Despite economic sanctions imposed by the United States and the West, we now learn that Russia's cash flows soared during the first quarter because of surging energy prices for Russian oil and gas — ironically, brought on by Russia’s attack on Ukraine. Russia's continued sales of oil and gas to the West are the single most important thing now propping up Putin’s brutal regime.
The Institute of International Finance projects that Russia will post a record $250 billion surplus this year based on its first-quarter sales of oil and gas, which would entirely make up for the Russian central bank reserves now frozen by Western powers through sanctions. In short, sales of oil and gas are giving Putin the money he needs to finance his savage war.
Russia's ruble has more than fully recovered. True, imports into the country have fallen sharply, reducing the standard of living of Russians who are unable to buy foreign goods. But via lies and propaganda, Putin has rallied Russians behind him nonetheless.
It’s now clear: The only way the United States and the West can impose real pain on Putin is to stop purchasing Russian oil and gas entirely. This would be costly for us, of course. We don’t know exactly how costly but there’s no question such a move would drive world energy prices substantially higher.
So today’s Office Hours question: Is it time for the United States and the West to make this sacrifice for Ukraine? Please leave your comments below. I’ll chime in as well.
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