Sens. Chris Van Hollen (D-MD) and Pat Toomey (R-PA) want to direct the Biden administration to put sanctions on countries that increase purchases of Russian fossil fuels, a strategy it has passed up so far, in a bid to more aggressively punish Russia economically for its invasion of Ukraine.
The pair is working on a legislative framework to expand President Joe Biden’s sanctions authority, they announced Tuesday, that would provide for these secondary sanctions. The framework also includes granting the president new and explicit controls over the setting of a price cap on Russian oil, which the Group of Seven nations intend to impose alongside other allied nations beginning later this year.
TOP LOBBYIST FOR UKRAINE IN DC SAYS WHAT WOULD BE NEEDED FOR PRICE CAP ON RUSSIAN OIL
The United States and allied nations have taken important steps since the war in Ukraine began to punish Russia economically, the senators said in a statement Tuesday.
“However, we have yet to effectively cut off funding to Putin’s war machine by diminishing Russia’s revenues from energy sales,” they said. “That’s why the Biden administration’s initiative with the G-7 to cap the price of Russian oil exports is crucial.”
The administration would need new authorities in order to enforce the price cap successfully, they added.
As for the secondary sanctions, the proposal “provides the administration with the tools needed to hold accountable the financial institutions supporting those countries involved in rampant war profiteering from Russian exports,” Toomey and Van Hollen said.
The U.S. moved quickly after the war in Ukraine began to impose a ban on Russian fossil fuel imports with the intention of ending the funding of its “war chest.”
Allies in Europe implemented a ban on Russian coal imports in August, while the EU plans to embargo most Russian oil imports beginning in December.
Analysis shows that sanctions, global energy market reorientation, and commercial blacklisting are pruning Russia’s economy, although it has benefited from higher energy commodity prices throughout the war’s duration. Russia had a revenue of 158 billion euros from its fossil fuel exports in the first six months of the war, according to an analysis from the Center for Research on Energy and Clean Air.
The Van Hollen-Toomey secondary sanctions proposal would seek to cut further into those revenues by providing for the imposition of sanctions on countries that increase purchases of Russian oil, gas, or other fossil fuel products.
However, that could cause trouble with countries that are not ready to participate in the West’s efforts to punish Russia’s energy sector and to stop buying, including India, which has been buying more Russian oil and doesn’t look too keen on participating in the price cap proposal.
The Biden administration has been down on the idea of imposing secondary sanctions. Deputy Treasury Secretary Wally Adeyemo said he “[doesn’t] think you need secondary sanctions for this to work,” speaking of the price cap.
Amos Hochstein, a senior adviser for energy security at the State Department, said in June he had been telling India that secondary sanctions are not on the table but that he’d been urging the country to consider two things.
“One, don’t go too far and don’t look like you’re taking advantage of the pain that is being felt in European households and in the United States,” Hochstein told the Senate Foreign Relations Subcommittee on Europe and Regional Security Cooperation. “Second, make sure you negotiate well because if you don’t buy it, nobody else is.”
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After Van Hollen and Toomey released the sanctions framework Tuesday, a Treasury Department official said the department looks forward to reviewing any final bill text but said it “has sufficient authorities to implement a price cap and is well-equipped to advance the policy” under existing law.
“Our goal remains to work hand-in-hand with our international partners to both keep Russian oil flowing onto global markets at lower prices and to reduce the Kremlin’s revenue for its illegal war in Ukraine,” the official said in a statement. “There is evidence this approach is already working, with public reports that Russia is scrambling to offer cut-rate discounts on oil to major importers like India and Indonesia in an attempt to get ahead of the price cap.”
