‘The U.S. came to the peace talks unarmed’ Sanctions expert Maria Shagina explains how the West can use its main economic weapon in negotiations with Russia
The U.S. and its allies have levied more than 20,000 sanctions against Russia in the three years since Moscow launched its full-scale invasion of Ukraine. Though they’ve failed to stop the Kremlin’s war machine, these measures continue to damage the Russian economy and are widely perceived as a source of leverage for the West. Upon returning to the White House in January, Donald Trump threatened even tougher sanctions against Russia if Vladimir Putin refused to strike a peace deal. But when U.S. and Russian officials met for talks in Saudi Arabia last week, the discussion seemed to lean towards economic cooperation rather than pressure — much to the dismay of Ukrainian and European officials. To find out more about the role sanctions could play in negotiations with Russia, The Beet editor Eilish Hart spoke to Maria Shagina, a senior research fellow at the International Institute for Strategic Studies (IISS).
The following interview has been lightly edited and abridged for length and clarity.
— Right after his inauguration, Donald Trump talked about the possibility of increasing sanctions to pressure Russia to end the war. His Russia-Ukraine envoy, Keith Kellogg, said the same in early February. We’ve heard less talk about it since then, but I wanted to start by asking you, in what ways do sanctions offer the U.S. leverage in negotiations with Russia?
— I think here, timing and sequencing are really key. At what point do you threaten sanctions and how do you use them as leverage? The Biden administration had sanctions as an open-ended timeline. [They took] an incremental approach — “as long as it takes” — and there was no endgame. When the Trump administration was coming to office, the narrative was different and welcomed, at least for Ukraine, because they said we’ll ramp up energy sanctions, lower the price cap [on Russian oil] below $45 per barrel (a very important measure because anything above $40-45 really doesn’t hurt Russia’s finances), and we’ll do it ahead of the negotiations to give Ukraine more leverage. So it sounded like a solid plan, which really mimicked the Iran JCPOA, a maximum pressure campaign.
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All of that is out the window now; there’s no such rhetoric whatsoever. And what we’re seeing is that the U.S. administration came to the peace talks with Russia unarmed. There is no pressure rhetoric whatsoever. They’re actually exploring “mutually beneficial economic cooperation” in the Arctic — exactly where the 2014 sanctions started.
Again, sequencing is very important: you can use sanctions as leverage, but then it doesn’t make sense to use them after [the negotiations start]. Because it’s the Trump administration that’s in a rush to “stop the killing”; to park Russia in some sort of corner and to focus on China. Russia is in no rush. They can engage with the negotiations, extract as maximalist goals as possible or, if not, go back to business as usual — to waging the war as they’ve been doing.
— Since 2022, Russia has become the most sanctioned country in the world. What options does the U.S. have in terms of further tightening sanctions against Russia at this point?
— Quite a lot. This is a title that misleads us in various respects, because with sanctions it’s not about quantity, it’s about quality. And even though we’re saying it as this sort of honorary title, “the most sanctioned country in the world,” [Russia] still pales in comparison with Iran, North Korea, and Syria — the most heavily sanctioned jurisdictions. Russia is not there yet.
If we look at the design of sanctions and the timing of the implementation, the key pillar of leverage that the West had, energy sanctions, either wasn’t imposed at all or quickly enough. We had the oil price cap, which was only implemented in [December 2022]. But in that first year [of the full-scale war], Russia really capitalized on record-high energy prices and recreated a sort of “fortress economy,” because it accumulated almost as much as the West immobilized in terms of its sovereign assets.
LNG and nuclear are other missing pieces of this bigger puzzle in the energy domain (even though Europe prides itself on phasing out Russian pipeline gas, it’s actually ramping up Russian LNG). [These are] smaller pieces, but they’re cumulative, so they do matter. The second key pillar of the sanctions regime that hasn’t been enforced as watertight as it should have been is export controls. More can be done on this; there are plenty of stories of how these have been circumvented.
On top of that, you could really ramp up secondary sanctions. The U.S., E.U., and the U.K. have the authority now in all three jurisdictions to go after, for example, foreign financial institutions when it comes to export control violations. Then you have [Russia’s frozen] sovereign assets.
My point is, the West has leverage, but so far it hasn’t been using it to actually degrade Russia’s ability to fund the war because its [approach has] been very incremental, and in a war of attrition, timing is really key. You will never be able to fully isolate Russia. This is not the world we live in; they will find a way. It’s just [a matter of] who will be ahead of who and, so far, Russia is winning.
— The U.S. and Russia appear to be sidelining not just Ukraine but also Europe in the negotiations. But Western sanctions policy has been largely coordinated between the U.S., the E.U., and the G7 countries since the 2022 invasion. Does this offer any leverage or an opening for European leaders to get a seat at the negotiating table?
— It could go both ways. If we look at how the Europeans responded to J.D. Vance’s speech at the Munich Security Conference, it was supposed to be a wake-up call on military spending, but we’ve yet to see a “coalition of the willing” and there’s still splintering within Europe.
Theoretically, Europe (including the U.K.) has leverage on at least three levels in terms of sanctions, in my opinion. [Russia’s frozen] sovereign assets are mainly in Euroclear accounts and in Britain. Then there’s LNG, nuclear, and lowering the [oil] price cap. Because the majority of Russian oil goes through the English Channel and European ports, they can really match this strengthening of the enforcement of the oil price cap and these geographical choke points. So theoretically, they have leverage; it’s a question of political will. It will be up to the E.U. and the U.K. to shoulder it or cave to U.S. pressure and also incrementally, quietly roll back all of the sanctions.
I’m less optimistic that we’ll see pressure from Europe and the U.K. If you look at the latest [E.U.] sanctions package (16), obviously it has been in the works since last year, but it’s another maintenance package. And this happened against the background of these massive transformational changes between the U.S. and Russia. [There were] dramatic shifts, but the [E.U.] response in both the military and economic domains is very incremental, very quiet. I’m afraid it’s so much in its DNA that they will act in the same manner [going forward].
— If the Trump administration were to unilaterally ease sanctions on Russia in some way, what would this mean for Ukraine? What options would Kyiv have in terms of a response?
— Again, the key question is whether the E.U. and U.K. will play along or whether they will keep sanctions [in place]. From Ukraine’s point of view, and this echoes what Zelensky said [at the Munich Security Conference], they want Europe to be on the same [page]. Playing on these grievances that both Ukraine and Europe were sidelined, Zelensky mentioned sanctions, [saying] that Europe should step up pressure on Russia. I guess this public diplomacy will get much more complicated for Ukraine in general.
I think it’s important to bring in China here, because there have been rumors that Chinese peacekeeping forces [could be involved in monitoring a potential ceasefire in Ukraine]. This is outside of sanctions, I suppose, but [this is where] it gets multidimensional. China could offer peacekeeping forces, let’s say, in exchange for fewer U.S. tariffs. It’s actually hard to separate all of these discussions [about the] European theater, the Asia-Pacific [region], plus the military and economic dimensions; with the Trump administration, where everything is transactional, it’s all sort of linked.
For Ukraine, the key aspect we’re seeing now is this minerals deal. That’s the key leverage they have that appeals to Trump and caught his attention, [but Kyiv has to figure out] how to package it in a way that’s directly linked to credible security guarantees and doesn’t really extort Ukrainian minerals, infrastructure, gas, and so on. I feel like Ukraine is running short of influence over Trump, so they really zoned in on this deal, but [the issue is] how to square it with an administration where you don’t have direct channels.
Interview by Eilish Hart