In late May, reports emerged that the European Commission is weighing a cut in the price cap on Russian oil — from the current $60 down to $45 per barrel. At the same time, a bill in the U.S. Senate threatens secondary sanctions, including tariffs of up to 500%, on countries that continue to trade with Russia. Yet both measures, economist Vladimir Milov argues, are likely to have only limited impact. The U.S. is unlikely to seriously jeopardize its own trade with China over secondary sanctions against Russia, and the EU has yet to demonstrate an ability to enforce even the current oil price cap. Still, that doesn’t mean sanctions are useless or ineffective. More than three years into the full-scale war, the combined weight of the restrictions already in place is beginning to hold back Russia’s economy — and the pressure will only mount. Under these conditions, the West must stay the course on sanctions while tightening enforcement.
Where do things stand on the sanctions front, and are there any potential measures that could dramatically shift the balance against Russia on the battlefield in Ukraine? Quite a few developments are underway. On one side, recent months have made Donald Trump’s posture clearer. He apparently has no intention of introducing new sanctions against Putin, but he has also stopped short of lifting the existing ones, which is significant in itself. However, Congress is stirring: a new sanctions bill calling for secondary sanctions against buyers of Russian oil has appeared, drawning vocal support from Republican lawmakers — potentially a sign of quiet backing from at least part of Trump’s inner circle. Meanwhile, the European Union is also preparing new moves, recognizing that it now bears a much greater share of the burden in confronting Russia amid Trump’s inaction. Let’s take this apart.
First, the current debate around sanctions is often based on a fundamental misunderstanding of what sanctions are meant to do and how they actually work. A popular notion holds that there exists some kind of “thermonuclear” sanctions option against Putin — a last-resort measure that the West has mysteriously refused to use, but that, once triggered, would bring Putin to his knees and stop the war instantly.
This belief also underpins claims that the existing sanctions aren’t working. Critics can simply point to the fact that Putin is still fighting and erroneously conclude: the war is still going; therefore, the sanctions have failed.
This idea is as far from reality as it gets. To begin with, there are no “thermonuclear” sanctions capable of turning off Putin with the push of a button. As the past few years have made clear, Russia has ways to stay afloat under any sanctions regime. The very notion of instantly disabling Putin is naïve: he has internal resources, cushioning mechanisms are in place, and his pivot to the Global South is working to some extent. You can’t just shut him down overnight.
The point of sanctions pressure is to gradually suffocate Putin’s economic capabilities over time — and as we are now seeing, in the fourth year of the full-scale war that strategy is beginning to take effect. If one looks past the Russian émigré press, with its awe-struck tone about Putin’s supposed might, and instead turns to official Russian sources and the transcripts of Kremlin meetings, what emerges is a parade of terms like “economic cooling,” “stagnation,” “record budget deficit,” “depletion of the National Welfare Fund,” “the need to maintain high interest rates to combat inflation” — and even, more recently, the once-taboo word “recession.”
The aim of sanctions pressure is to gradually strangle Putin’s economic capabilities over the long term. The convergence of all these phenomena at the same time and place can only come as the result of broad, consistent, and methodical sanctions spanning hundreds of areas and requiring persistence and time. Nevertheless, the search for some kind of “thermonuclear” sanction that could instantly shut Putin down continues.
The aim of sanctions pressure is to gradually strangle Putin’s economic capabilities over the long term.
Today, the two most popular ideas among those looking for a quick fix are secondary sanctions against buyers of Russian oil (promoted by U.S. senators and even floated by Trump himself, if one chooses to interpret his convoluted rhetoric that way), or lowering the price cap on Russian oil (an initiative backed by Europe).
The oil price cap has generally had a limited effect. Prices for Russian export crude have often exceeded the cap and only dropped below it in the initial months after the EU oil embargo was introduced — when Russian oil producers had to go to great lengths to convince Asian buyers to accept unexpected additional volumes — and, more recently, in connection with a general slump in global oil prices. When the price cap was first implemented, it was expected to function more as a bargaining tool: Asian buyers of Russian oil could use it as leverage to refuse purchases above $60 per barrel.
But buyers in Asia proved perfectly willing to purchase Russian oil at prices above $60 per barrel, forcing the West to adopt a far more labor-intensive long-term approach. The decision was made to track down hundreds of tankers in Russia’s “shadow fleet” that transport oil in defiance of the price cap, along with insurance companies, traders, and shipowners helping the Kremlin circumvent restrictions, and to begin adding them to sanctions lists by the hundreds and thousands. This painstaking effort is yielding results, but so far only partial ones: the discount on Russian export oil now hovers just above $10 per barrel — significant, but hardly a “magic button.”
In this context, talk of lowering the price cap further — to $30, $45, or any other figure — depends most of all on the West’s capacity to enforce it. That would require a major expansion of sanctions targeting hundreds of operators and vessels in the “shadow fleet” that remain unsanctioned. Such work would require a large corps of personnel to carry out enforcement.
Today, the main enforcement mechanism for monitoring sanctions compliance and punishing violators lies in the hands of the United States. The key institution is the Office of Foreign Assets Control (OFAC) at the U.S. Treasury, which boasts decades of experience and has developed a well-honed system for implementing sanctions.
But OFAC’s effectiveness has sharply declined due to the targeted dismantling of the U.S. bureaucracy carried out by the Department of Government Efficiency (DOGE) and as a consequence of the overall weakening of pressure from the White House when it comes to enforcement. Washington has already signaled that it does not want to lower the price cap on Russian oil. And the European Union — which is now championing that very idea — has no OFAC of its own, nor does one appear to be in the making. When the subject is raised, European officials tend to react as if someone had placed a poisonous snake on the table. Creating a new bureaucratic body would not go down well with voters and would be an easy target for Euroskeptics and right-wing populists.
However, without rigorous and thorough enforcement, the idea of lowering the oil price cap is doomed to have no effect — it could even backfire. The dynamic typically works like this:
– Sanctions skeptics constantly flood the information space with noise about how “sanctions don’t work”;
– A non-functioning lower price cap would become an easy new target for criticism;
– Politicians, already under pressure from voters, Euroskeptic critics, and the prevailing media narrative — and already unsure about the effectiveness of sanctions — will have even more reason to doubt;
– The more ineffective sanctions mechanisms there are, the higher the chances that politicians will throw in the towel and lift sanctions altogether — since they “didn’t help stop the war,” lobbying from business interests might be enough to convince policymakers to cut the regulations that really are working.
This chain of reasoning raises the question of whether it is even wise to publicly voice doubts about the effectiveness of any sanctions, given that the ultimate beneficiary of such skepticism is Putin. But in this particular case, lowering the oil price cap without first putting in place proper enforcement mechanisms risks handing skeptics yet another argument.
The ultimate beneficiary of doubts about whether sanctions are working is Putin
Another popular idea right now is the introduction of secondary sanctions against countries that purchase Russian oil. The idea is that the U.S. would demand third countries stop importing oil from Russia, and if they fail to comply, import duties could be imposed on their goods. Proponents of this approach are threatening tariffs as high as 500% on goods from countries that dare to buy Russian oil.
This idea appears completely unworkable — and Moscow knows it. There are virtually no successful examples of secondary sanctions being applied to entire states. Secondary sanctions are used against individuals and legal entities that violate sanctions by working with sanctioned countries like Russia, Iran, or North Korea. But entire countries?
That would amount to a full-scale trade embargo, as a 500% tariff makes trade practically impossible. Imposing such a regulation might be conceivable if the main buyers of Russian oil were, say, Gabon or Palau. But nearly 80% of Russia’s oil exports go to China and India. The U.S. has only just reached a deal with China to partially ease mutual trade tariffs, a move that significantly calmed the markets. India is already in an advanced stage of preparing a trade deal with the U.S.
Under the circumstances, it is difficult to imagine that anyone seriously believes the U.S. is going to throw out the fruits of painstaking negotiations with two of its largest trading partners and impose a full trade embargo on them just to force them to stop buying Russian oil. Anyone with even minimal insight into how the Senate works can guess that Senator Lindsey Graham simply tossed something flashy into the bill to generate media noise about “crushing sanctions from hell.” No one has yet been able to explain how this is actually supposed to work — “hell” isn’t answering the phone.
But if we cut through the noise about another round of searching for some kind of “thermonuclear super-sanctions” — whether it’s 500% tariffs on importers of Russian oil (unrealistic), or a lowered oil price cap (feasible, but only if rigorously enforced, which is a problem) — we’re left with this: the sanctions imposed on Russia in recent years are working. The clearest proof is the sharp and highly predictable deterioration in the Russian economy. There’s a lot that can be done to improve their effectiveness, especially in the area of enforcement, but it’s deeply counterproductive to dismiss the sanctions framework that’s already in place.
Loopholes for circumventing sanctions must be closed (and here we are again with the much-discussed enforcement). Europeans will eventually have to create their own version of OFAC, whether they like it or not. The remaining unsanctioned exports must also be shut down — non-ferrous metals, gas. In 2024, Russia increased its pipeline gas exports to the EU by 14%, which helped return Gazprom from losses back to profit. In liquefied natural gas (LNG) shipments, Russia is competing with the U.S. for second place among EU suppliers. Non-ferrous metals are also being delivered to the EU in large volumes. Combined, these sectors account for tens of billions of dollars in annual exports. They are a major source of revenue for Putin’s war machine.
The EU is already moving in the right direction: in February, it imposed sanctions on Russian aluminum and is discussing a phased plan to stop buying Russian gas, oil, and uranium. The gas plan, incidentally, is quite solid. It includes mechanisms to make it more difficult for European customers to sign contracts for Russian gas, and it does so by taking a less maximalist approach. Rather than implementing the measures as sanctions, which would require consensus with pro-Putin governments like those in Hungary or Slovakia, they can be imposed as trade quotas or amendments to laws and regulations, which can be adopted by majority vote.
Faster progress would be welcome, of course, but at least the plan presented in May opens a realistic path to fully closing the European market to Russian gas within two years — better than any viable option on the table — and breaks the deadlock on Hungary’s veto.
The EU is also discussing a full trade embargo against Russia, though trade has already dropped to a bare minimum. In 2024, turnover between Russia and the EU fell to less than €68 billion — the lowest since 1999 and 24% below even 2023 levels. The core of Russian exports to the EU (€36 billion in 2024) consists of gas, metals, fertilizers, uranium, and oil deliveries to Hungary and Slovakia. Beyond that, there isn’t much left to cut.
Overall, as has become clear after four months of Trump’s presidency, the European Union remains the main “sanctions anchor” preventing the regime from collapsing — no matter what Trump does with regard to Russia. Not long ago, Bloomberg published an article essentially confirming my earlier assumptions: if European sanctions remain in place, even a rollback of U.S. sanctions will mean little, as Russia will still be toxic.
If European sanctions remain in place, even a rollback of U.S. sanctions will mean little, as Russia will still be toxic
I’m convinced this is the main reason Trump hasn’t lifted the old sanctions against Putin: as long as European sanctions remain, lifting U.S. sanctions wouldn’t benefit either of them, but it could become a major PR disaster for Trump if Russian aggression against Ukraine doesn’t actually stop after such a move.
On the other hand, the EU suffers from a serious lack of structures capable of enforcing sanctions— that is, of monitoring compliance and punishing those who help circumvent restrictions. Europe urgently needs its own version of OFAC. At one time, the EU opted not to create such a body because the Americans were already handling this function, and sanctions policy had been delegated to the national governments of member states.
Today, that arrangement is no longer adequate, yet creating a new bureaucratic structure almost always requires overcoming all but insurmountable resistance. In this case, however, getting past those obstacles is an absolute necessity. If the EU fails to establish its own OFAC in the near future, that will pose serious problems for the effectiveness of the sanctions regime — including the implementation of new mechanisms currently under discussion, such as lowering the price cap on Russian oil.
Across Europe, there is growing awareness that sanctions really are inflicting significant harm on the Russian economy. It’s time to cut through the noise and hysteria over their supposed “ineffectiveness” and focus systematically on narrowing Putin’s room for maneuver. The European Union has access to top expert analysis on this issue — for instance, the Stockholm Institute of Transition Economics (SITE), which shared its findings on sanctions’ impact at a May meeting of EU finance ministers in Brussels.
Europe still faces major tasks: implementing the plan to phase out Russian gas, and ending its purchases of Russian oil, metals, and uranium. Above all, it must seriously build enforcement mechanisms for the sanctions regime, modeled on the U.S. OFAC — there is no alternative. Although Trump has yet to lift U.S. sanctions, Europe can no longer rely on America’s leadership and must step up on its own.
The pursuit of some mythical “thermonuclear sanctions from hell” is a dead end. What’s needed instead is steady, focused, and methodical work — and that effort is already producing tangible results. Naturally, more progress — always faster, and always stronger — is the goal. But to get there, the emphasis must remain on what really matters, and what really works. It is necessary to leave behind once and for all any hope of finding the “Holy Grail” of sanctions. There are fixes — but those fixes are neither quick nor easy.
