end his invasion.

“It would be very useful to try to devise a way to reduce proceeds from those sales and that really is the proper objective, I think, of a ban,” Treasury Secretary Janet Yellen told a meeting of world finance leaders Thursday.

“But if we can think of a way to do that without harming the entire world from higher energy prices, that would be ideal,” Yellen said.

President Joe Biden already has ended the relatively minor U.S. imports of Russian oil and other fossil fuel products. But the U.S. would be central if allies move to cut the global flow of Russian fuel and punish nations and businesses that fail to comply.

Global purchases of Russian oil and gas production account for at least 40% of government revenue for Moscow. Exports are keeping Russia’s economy afloat despite the sanctions enacted so far and financing the war.

Cutting back further on Russian petroleum to the market would make a global supply crunch even worse, increasing prices for everyone, including in the United States.

Republicans already are making gas price increases that stem in part from Russia’s war a top campaign point against Biden.

“Everybody wants a pain-free option, right?” asked Daniel Fried, a former assistant U.S. secretary of state for Europe, and one of many urging the U.S. to take tougher action as Russia builds forces for a new phase of attacks in Ukraine. “Yeah, they seldom exist.”

“If anybody writes they can do this thing without some effect on gas prices, you know, without taking a hit — you’re crazy, because you can’t,” Fried said.

The U.S. is already being asked to assure the world that U.S. producers can help make up for lost Russian supply, if Europe moves to cut the hose on Russian oil purchases quickly. The U.S. would likely be an administrator and enforcer in any secondary sanctions to penalize China or other nations or businesses if they buy from or enable Russia’s oil and gas industry.

European Commission President Ursula von der Leyen said European nations have considered diverting their payments for Russian oil and gas into escrow accounts, similar to deals forced on Iran and Iraq as part of sanctions.

A poll by The Associated Press and the NORC Center for Public Affairs Research found that more than half of respondents want Biden to be tougher on Putin.

People in the U.S. may just be coming around to accepting that doing that could mean financial hardships for them. By 51% to 45%, respondents in the AP-NORC poll said the U.S. should focus on sanctioning Russia as effectively as possible more than on limiting damage to the U.S. economy.

But ask Alan Gold of Potomac, Maryland, if he’s willing to pay more for gasoline as part of any global move to starve Russia of money for the Ukraine war, and the answer you get is a growl.

“I’m paying $5 a gallon now,” Gold said this past week at a strip mall gas station, jerking his head at the price tally rolling upward as he pumped gas into his vehicle.

Elina Ribakova, deputy chief economist of the Institute of International Finance, said Russia’s war is boosting the price it gets for its oil and gas, driving the surplus in Russia’s current accounts to nearly $60 billion, a recent high despite all the West’s sanctions.

Economists and policymakers have to decide next steps as part of the larger context of militaries at war, the risks of nuclear war and the cost of Ukrainian lives, Ribakova told an online panel with Princeton’s Bendheim Center for Finance this past week. “This is the cost we’re thinking about when we think about sanctions ... not just about economics.”

Barring major shifts, the financial realm is the one where the next major U.S. actions against Russia will come from.

Militarily, the U.S. is unlikely to send in many new, complex weapons systems, like U.S. tanks or fighter or bomber jets. Doing so would tie up Ukrainian fighters in training on unfamiliar weapons when they’re needed for fighting, by the Pentagon’s reasoning.

Instead, the U.S. is expected to keep doing what it’s doing militarily, only more so, pumping in more cash and basic battlefield weapons and resupplies. On Thursday Biden pledged an additional $1.3 billion for heavy artillery, 144,000 rounds of ammunition and other aid.

Further boosting U.S. intelligence-sharing to help Ukraine in the fight is an option.

On the diplomatic front, the U.S. and likeminded nations are exploring ways Russia could be further isolated. Russia has already been suspended from the U.N. Human Rights Council and is facing a push at the world body’s educational, scientific and cultural organization to strip it of its UNESCO presidency and bar it from hosting a June meeting of its World Heritage Committee.

Russia is unlikely to be suspended from the International Civil Aviation Organization, World Health Organization or Food and Agriculture Organization, however. Any attempt to remove it from the world body’s most powerful grouping – the U.N. Security Council – would fail on a Russian and likely Chinese veto.

Talk of the U.S. officially designating Russia or Russian mercenaries as terrorists or supporters of terrorism hasn’t gained traction.

There is another big step the U.S. and its democratic allies should take, that doesn’t get as much attention, argues Alex Finley, a former officer of the CIA’s directorate of operations: Clean up their own act.

“We need to examine our own role,” said Finley, who tracks seizures of Russian yachts and other Western penalties on Putin. She and others say lax regulation and enforcement in the West have allowed Putin and Russia to influence U.S. elections, park cash from corrupt enterprises in shell companies and offshore tax havens, and buy visas and passports to Western countries.

It’s all served to erode transparency and the rule of law in Western democracies, as Putin intended, said Finley.

The West got lax because “we made money with it,” Finley said. “But we did it in a way that we sold ... part of the soul of democracy.”