A new round of the most effective sanctions, organized by U.S. President Donald Trump, could shatter the Russian economy, forcing Russian President Vladimir Putin into a humiliating retreat. Reports TSN. This has been reported by Kontrakty.UA.
This is discussed in an article by The Telegraph.
Trump's Threats of New Sanctions
Trump warned the Kremlin that it could face "big problems" if it does not reach a peace agreement regarding the war in Ukraine.
Subsequently, the American leader doubled down on his aggressive stance towards the Russian president. According to Trump, if a peace agreement is not reached soon, the U.S. "will have no choice but to impose high taxes, tariffs, and sanctions on everything sold by Russia to the United States."
The article's author notes that silencing Moscow's missiles and bombs on Europe's doorstep would serve as a striking demonstration of Washington's renewed power.
"Perhaps Trump will first need to refine his plan. According to several skeptics, trade between the U.S. and Russia is relatively minimal. However, under the leadership of the U.S. president, a new round of punitive and targeted sanctions could deliver a decisive blow to the Kremlin's imperial crusade, crippling the fragile Russian economy and forcing Putin to halt his invasion," the piece states.
The Fragility of the Russian Economy
The author describes the notion that a combination of vast oil and gas reserves along with military reserves of $650 billion has shielded the Russian economy from external shocks as a myth. The economy has indeed shown resilience, but cracks are appearing everywhere.
"This image of resilience is misleading. Over the past two years, the Russian economy has functioned like a marathon runner on fiscal steroids, and now those steroids are fading," stated Alexandra Prokopenko, a researcher at the Carnegie Eurasia Center in Berlin.
"The Russian economy is burdened by sanctions. Russia has to pay top dollar for critical imports and offer discounts on its exports. Inflation is rampant, and its central bank was forced to raise interest rates to 21 percent, while the ruble is once again approaching record lows," economist Timothy Ash said.
According to him, Russia has lost access to central bank reserves amounting to $330 billion. Russian companies have had overseas assets worth over $400 billion confiscated, and the total cost of the war for Russia is nearing $1 trillion, equivalent to "half of Russia's annual GDP."
Russia cannot sustain a war indefinitely while financing social and infrastructure programs.
Russia has raised defense spending to a post-Soviet high of 6.3% of GDP, which constitutes a third of its budget expenditures. Given the increasing inability to keep inflation low and stabilize the ruble, Prokopenko believes that by 2026 "the fiscal and social challenges now emerging on the horizon could fully metastasize into a crisis."
The EU Has Failed to Properly Implement Sanctions
The reason for heated discussions is the extent to which the growing challenges for Russia are linked to Western sanctions. However, it cannot be denied that the restrictions could go further, not least because the European Union has repeatedly failed to ensure the proper implementation of existing ones.
According to the article's author, Europe has been particularly weak when it comes to Russian energy – a sector where the West has the greatest opportunity to harm Putin.
Despite European Commission President Ursula von der Leyen's claims in Davos that the bloc has "significantly reduced" its "dependence on Russian fossil fuels in record time," the idea that Europe has completely abandoned the import of Russian oil and gas, as promised, is a shameful Brussels spin.
Indeed, according to the European Commission, in the third quarter of 2024, nearly one-fifth of the gas imported into the EU came from Russia. This is 3% more than in the previous three months. Furthermore, the EU has failed to fully suppress the massive shadow tanker fleet of Russia, which has allowed it to almost effortlessly evade sanctions and continue exporting oil and gas worldwide.
Robin Brooks, an economist at the American think tank Brookings Institution, emphasized the significance of the sanctions imposed on January 10 against 183 vessels of the shadow fleet controlled by Russia. According to the expert, this move was "a strong blow to the shadow fleet – these oil tankers are Putin's 'Achilles' heel'."
At the same time, Brooks stressed that this was the work of the U.S.-British coalition, while "the EU remained silent and did nothing, even though the shadow fleet is particularly large in Russian Baltic ports."
The West Can Exhaust Putin's Military Machine
The publication notes that by doubling down on efforts to reduce the revenues that Russia receives from oil and gas imports, the West can exhaust Putin's military machine. However, it must cover all angles. Ukraine's presidential representative for sanctions, Vladyslav Vasyuk, told The Independent that Washington should target so-called shadow fleet participants – insurance, crewing, and financial settlement companies. According to Vasyuk, there is potential for sanctions in at least another 10 sectors.
The article's author believes that it will take months, if not years, to negotiate the terms of any peace agreement. But the first step in any conflict is a ceasefire.
"A new round of the most effective sanctions, organized by a reinvigorated Trump, could devastate Russia's shrinking economy, forcing Putin into a humiliating retreat," the article concludes.
Additionally, an article from the Associated Press states that Trump's threats against Russia regarding new sanctions make little sense, as Russian exports to the U.S. are currently so minimal that a complete halt would not deal a painful blow to Moscow.