Promptly opening the export spigot on our own oil and gas production and accelerating our development of those fields, including on Federal land (which will have minimal production effect today; although it’ll have significant effect in the near- to mid-term by significantly expanding the supply of oil and gas on the global market) will produce an immediate spike down in the global price of oil and gas, which will have an associated immediate negative impact on the value of Russian oil and gas exports.
Blocking Russian access to credit on the global banking system—even just on the American banking system—and requiring cash-only transactions will have a negative impact on Russia’s cash reserves.
Seizing the personal banking and physical assets held by the Russian oligarchs and by Putin will remove billions of dollars’ worth of value from these folks—and it’s the oligarchs as much as a mendacious Russian legislature who are the source of Putin’s political power.
Of course, a significant fraction of the success of the sanctions will depend on how well Europe does its part. Their participation will go a long way toward identifying who truly believes in the sanctity—as opposed to the convenience—of national sovereignty and who just engages in empty rhetoric for personal gain. Their participation will go a long way toward identifying who our friends are and who are just summertime soldiers. Their participation will go a long way toward determining who stands with Ukraine and who are willing only to talk about standing with Ukraine.
We can’t let their timidity stand in the way of our acting, though. Nor can we let the fact that the sanctions will bring Russian retaliatory sanctions on us deter us.
Russian Foreign Minister Sergei Lavrov said Friday sanctions imposed by the West “would inevitably hit the United States like a boomerang.” Their foreign ministry added they “will not accept the language of sanctions and threats,” and will respond if sanctions are imposed.
What sanctions can Russia impose? They can block further Western/American investment in Russian oil and gas field development. They can block further Western/American investment in oil and gas delivery systems (read: pipelines). They can cease existing Western/American investments throughout their economy, not only in their oil and gas industry. They can begin dumping their holding of American Treasuries. They even could deny us access via their territory and airspace to our bases in the ‘Stans from which we support our war effort in Afghanistan.
This will hurt us, to be sure. But who else will it hurt? Russia can’t develop its oil and gas industry without us—that’s why we’re there. What they have developed has been being depleted for more than 10 years; those assets are declining in value. Their economy is utterly dependent on oil and gas. Recall the damage done Texas’ strictly oil and gas economy during the first Arab oil embargo and the Nixon price controls.
Dumping their US Treasury holding will devalue the rest of what they hold, decreasing their ability to convert the rest into cash with which to complete the now-demanded cash only transaction.
Our war in Afghanistan is winding down, and those bases already are becoming less and less critical to our efforts.
The oligarchs’ loss of their own overseas assets and their loss of access to non-Russian banking, even to their overseas villas and other assets will hurt Putin’s primary supporters where it hurts the most: in their own pocketbooks.
The sanctions that will boomerang on us will boomerang right back on them, and worse.
And our own actions will determine whether our own administration truly believes in the sanctity of national sovereignty, with whom we are friends, whether we stand with Ukraine. I’ve no doubt where the American people stand.