Commentary
So far, the Russian oil cap is having the desired effect. Russia’s economy is hurting, and the European Union has access to cheap oil. But maintaining the status quo will be a delicate game of financial carrot and stick.
Since the war in Ukraine began, the United States, the G-7, the EU, and other allies began imposing economic sanctions on Russia. The sanctions are meant to have two effects: punish Russia for violating the accepted rules and norms of the global community by invading and occupying a sovereign nation unprovoked, and reduce Russia’s income.
Fighting a war is expensive. And if the sanctions can cut off Russia’s access to cash, Moscow will run out of money and be unable to continue the fight. The United States used a similar strategy during the Cold War when it sucked the USSR into an arms race that eventually broke the Kremlin’s banks. But this time, the United States doesn’t have to spend much to inflict financial damage on Russia….