Trump’s New Russia Sanctions Expose How The West Continues To Fund Putin’s War Machine

The persistence of the West’s continuing gluttony for Russian hydrocarbons doesn’t just counteract our aid but is utterly shameful. Why has it taken three years and intervention by Ukraine’s most unbelieving faithful to point it out?

In the early hours of the 24th February 2022, the magnitude of Europe’s failed gamble of reliance on Russian hydrocarbons was laid bare for all to see. Overnight, the continent’s largest country had begun to be laid siege to by a regime whose most lucrative industry raised over half its revenue from hydrocarbons, and hindsight in the public discourse was unforgivably instantaneous. 

Whilst bringing Europe’s gamble of peace and dissuasion through trade back down to reality, Putin was placing a bet of his own: that Europe’s dependency on Russian energy exporters was too great to provoke any meaningful reaction, let alone efforts to cease consumption. But throughout the opening days of the invasion, almost every western leader rightly took to their podiums to assert their agreement with much of the public that, no matter the impacts, we could not allow Putin’s gamble to pay off.

By late summer, such was the scale of the energy price crisis, with inflationary pressures coursing through the arteries of almost all western economies, that readers could be forgiven for believing that European and Asian countries fully committed to supporting the Ukrainian war effort must have already achieved complete disentanglement from Putin’s ensnaring web of oil, gas and coal dependencies. In reality, this was not only far from the truth then, but remains the case for much of the West, including major NATO and EU members and partners.

With gas, whilst Europe consumed 77.3% of Russia’s total exports before the war broke out, by the end of 2023 the continent still accounted for 53.8% of Russia’s gas sales, and whilst pipeline exports have fallen dramatically, Europe now imports 50% of Russia’s total LNG output, compared to 39% in 2021. Bleaker still is the fact that, by 2024 industry estimates, the average rates at which European buyers purchase from Russia are 75.4% greater than their Chinese counterparts. Considering the domineering extent of state ownership within Russia’s energy exports industry, it can be assumed that a large proportion of funds used to perpetuate any such continued dependency will continue to be channelled straight into Russia’s frontline efforts. 

Should the current peace process falter, Trump’s threat of secondary sanctions for Russia’s continued aggression - the enactment of 100% coercive trade tariffs upon countries still purchasing Russian hydrocarbons, therefore not only present perhaps the most effective diplomatic measure to rebalance battlefield odds in Ukraine’s favour thus far but also threaten to shine the global spotlight on exactly how Russia has been able to sustain its aggression for so long after the West’s 2022 sanctions overtures. Whilst many are quick to cast blame towards Beijing and New Delhi, it is the Ukrainian-supportive West who will, or at least should, shoulder much of the responsibility for the continued sustainability of Russia’s wartime balance sheets. 

Look beyond the UK and US, whose economies have been completely decoupled from the Russian energy industry since the end of 2022, and the data paints a staggering picture of how persisting energy dependencies continue to be parasitic amongst EU and NATO member states and our partners in the Ukrainian struggle. 

Though France and Germany, the EU’s two powerhouse economic engines, reduced their direct reliance on Russian hydrocarbons within their domestic energy consumption makeup by 78% and 93% respectively between 2022 and 2023, consumers still paid Russian suppliers $16.6bn and $23.7bn between January 2022 and December the following year according to trade flows monitoring by the OEC. To put this in perspective, when contrasting energy payments in the first two years alone against the sum totals each country has granted Ukraine during the entirety of the conflict to date as reported by the Kiel Institute, such energy dependency outstrips Germany’s $17.1bn by a factor of 1.4 and France’s less generous $7.9bn by a factor of 2.1.

This same story has played out in many other major European countries’ economies as well. By the end of 2023, the Netherlands had spent $19.5bn on Russian energy in the same two-year period, retaining 17% of its pre-war supply from Russian providers in sum payments 2.15 times larger than its total aid expenditure to date. Belgium had spent a 4.45 times larger $9.7bn and still retained 41% of its Russian supply; Spain a 6.1 times larger $9.7bn having shed only 48% of its own dependency, and Italy though retaining just an 11% supply had paid Russian providers an astounding $26.3bn by the end of 2023 - over tenfold its total aid contributions. Such continued trade by major western powers represent a significant windfall for Russia’s Ministry of Defence, with all six nations’ receipts more than cancelling out their own support for Ukraine’s war effort in financial terms - a precedent observable across the West.

In fact, a total of 19 EU member states share this in commonality. By the end of 2023, Latvia on NATO’s front line still retained 56% of its 2022 Russian energy supply, having already outspent its aid to Ukraine to date 2.2 times. In the same way, NATO members Portugal, Bulgaria and Slovakia had only shed 31%, 14% and 7% of their reliance on direct Russian imports between 2022 and 2023, 1.9, 34.8 and 16.6 times their total aid contributions. Austria, though one of only five definitively identifiable EU outliers in having only spent half as much on Russian energy within the same period as it has in aid, still entered 2024 having retained 48% of its 2022 receipts. Shockingly, Hungary, a NATO member sharing an 85 mile border with Ukraine, actually increased its consumption of Russian hydrocarbons as part of its domestic imported energy mix by 11% in 2023, which compared to its direct aid commitments of just $60m, mean that Hungary has sent Moscow 251 times more money in 2022 and 2023 than they have sent to Kyiv in aid to date. Only two EU member states, Malta and Luxembourg, had zero reliance on Russian energy imports by the end of 2023, although neither country had any meaningful regular trading relationship with Russia for energy before 2022.

Circumstances appear somewhat brighter when looking to the remaining non-EU NATO members, with countries lacking any dependency on Russia’s energy exporters before the invasion, including Canada, Albania, Iceland and Montenegro, having opted to remain outside of any such relationship. Bosnia retained 72% of its dependency between 2022 and 2023, and North Macedonia and Turkey’s grew as a proportion of their imported energy mixes by 3% and 47% between 2022 and 2023. In Turkey’s case, the $27bn total Russian hydrocarbon purchases within this period alone eclipse its $80m total aid packages to Ukraine 338 times over, as part of a deliberate bid to cash in on the sanctions-deflated prices inflicted on Russian energy by Turkey’s own allies.

In the far East, close partners of NATO, the US and the EU, who look to outcomes in Ukraine as a potentially decisive precursor to the prospect of a Chinese invasion of Taiwan, show little difference.

Japan, a likely participant in the defence of any Taiwanese invasion, maintained a 64% dependency in 2023 to 2022 at an expense of $15.2bn across both years. South Korea, though having kicked the habit completely by the end of 2022, had spent $11.2bn with Russian exporters in the process - sending Moscow tenfold what it has sent to Ukraine to date whilst Putin reciprocated by spending billions significantly deepening defence and economic ties with Pyongyang. Singapore, much like Turkey, has chosen to take advantage of attractively discounted Russian hydrocarbons, increasing its proportion within its import mix by 180% between 2022 and 2023.

Finally, Taiwan itself increased its dependency on Russian imports by 38% in the same period sending $5.4bn to China’s ‘no limits’ partner equating 107 times greater value than the total aid Taiwan has sent to Ukraine - staggering given its own increasingly precarious position within the clutches of the People’s Liberation Army so starkly parallel to Ukraine’s in the six months preceding the full scale invasion.

Overall, once tallied up, the $267bn cost of continued Russian energy dependency of NATO, the EU and just the few other partner countries discussed above within 2022 and 2023 alone far eclipses China’s $180bn or India’s $93bn for the same period.

Ultimately, Trump is right. Should the current peace process break down, any further efforts to help tip the balance of conflict towards Ukraine and strengthen their negotiating position must include robust efforts to cease the financing of its enemy. We must now begin to have frank discussions with our allies about their gluttony for Russian hydrocarbons, not just for Ukraine’s sake, but because they too risk facing consequences far greater than just trade tariffs if Russia’s all-out siege infrastructure continues to be sufficiently economically viable for Putin.

Illustration: Will Allen/Europinion