- The ongoing Russian invasion of Ukraine shows no signs of abating even as the global community undergoes duress on account of global supply disruptions. Despite the US-led European and Western countries imposing wide-ranging sanctions on Russia, there seems to be no palpable effect on Moscow to stop its misadventures. The double standards adopted by these very countries in purchasing oil and gas supplies from Russia amply demonstrate how sanctions are having little effect on Moscow’s revenue generation. As Ukraine seeks help and support from the world to make Russia see the futility of unwanted war, the double standards adopted by some of the most advanced countries in blatantly buying energy supplies from Russia have gone unnoticed.
PC: FT Visual & Data Journalism
- Against the backdrop of the recently concluded G7 meet, a certain move to choke off energy revenues for Russia by manipulating and limiting the price of Russian oil is being considered seriously. In other words, what this somewhat risky proposition showcase is the acknowledgment that sanctions and embargoes imposed by the EU, US, and their allies have had little impact on Russia’s war-making ability against Ukraine. On the contrary, the squeeze on Russian oil has elevated global crude prices, which continue to be well above the $100 per barrel mark, helping Moscow earn more for its war chest. Agreed, the EU has already pledged to block 90% of its Russian oil imports by the end of the year. But it will be an exercise in futility.
- However, with exemptions for countries like Hungary and pipeline supplies, Russian oil continues to flow at elevated prices, aiding inflation and pushing up the cost of living everywhere. The G7 plan seeks to undermine the so-called Russian monopoly through price caps. Initial reports indicate that it will work by lifting sanctions on insurance for cargo ships transporting Russian oil in return for a price deal. Theoretically, this should incentivize countries to accept the price cap. Further, note that the London-based International Group of Protection & Indemnity Clubs insures nearly 95% of the world’s cargo shipment. The group itself will face sanctions if it insures any Russian oil cargo above the yet-to-be-determined price.
PC: IGPandi
- Moreover, the plan may not be acceptable to all including China since Beijing and Moscow have formed a strong strategic compact of late. Of course, Russia cannot be browbeaten just like that. Mind you, price manipulation almost always has unforeseen consequences. It makes sense to consider France’s suggestion of getting Iran and Venezuela back to the oil suppliers’ fold. Now, the whole universe is aware of how issues surrounding Iran and Venezuela have panned out all these years. Remember, the West wants to weaken Russia, even if it damages the global economy, including Western ones. However, level-headed approaches will consider facilitating Moscow-Kyiv negotiations. Every new plan to punish Russia will only hurt the global economy even more. World leaders should keep this aspect in mind before embarking on counterproductive moves.
