Ukraine Implores Biden to Sanction Putin’s ‘Sacred Cow’

The former head of Ukraine’s state energy company urged the United States and its allies to unleash punishing sanctions on Russia’s energy sector, saying Russian President Vladimir Putin won’t believe the West is serious about stopping his invasion of Ukraine unless it targets the backbone of his country’s economy. 

“Putin and his gang, they treat energy as their unconditional indulgence from the West,” said Andriy Kobolyev, the former chief executive of Ukraine’s state gas company, Naftogaz. Kobolyev traveled to Washington this week, on behalf of Ukrainian President Volodymyr Zelensky, to meet with U.S. lawmakers and senior Biden administration officials to urge them to ramp up sanctions on Russia’s energy sector, which he described as Putin’s “sacred cow.”

He told Foreign Policy in an interview he believed that Western sanctions on Russia’s energy sector are “inevitable” given that current sanctions have not altered Putin’s commitment to the war, but he urged Western leaders not to drag their heels. “Why would you wait until a nuclear power plant is blown up?” he said, referring to a Russian attack on a nuclear power plant in Zaporizhzhia late Thursday, causing a fire that has since been extinguished.

The United States and Europe have unleashed a series of unprecedented sanctions on the Russian economy and Putin’s inner circle, seriously restricting the Russian Central Bank’s ability to prop up the plunging ruble, and going after oligarchs and their assets. But, so far, the Biden administration has shied away from directly targeting Russia’s oil and gas sector, which accounts for roughly 40 percent of the country’s economy—and which is critical to Europe.

That could change soon, as a growing chorus of U.S. lawmakers on both sides of the aisle call for escalating sanctions, while Russia doubles down on its all-out invasion. U.S. House Speaker Nancy Pelosi, one of President Joe Biden’s most important allies on Capitol Hill, said she supports U.S. bans on Russian oil imports, a move that could pave the way for harsher embargoes and sanctions. “I’m all for that—ban it,” Pelosi said at a press conference on Capitol Hill on Thursday.

Her comments came on the heels of a hearing in which top Biden administration officials were grilled on why they hadn’t raised the pressure on Moscow by rolling out more sanctions on Russia’s energy sector, or through secondary sanctions on its financial sector. “President Biden must stop American dollars from funding Putin’s war machine by cutting off U.S. imports of Russian oil,” Rep. Michael McCaul, the top Republican on the House Foreign Affairs Committee, told Deputy Secretary of State Wendy Sherman and other administration officials at a hearing on March 2.

“Energy exports are the lifeblood of the Russian economy. And we should not be allowing Putin to use that lifeblood to spill blood in Ukraine,” he said. 

The United States imports about 400,000 barrels of Russian oil a day, down dramatically from last year’s levels. (The United States consumes about 20 million barrels of oil a day.) For sanctions on the Russian energy industry to have real teeth, it would have to be done in conjunction with allies in Europe, which accounts for some 70 percent of Russia’s gas exports and half of oil exports, as well as energy-hungry countries in Asia, such as Japan and South Korea.

In the meantime, the market is imposing its own sanctions. Russian oil has been hard to sell all week, even at drastic discounts to benchmark prices. Many traders and oil companies are reluctant to do business with Russia due to sanctions risk.

The White House said on Friday that it was assessing how to reduce imports of Russian oil and ways to minimize the knock-on effects for global supplies and consumer prices. “We are looking at ways to reduce the import of Russian oil while also making sure that we are maintaining the global supply needs out there,” White House press secretary Jen Psaki said in a briefing. 

“These people are so weak that in the face of military aggression against NATO countries, they care about prices. How much will it cost to U.S. economy if [the] NATO alliance will be attacked?” Kobolyev said. 

He referred to Russia’s energy sector as the “sacred cow” for Putin and his inner circle of elites at the top of the country, and he said they couldn’t be pushed to the negotiating table unless Washington and its allies smothered the country’s oil and gas sectors in sanctions.

Russia’s invasion of Ukraine is likely to accelerate efforts in Europe to wean itself off of Russian energy over the long term. “We need to get independent from Russian gas, oil, and coal,” European Commission President Ursula von der Leyen said on Thursday. “Our resolve to go forward in this case is stronger than ever.”

While European countries have joined Washington in rolling out sweeping sanctions against Russia, the European Union has so far avoided targeting banks involved in the energy industry. The EU removed some of Russia’s top banks from the global financial messaging system SWIFT, but it stopped short of including on that list Russian banks heavily involved in the energy sector, including Sberbank and Gazprombank. Eastern European officials criticized the decision, arguing Brussels wasn’t going far enough. 

“As Poland, we demand that all Russian entities, thanks to which Russia finances the war in Ukraine, be effectively and fully covered by sanctions,” Polish Prime Minister Mateusz Morawiecki said in a Facebook post.