OPINION:
The incoming Trump administration has legitimate concerns about how much the U.S. is spending to help Ukraine — $175 billion at last count. But there is a way to pressure Russia to bring the fighting to an end that doesn’t involve enormous further expenditure: Let’s get serious about economic warfare.
Although the West has enacted a complex system of sanctions designed to punish Russia, the cracks are apparent. Just as he increased and tightened sanctions against Iran in his first term, President-elect Donald Trump can do the same against Russia — and demand that Europe do the same.
Most Americans will be surprised to learn that sanctions have been applied only to “certain segments of the Russian economy” such as “banks, oil refineries, defense manufacturers and high-tech companies,” a recent paper by Chris Miller and Caroline Nowak of the American Enterprise Institute pointed out.
Gaps are significant. For example, few or no sanctions hit Russian natural gas and metals, including iron ore, copper and aluminum. Even more shocking, Russia continues to operate its own steel manufacturing plants in the U.S. and Europe.
Russia is engaged in an all-out war against Ukraine, but the West is waging only a halfway economic war against Russia. Why shouldn’t Ukraine’s allies impose comprehensive, airtight sanctions against Russia as a way of driving the invader out?
The fact that this question must be asked seems absurd. During World Wars I and II, the Allies didn’t merely sanction German exports; they instituted blockades to prevent goods from coming in or out. Ukraine, unfortunately, is different — but it shouldn’t be. We support Ukraine for the same reason we led the Allies in the world wars — to uphold democratic values and deter further aggression. Russia’s economy enables its aggression.
Natural gas offers a good example of the current pallid and disjointed sanctions policy. While the U.S. banned the import of Russian oil and natural gas by executive order in March 2022, the European Union has not.
Meanwhile, the export of U.S. liquefied natural gas to Europe has ramped up dramatically, so the cost of a complete ban on Russian gas would be well cushioned. There is no reason for Europeans to continue to rely on Russian natural gas — during this war or after — when they have clear alternatives.
Then, there’s steel. To its credit, almost from the start of Russian aggression, the EU banned the import of finished Russian steel as well as certain semi-finished products. But the EU still permits critical inputs such as pig iron and slab, which are then used to make the products that are prohibited as imports.
While the typical pattern in a war is to increase sanctions over time, the EU in December actually lifted bans that were scheduled for pig-iron and steel slab imports. Russian pig-iron sales in Europe, which have doubled since 2021, will face a mild quota this year, but a ban has been deferred until 2026. For steel-slab imports, the ban won’t occur until September 2028.
In addition, Russian steel is “highly carbon-intensive,” said Axel Eggert, who heads the European Steel Association. “The decision fuels a perverse system that not only weakens EU sanctions against Russia but also runs counter to EU climate targets.”
“The main beneficiary of the extension of slab imports is NLMK Europe,” the think tank GMK Center said. Russia’s largest steel producer, Novolipetsk, or NLMK, is 79% owned by Vladimir Lisin, a billionaire oligarch. NLMK also has steel rolling facilities in Belgium, France, Denmark and Italy as well as plants in Indiana and Pennsylvania.
At the same time, Mr. Lisin’s enterprises cooperate with the Russian military-industrial complex, helping to make weapons and missiles. His company, First Cargo, transported military equipment to Crimea and Donbas before the 2022 invasion.
As with natural gas, Europe can easily survive without Russian pig iron and slab. For example, before the war, Russia was a major supplier of pig iron to the U.S., but after U.S. sanctions, Russian exports vanished and were replaced by pig iron from Brazil.
Natural gas and steel are only two cases where sanctions are weak or nonexistent, and they cry out for bans. Both Europe and the U.S. should sanction Mr. Lisin himself and force the sale of NLMK plants in their nations.
Economic warfare can help defeat Russia but only if the West is willing to absorb some short-term costs for the long-term gains of victory. Russian strongman Vladimir Putin can only be laughing at the current halfway sanctions policy. He’s certainly not suffering.
• James K. Glassman, a former U.S. undersecretary of state, is an adviser to System Capital Management, a global investment group based in Ukraine.
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