Month: September 2025

U.S. President Donald Trump declared that Europe must stop buying Russian energy before the United States imposes secondary sanctions on major importers of Russian oil and gas such as China. Scott Bessent, his Treasury secretary, went further, arguing that the United States and its allies could together “collapse the Russian economy.” Energy Secretary Chris Wright has echoed this call, pointing out that European countries have enough alternatives to phase out Russian gas and nuclear-fuel imports immediately.

Some see these statements as another excuse to avoid taking tough action against Russia. But the Trump administration is right to point out an inconvenient truth that many Europeans avoid: Russia’s war effort is still financed by billions in oil and gas sales to Europe.

Those revenues are made possible only because of loopholes in Western sanctions and patchy enforcement. If the United States and the European Union are serious about empowering Ukraine in upcoming talks to end the war, they must act decisively to close those loopholes and transform existing sanctions into real economic pressure.

In terms of other measures to support Ukraine, the EU is finally considering how to make use of Russia’s frozen central bank reserves for Ukraine’s benefit, most likely through the issuance of a “reparation loan” that Ukraine would pay back only after Russia paid reparations. This is the single most important step the EU can take to effectively leverage Russian assets, since about $250 billion of these funds are in Europe and most have now matured and are available as cash balances.

But another urgent priority is to enforce the G7 oil price cap and put an end to Russian oil entering Europe through the back door. The cap was designed to keep Russian oil on global markets to avoid price spikes, but to slash Moscow’s profits by limiting the revenue it can earn from each barrel sold. Despite formal bans, exemptions for Central European countries have also kept Russian crude oil flowing through the Druzhba pipeline, bringing oil from Russia through Ukraine to Hungary and Slovakia, while a refining loophole has allowed India and Turkey to import vast volumes of Russian oil, process it, and export the products to Europe. Trump is right that this scheme must be stopped.

Figure 1: Value of EU Natural Gas Imports (Million EUR) & Volume of Russian Gas Imports into the EU

Since January 2014 alone, some $15 billion worth of fuels derived from Russian crude have reached EU markets. On top of that, Urals crude (a Russian oil export blend) has traded above the nominal ceiling of $60 a barrel for much of this year, providing Moscow with ample revenues to sustain its war economy. The EU’s 18th sanctions package, approved in July, finally closes the refining loophole and lowers the oil price cap to $47.60, but without rigorous implementation these measures risk becoming little more than symbolic gestures.

Figure 2: Scenarios for Russian Crude Oil Revenues with Stronger Sanctions Enforcement

The West must also take aim at the many enablers who profit from circumventing sanctions. Refiners, traders, shippers, insurers, and financial intermediaries along the entire energy supply chain have all benefitted from the inconsistencies of the current regime. Limited secondary sanctions against these actors are now considered in a draft 19^th sanctions package.

This debate also intersects with current legislation in the U.S. Congress, which, if passed, would mandate steep tariffs on countries that continue to purchase Russian oil. In this sense, the draft U.S. legislation complements — but cannot substitute for — more comprehensive measures. High tariffs on Russian oil importers may generate leverage over some countries, but without coordinated enforcement across the G7, they will leave too many escape routes open. Europe and the United States must therefore go beyond tariffs to close loopholes, harmonize enforcement, and penalize the actors who profit from sanctions circumvention.

Contrary to fears of market disruption, alternative supplies to the Russian oil are readily available: Saudi Arabia and the United Arab Emirates alone have more than 3 million barrels a day of spare capacity. By penalizing those who facilitate Russian exports, the United States and the EU can ensure that sanctions bite where it matters most — in the Kremlin’s pocketbook.

Sanctions enforcement itself remains the Achilles’ heel of the Western approach. Russia’s “shadow fleet” of close to 600 aging tankers concealed in various ways continues to move crude with little effective oversight. Only a fraction of these vessels is covered by joint Western sanctions lists, and enforcement practices vary widely across jurisdictions.

In the EU, more than 160 national authorities share responsibility for implementation, with divergent mandates and resources that create ample opportunities for evasion. Some member States have yet to secure a single conviction for sanctions violations. To plug these gaps, Brussels should empower the European Public Prosecutor’s Office to investigate complex cross-border evasion schemes and coordinate enforcement cases. At the same time, the G7 should establish a harmonized regime of ship-tracking and insurance bans to cut through the patchwork of national enforcement systems.

Beyond immediate sanctions measures, the West needs to align its long-term economic-security strategies. That means dismantling the oligarchic financial networks that Russia continues to use in offshore havens such as Cyprus, the British Virgin Islands, Lichtenstein, and the Netherlands, and investing in Ukraine’s defense industrial base.

Expanding joint U.S.–European public-private partnerships in defense, energy, and infrastructure would also bolster Ukraine’s capacity to withstand the war, while strengthening the security of its neighbors. These steps would help shift the balance from crisis management toward a durable strategic posture.

Trump is right to point out the inconsistencies in Western sanctions enforcement against Russia, which have allowed Russia’s war economy to grow at a healthy clip in both 2023 and 2024, despite supposedly “crippling” sanctions. The solution is clear: Western countries need to eliminate the loopholes undercutting the current sanctions regime so they can apply real leverage on Moscow. That requires cutting off Russia’s energy revenues, deploying its frozen assets, targeting its enablers, and enforcing sanctions with relentless rigor. Only by constraining the Kremlin’s war economy can the West ensure that Ukraine negotiates from a position of strength, and that any peace achieved rests on justice, not capitulation.

The post The Imperative to Weaken the Kremlin’s War Economy: What the West Can Do appeared first on Just Security.