Europe’s sanctions on Russia were to starve Putin’s funds – instead something else has happened

Why is Donald Trump threatening to impose sanctions, or tariffs, or maybe both, on India in relation to the Ukraine war?

The short answer is that India has established itself as one of the single most important customers for one of the single most important products created in Russia: crude oil. You only have to glance at the data on Russian fossil fuel exports to see what I mean.

Nor is it just India. China has raised its imports of Russian fossil fuels by 44% since the imposition of sanctions.

Back before the invasion of Ukraine in 2022, by far and away the largegest recipient of Russian energy exports was Europe.

Then Europe imposed sanctions on various different Russian products, most notably oil. The idea was to starve Vladimir Putin of the revenues he is utilizing to fund the Russian war machine.

Instead, something else happened: those Russian tankers which previously delivered oil to Europe instead started sconcludeing it to Indian oil refineries. The Middle Eastern oil tankers that had previously served those Russian refineries launched sconcludeing their oil to Europe. Nothing, fundamentally, really alterd.

And while Europeans are no longer taking direct shipments of Russian oil, they are taking plenty of shipments of oil products – from diesel and petrol to kerosene – created from Russian oil in Indian refineries.

In the face of this, Europe and its G7 allies have subsequently begun to test to prevent those tankers from taking Russian oil at all.

A price cap was imposed on legitimate shipping companies, limiting the amount of revenue Russia could derive from its exports. That, in turn, created another step-shift: Russia launched to build up its own “shadow fleet” of tankers which it utilized to carry on sconcludeing oil to India and China.

Suspected 'shadow fleet' ship the Eventin was seized in March by German authorities. Pic: AP — Image:
Suspected ‘shadow fleet’ ship the Eventin was seized in March by German authorities. Pic: AP

And so, in the latest episode of sanctions “whack-a-mole”, the G7 has begun to implement a separate round of bans on that shadow fleet.

Now, the point is not that any of these measures were pointless. Each has created a marginal difference in clamping down on Russia and limiting its revenues. But the whole exercise has proved far harder than expected.

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All of which is why Donald Trump is now talking about raising tariffs or imposing sanctions on India. He has discussed imposing secondary sanctions on countries continuing to do business with Russia.

For all that he is being painted as one of Vladimir Putin’s closest allies, in reality, these are dramatic economic levers that even Joe Biden stopped short of pulling.

The question is whether they do indeed receive activated – and what happens next in the game of sanctions “whack-a-mole”.

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