They may or may not be paying a premium, but it has nothing to do with "moral high ground".
Its to do with not giving the regional agressor leverage over your economy. The war between Russia and Ukraine exists in the military domain, the war between Europe and Russia is currently in the economic domain. Even if sanctions only shifted the supply chain to add middlemen, it prevents Russia from having direct control on energy supplies in Europe, which improves Europe's (and Ukraine's) strategic position.
Ukraine and Europe are defending their homes and people from a military/economic/political threat, an imperialist threat, and you think this is about "moral high ground"?
This mainly applied to gas and not oil though. The point of the sanctions is to primarily decreases Russia’s oil revenue.
You don't have any duty to defend every action of European politicians. You will certainly never be rewarded for your loyalty to them. The best reward you can hope for is increased taxation of your labour and the worst reward is being drafted into an industrialized war.
The EU are not winning against Russia by purchasing energy from them through middlemen.
Who said they don't understand it? What can they do about it? Nothing.
https://archive.is/2023.02.23-211202/https://www.nytimes.com...
https://nationalinterest.org/feature/can-we-please-stop-comp...
https://www.reuters.com/markets/europe/russian-economy-minis...
https://www.theguardian.com/business/2023/may/21/the-west-ti...
There's a saying "never interrupt your enemy when he is making a mistake", yet it seems Russians do exactly that again and again?
Also, this link selection is provided by a Russian, so the point still stands.
* https://foreignpolicy.com/2022/12/01/ukraine-russia-sanction...
* https://www.intereconomics.eu/contents/year/2023/number/1/ar...
* https://www.csis.org/analysis/russia-sanctions-one-year
Nobody claims the sanctions are perfect. Sometimes there are holes which need to be plugged. There are some other areas which should be sanctioned.
The West should of course work on making the sanctions harder hitting.
The whole premise of your argument seems to be based on the notion that countries can't have an economy that's independent from the west. This is an absurd idea given that the west accounts for only 20% of world's population. Majority of the world sharply disagrees with the west as studies commissioned by EU and US clearly show:
https://ecfr.eu/publication/united-west-divided-from-the-res...
https://usrussiaaccord.org/acura-viewpoint-krishen-mehta-the...
And here's how NYT puts it:
> A year on, it’s becoming clearer: While the West’s core coalition remains remarkably solid, it never convinced the rest of the world to isolate Russia.
https://archive.is/2023.02.23-211202/https://www.nytimes.com...
What ultimately matters is the relative damage the sanctions are causing to Russia and Europe. There is clear evidence that there has been sever economic impact on Europe as a result of the sanctions, and there is no evidence that there's a greater crisis in Russia than in Europe right now. It's also important to note that Russia has already made it through two major crises in the 90s and in 2014 while Europe has not experienced anything similar in recent history. What remains to be seen is whether Europe or Russia will be able to handle the decoupling better.
The problem is that you're presenting the problem as very one sided while it's clearly contested at minimum. This + the fact you're Russian is making it easy to guess whose agenda you're pushing.
> There has been no evidence that Russia's war in Ukraine has been negatively impacted by the sanctions
It's difficult to get neutral data. We have data from Kremlin, but it would be dumb to take their word as true.
An unconvential data measuring emissions suggest that Russian industry is in decline: https://ca.finance.yahoo.com/news/russias-economy-suffering-...
> This is an absurd idea given that the west accounts for only 20% of world's population
I guess you're intentionally "forgetting" that the west amounts to 50% of world's economy. Being sanctioned by half the world's economy has likely negative consequences.
> and there is no evidence that there's a greater crisis in Russia than in Europe right now.
We have only little evidence unfortunately, since as stated above, we simply lack reliable data. There are a few tidbits which might suggest that the economic picture is not that rosy - the emission study above, the Russian state deficits, dropping oil/gas revenues and even Putin admitting that sanctions can hurt Russian economy.
But to repeat myself, I'm ready to admit that the sanctions regime is not perfect. It's a reminder to work harder on new sanctions and to plug holes.
You're literally doing what you're accusing me of in this thread. The fact that you continue to use ad hominem as a form of argument really shows which one of us has an agenda here.
> It's difficult to get neutral data. We have data from Kremlin, but it would be dumb to take their word as true.
We don't have to take their word as true, we can look at the fact that western media is now increasingly skeptical about the direction of the war.'
> An unconvential data measuring emissions suggest that Russian industry is in decline
That's really not showing much of anything, the graphs in the actual report show minor fluctuations, and don't even show longer term trends https://archive.ph/2XS6C
> I guess you're intentionally "forgetting" that the west amounts to 50% of world's economy. Being sanctioned by half the world's economy has likely negative consequences.
I guess you're forgetting that this cuts both ways. Being cut off from a major commodity exporter is currently hurting western countries. That's why Germany is in a recession right now.
Meanwhile, your argument doesn't actually hold because Russia just needs to have enough trade partners to replace the trade with the west, and the west still needs the things it was getting from Russia. So, all that happens in practice is that Russia sells to other countries, and they resell to the west. This is how supply and demand works.
> We have only little evidence unfortunately, since as stated above, we simply lack reliable data. There are a few tidbits which might suggest that the economic picture is not that rosy - the emission study above, the Russian state deficits, dropping oil/gas revenues and even Putin admitting that sanctions can hurt Russian economy.
There are plenty of tidbits that suggest western economies are in a terrible shape and that western countries are experiencing an unprecedented cost of living crisis right now. As I've pointed out before, Russia has made it through much bigger crises in 1990s and in 2014. On the other hand, the west has not had a comparable crisis to what we're seeing now in recent history. We'll just have to see how the west copes with it.
> But to repeat myself, I'm ready to admit that the sanctions regime is not perfect. It's a reminder to work harder on new sanctions and to plug holes.
What the sanctions are actually achieving is creating a whole separate economy around BRICS that will be decoupled from the west. The whole scheme can only work when the west is at the centre of the world economy. That's no longer the case, and we're seeing countries moving off the dollar now at an accelerating rate.
None of your links actually say that. What they do say is that sanctions did not have the short term impact that some hoped/predicted. What all of them say is that in the long term Russia is most likely fucked. Your claim that the sanctions have been an utter failure is divorced from logic if we go by the links that you provided.
https://www.spectator.co.uk/article/why-the-economic-war-aga...
That doesn't translate to "sanctions are utter failure ". Again, your logic is failing you.
> but whatever you say buddy
The articles you linked to are saying that, have you read them? Reading comprehension is a valuable skill to have.
> Here is another article you might want to read carefully
> The country has suffered harm from western sanctions, even if nothing like on the scale that we imagined we could inflict. But if the West is thinking that in future it can fight wars purely by economic means, without bombs or bullets, it is badly mistaken.
So even this new article that you linked disagrees that the sanctions were an utter failure...
If you don't understand how Europe going into recession while Russia showing growth is a failure of the sanctions, then your logic if failing you I'm afraid.
> The articles you linked to are saying that, have you read them? Reading comprehension is a valuable skill to have.
And once you develop this skill then you'll be able to comprehend what these articles are saying.
> So even this new article that you linked disagrees that the sanctions were an utter failure...
Keep working on that reading comprehension.
EU is predicted to have bigger growth then Russia, so...
> Keep working on that reading comprehension.
Certainly you could find one passage in those links you provided that is talking about the utter failure that the sanctions are and share it with us. I did that to show my point but for some reason you don't want to discuss the contents of the articles you provided.
Or you could at least show how did you logically go from Russia GDP is predicted to grow to sanctions are utter failure. That was your argument, wasn't it?
EU is buying through India, right? If Russia put fee's in place to discourage India from reselling, but EU demand didn't change, prices would have to increase, right? It's a two sided market, supply and EU demand, which makes this "If India doesn't buy Russia's oil to resell to Europe" seem impossible.
The biggest loss for Russia isn't the loss of crude oil sales, it's the loss of sale on refined goods. They were a massive supplier of things like diesel to Europe.
Ahh thanks, that directly answers to my original question, which apparently wasn't appreciated. It makes sense now.
I'm wondering if there's some interesting metric that can be extracted from comment chains like this, where some semblance of a conversation continues with completely separate people.
Not really, EU is paying a market rate just like the rest of the world. It's just that a big part of the profit which would normally go to Russia now goes to middlemen.
The price cap was designed to reduce Russian profits without reducing Russian oil exports..
At the very least it reduces the amount of funds Russia has at its disposal for the war.
"The revenue is still down 43% from a year ago, the IEA said, as Russia is forced to sell its barrels to a more limited pool of customers who can negotiate greater discounts."
IMF bases their projection on data provided by Russian government agencies. So this works only if you trust Russian government to not fumble data.
For sure India and China are eager to exploit the very unequal relationship where Russia now needs India and China much more than the opposite.
The Russian economy is not collapsing, but I'm pretty sure it's hurting. Even if we had real GDP figures, they'd be misleading as now a significant part of the GDP is coming from production of military gear which is literally being burned and does not generate income or feed into other parts of the economy.
I mean, what's the alternative explanation of why India increased the Russian oil imports tenfold? It's not because of good will, it's because India can suddenly import Russian oil much cheaper than before. Why does Russia sell oil cheaper to India? Because it won't find another such big customer.
You're contradicting yourself. India is selling at a market rate, so if there's a profit to make, it's coming from the Russian side. Pick one - either India has a big markup or Russia sells with only small discount. Both can't be true.
I'll reiterate my point since it clearly escaped you. The question is which economy is being hurt more relatively speaking. There is clear evidence that European economy is suffering and countries like Germany are now in recession. There is no such evidence regarding Russian economy.
2022 GDP growth:
* Germany +1.9%
* Russia -2.1% (according to Russia's agency)
Yeah, evidence absolutely points to European economy getting hammered while Russia is better than ever.
https://www.cnn.com/2023/05/25/economy/germany-recession-q1-...
https://www.bloomberg.com/news/articles/2023-05-25/germany-e...
https://www.reuters.com/markets/europe/russian-economy-minis...
Evidence absolutely does point to European economy getting hammered while Russia is better than ever. I have to ask what your agenda is here given that you keep trying to pretend things that are obviously happening aren't happening?
In same fairytale, that may be so. In the real world, oil and gas revenue is 40% of Russia's federal budget and down -52% YoY as of April, so that's more than -20% from oil and gas alone gone before taking collapse of other exports and explosion of military expenditure into account. At this rate, we'll see a replay of 1998 soon.
The hard facts are that federal revenue is down -22% while expenditure is up +26% and Russia is running a 30% deficit.
Now they are lower. (Partial) success!
https://www.reuters.com/business/energy/russias-april-gas-ex...
https://www.statista.com/statistics/1306522/key-importers-of...
I agree with you on that one. It's a longer project to become independent of Russian energy completely and we're not there yet. But the level of dependence dropped sharply since last year.
> This will be a decades long project of creating alternative energy production.
It will take years, yes. Europe kind of ignored this problem, now it will have to pay to get out of it. There's no other way, though.
So, by the time Europe actually manages to wean itself off from Russian gas, there will be infrastructure for Russia to direct gas to China and other countries. I certainly agree that Europe has no other choice at this point. How Europe manages its energy transition is a big question though since energy is needed to build out the alternative infrastructure.
Now, it looks like Russia is going to spend $100 billion on the pipeline to sell its gas cheaply. But wait, China isn't that eager to commit to the project: https://www.ft.com/content/541f8bcb-118a-419e-869f-3273fcc9c...
Maybe China is trying to bargain even better price? China can, after all, buy energy from other sellers, but Russia has nowhere else to sell its gas.
Meanwhile, Europe is stuck buying LNG on the spot market at a far higher rate than it was getting via pipelines from Russia. I wonder who the bigger loser in all this is...
The whole context here is whether Russia is suffering economically as a result more than Europe. Given that Germany is already in a recession, it's pretty clear what the answer is.
Now, that's not a simple fact. A simple fact is that China still didn't commit to the project.
> but at the end of the day Russia gets to offload its resources
Don't you think that the price is an important part here? If Russia "offloads" its resources at prices near break even, then the whole situation is a strategic loss.
> The whole context here is whether Russia is suffering economically as a result more than Europe. Given that Germany is already in a recession, it's pretty clear what the answer is.
Even the poor data we have points to Russia being the bigger loser.
> Don't you think that the price is an important part here? If Russia "offloads" its resources at prices near break even, then the whole situation is a strategic loss.
Except they're not selling at break even prices, this is just the fairy tale you keep repeating here.
> Even the poor data we have points to Russia being the bigger loser.
It doesn't show anything of the sort as numerous articles I've provided clearly state. However, you're clearly just going to repeat this like a broken record so I don't see any point continuing this discussion.
We'll see who's right soon enough.
It's definitely not simply a matter of moral high ground. Independent of the sympathies they may have for the Ukrainian side -- it is objectively in the cold, pragmatic self-interest of European countries to not let themselves be beholden to as capricious and unstable a supplier as Russia.
They are paying a premium for independence. Any given barrel of oil may or may not still come originally from Russia, but Russia can not use it as a lever any more, because there is no single channel any more. Russia would have to stop selling to everyone in the world, or raise prices to everyone in the world.
This probably even drives prices down, which both helps everyone else and hurts Russia.
Also oil extraction is quite capital-intensive. A well will output most of its potential in the first 3 years. Currently, Russia is running on existing wells, and it currently is not profitable to establish new wells for them. For example Venezuela sits on deposits bigger than Saudi Arabia. At current prices it is not profitable to extract it.
They could buy runway for some time running negative, though. Provided they have the internal means to do so.
And there's the question of how much reserves and commercial balance they run at. That's what brought them to the negotiation table in 2014. We'll see what happens in a year or two.
Sanctions work.
It will also slowly deteriorate Russian oil refining industry since everyone just want to buy their cheaper crude oil. It will take decade and won't stop the war now, but it gonna be a huge hit in a long run.
So while EU sanctions are weak they do work.
What changed now is that he has to sell that oil to others at a steep discount leaving him almost no profit, with the middlemen making all that profit instead - which is OK.
But, EU statement mainly referred to gas, not oil. With gas, situation is a lot clearer - Russia simply stopped producing the gas EU stopped buying, because they can't technically sell it elsewhere, and EU buys it mainly from USA. It took almost a year for market to readjust but now the prices are same as they used to be before all these events.
And that’s perfect, for the EU. Russia won’t be enjoying that, which was the entire point.
I hadn’t realised gas prices had dropped so much.
It shows export volumes pretty steady, but revenue loss of 43%. That would seem likely to have hit profits pretty hard.
https://edition.cnn.com/2023/04/14/energy/russia-oil-exports...
https://www.cnbc.com/2023/05/24/ukraine-the-wests-oil-war-ag...
Analysis published Wednesday by the Centre for Research on Energy and Clean Air, an independent Finnish think tank, found that Russia’s revenues from oil exports have recovered from levels reached in January and February.
The findings show that Moscow has been able to successfully claw back earnings from fossil fuel exports in recent weeks despite the imposition of import bans from the European Union and a broader G7 oil price cap late last year.
Energy analysts at CREA suggested the failure from the so-called Price Cap Coalition to revise price levels and enforce the policy had resulted in the measures “losing traction, integrity and credibility.”
No they would not. From the link you provided:
> “Russia’s export revenue in April was down substantially year-on-year, mainly due to the impact of the EU import ban and lower oil prices. This means that Russia’s budget will likely stay in deficit, constraining military expenses,” said Lauri Myllyvirta, lead analyst at CREA and co-author of the report.