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West confirms Ukraine billions funded by Russian assets
But the US taxpayer will be on the hook once a hold on Moscow’s money is lifted and Kyiv struggles to pay back loans
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Below an article that I published in November on Strategic Culture website. My assessment is as relevant as ever. With much speculation about how Trump might get Zelensky to come to the negotiating table,, very little has been said on how sanctions relief might leverage Russian engagement in any peace process. Keith Kellogg, Trump’s Envoy For Ukraine, mentioned sanctions relief in the paper he produced in April on peace in Ukraine, but no more detailed suggestions have emerged since his appointment. Now is the time to put some intellectual effort into planning for sanctions relief against key milestones, and to ensure that any plan is Zelensky-proof.
Following Trump’s election, there has been much speculation about how the war in Ukraine might end. But to understand it might end, it’s vital to understand how it started.
The origins of the war in Ukraine can be traced back to the ouster of Ukrainian President Yanukovych in February 2014. Russia labelled it a coup, realists would say it was unconstitutional change in power, and U.S. & British officials would shrug their shoulders.
After Russia occupied Crimea and as insurgency broke out in the Donbas, the French and Germans launched a peace process involving the Presidents of Russia and Ukraine. From this so-called ‘Normandy format’ emerged two peace deals named the Minsk agreements. But the UK was sidelined from the peace process and the Americans suspicious of it.
Left out, Britain, supported by the U.S., pushed sanctions as the primary vehicle to contain Russia, running counter to what the French and Germans were trying to achieve. By the summer of 2015, the Minsk agreements had become sidelined, and sanctions were set in stone.
Since that time, Russia has become the most sanctioned country on the planet. Thirty-three western countries, led by the USA, imposed more than twenty thousand sanctions against Russian people and companies. That’s fifteen times more sanctions than Iran in a distant second place.
If we could completely cut Russia’s economic ties with the west, so the theory went, then that would be so damaging that Russia would have to withdraw from Ukraine. Western powers therefore sanctioned everything that they could, from money, ships, oil, gold, diamonds, weapons and all manner of hi-tech components. But from a very early stage, it was clear that sanctions weren’t altering Russian policy to Ukraine, quite the opposite.
When I left the Foreign Office in 2023, the UK government with its western partners, had gone through all the sanctions that they thought might weaken Russia. The west could probably find more people or entities to sanction. But policy makers never really gripped Russian gas, as some European countries still rely on it. And anyway, the destruction of the Nordstream pipeline solved that conundrum. Russian oligarchs that had political connections in the west were spared as were Russian companies that owned factories in the USA, to prevent American job losses. But we hit most things and neared the bottom of the barrel.
Yet, Russia’s economy always seemed to bounce back. That’s partly because, sanctions were never as big a deal as other events that moved the global economy, such as the oil price collapses in 2014 and 2016 and Covid. But it was also because Russia continually adapted its macroeconomic policy to absorb and, in the end, profit from sanctions. Following an immediate post-sanctions contraction of economic growth in 2022, Russia has grown more strongly than the western countries that imposed sanctions.
Western powers therefore needed something stronger, so sanctions evolved into a political tool to isolate Russia on the world stage. The USA, European Union and other countries including Japan and Australia sanctioned every possible type of economic, social and cultural activity involving Russia. Western academics no longer collaborate with Russian academics. Russian airliners can’t pass over western airspace and vice versa. Border posts have been closed or minimized. Russia can’t compete in international sporting events or even the Eurovision song contest.
Russian Ministers are subjected to indignant walkouts by western diplomats and ministers at international gatherings. Ordinary Russian people were denied a weekend ParkRun. Ukraine did its part, cancelling the Russian Orthodox church and going on a propaganda offensive with any western company that sold goods with the word ‘Russia’ in their branding.
And yet, outside of the west, Russia’s standing on the global stage doesn’t seem to be in decline. In a process accelerated by the Ukraine war, Russia, with China, has spearheaded a rapid shift by the developing world to create their own formats for dialogue and cooperation. There are over 200 countries on this planet, so the wealthy ‘west’ is in a minority. The BRICS group has grown rapidly, with a long queue of countries waiting to join, including NATO member Turkey.. Vladimir Putin has an International Criminal Court arrest warrant out on him, yet he still travels freely to ‘friendly’ countries, where he receives the red-carpet treatment. He recently hosted a successful BRICS summit in Kazan while war continued to rage in Ukraine.
War started in February 2022 a few days after the Ukrainian government finally signalled the death knell of the Minsk peace agreements. But the point is that the Minsk agreement was necessarily bad; it’s simply that the U.S. and UK invested significant efforts in ensuring its failure.
Sanctions never looked likely to prevent war, nor force its end, despite the death or injury to over one million people and a vast exodus of Ukraine’s population. War in Ukraine became reduced to the brutal, bloody town by town fighting in Europe after D-Day, while life in the west, and in Russia, carried on almost as normal. Fighting alone, Ukraine has never had sufficient resources to survive and never will.
There is a strong case that sanctions created the conditions for war to erupt, by undermining the very peace process – the Normandy Format – that was established to prevent it. And that the west’s continued blind faith in sanctions took us to the brink of a doomsday scenario, more horrific than the use of nuclear weapons in Hiroshima and Nagasaki.
Western leaders, not wanting war themselves, focused blindly on supporting Ukraine for as long as it takes. But the notion of ‘as long as it takes’ became tarnished with increasing numbers of western politicians started complaining that it is taking too long. Not least as the economics and demographics of war still show that Russia can continue fighting for as long as it takes, and that Vladimir Putin has the domestic political support to do that.
So, beyond the hype, if Trump is serious about ending the war in Ukraine, he must look at its origins. A ceasefire alone won’t cut it with Putin. There needs finally to be a peace proposal that includes targeted sanctions reduction. That, and a final reckoning with the NATO membership issue, the brightest red line of all.