How to make Russia pay: a new US sanctions strategy in favor of Ukraine

The US administration can put Russia's cash flow for its benefit and distract it from funding for war, writes economist Glenn Gabbard in a column for The New York Times. It is a secondary oil sanctions that will have to pay a fee for each supply to the US Treasury. Despite the fact that Russia and Ukraine were talking to ceasefire with American representatives in Saudi Arabia, Russian President Vladimir Putin did not show a real commitment to the end of the war. President Trump needs better cards.

A few weeks ago, the President put forward the idea of ​​imposing sanctions and tariffs for Russian imports. But the Kremlin treated it with disdain - mainly because the United States imports almost nothing from Russia. Large financial and trade sanctions have been in force for about three years, and are clearly not enough to reach peace. Fortunately, there is an easy way to improve the situation of Americans.

The administration should impose sanctions against any company or private person-in any country-which are involved in the sale of Russian oil and gas. Russia can avoid these so -called secondary sanctions by paying for the US Treasury for each supply. This payment will be called a Russian universal tariff, and it will start with a low level, but will increase with every week, which will pass without a peace agreement. Ships transport most of Russian oil and gas to the world markets.

Secondary sanctions - if Russia does not make the necessary payments - touches all parties to the agreement, including the owner of the tanker, the insurer and the buyer. In Russia, revenues from the sale of fossil fuels and military expenditures are interconnected, although the country can also use its national welfare fund and other sources.

Exports of fossil fuel are the main source of dollar income for the Kremlin, which depends on the hard currency for the purchase of weapons and other military supplies from abroad and payment of North Korean soldiers. Currently, the country exports raw oil and oil products worth about $ 500 million and natural gas for $ 100 million. In 2025, the Kremlin laid a little less - almost $ 400 million a day.

The Russian universal tariff will immediately provide the United States with money, unlike the offered Ukrainian fund of critical minerals, which will take years to bring at least some profit. A duty of $ 20 per barrel of oil can bring up to $ 120 million a day (over $ 40 billion a year), and additional income can be received by entering a similar duty on natural gas. Every dollar collected by the United States is a dollar that Russia cannot spend on financing its war.

Ideally, this policy should force Russia to negotiate. Otherwise, the United States will continue to collect billions annually, which can help finance Mr Trump proposed by Mr. Trump. In this scenario, Russia will actually help return US taxes used to assist Ukraine in protecting against Russia's attack.

Over the last three years, Western sanctions and outrage of the public, including the refusal of some dockers to unload Russian oil tankers, forced Russia to look for new buyers and sell their oil at a discount on how to compare with world prices. Over the past 12 months, the oil discount was about $ 9 per barrel, and in April 2022 reached $ 35 per barrel. Despite the decrease in oil prices, Russia retains exports, providing a stable supply in the global oil market.

By imposing additional sanctions, if the universal Russian tariff is not paid, the United States will receive some of the income, in fact increasing the discount on Russian oil. Russia's continuation of exports, despite large discounts over the last three years, suggests that it will continue to export oil to the same amount. This will maintain the stability of the global oil supply and help to contain prices for it.

Oil and gas production in Russia is inexpensive, and it depends largely on the income they bring, so it has no other choice but to continue selling them, even at lower prices. While Trump can accept this strategy, Congress can strengthen his position in the negotiations by adopting a bill that introduces a universal tariff for Russia. This will allow the President to protect his ties with Putin, blamed for the adoption of this event to Congress.

In addition, he will decide whether to sign the bill and when, which will give him additional levers of influence on Russia. Perhaps the discussion of such a bill will help to push the Kremlin to conclude a peace agreement. The combination of secondary sanctions, a strong tool in the US economic arsenal, with tariffs similar to duties, can put pressure on Putin, jeopardizing his most valuable source of income. It will also facilitate Mr. Trump to fulfill his promise for a strong peace.