Transcript of NewsX discussion of U.S.-U.K. sanctions on Russian energy sector

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NewsX - Porteous: 0:00
Hello and welcome. I am Thomas Porteous, and today we will be diving into a discussion on the USA and the United Kingdom tightening sanctions on the Russian oil industry. Ukrainian President Vlodymyr Zelenskyy announced that Ukrainian forces in the Kursk region have captured two North Korean soldiers, marking the first time Kiev has detained North Korean military personnel. Despite being wounded, the soldiers survived and are currently in Kiev, where they are being interrogated by Ukraine's security service. Meanwhile, the Biden administration has imposed stringent sanctions targeting Russia's energy sector, aiming to cut off funding for Moscow's ongoing war against Ukraine.

0:38
These measures come as President-elect Donald Trump prepares to meet with Russian President Vladimir Putin. Senior US officials hope to strengthen Ukraine's position before Trump's inauguration and ensure that the incoming administration continues to enforce these sanctions. Thank you for joining us for this debate. In this discussion we are joined by Professor Arvind Mahajan, Lamar Savings Professor of Finance at Texas A&M; Professor Rohan Gunaratna, international affairs expert from Singapore; Daniel Wagner, CEO of Country Risk Solutions from Portland, Oregon and Professor Madhav Nalapat, Editorial Director of The Sunday Guardian.

1:19
Thank you for joining us for this discussion. My first question to you is for Professor Arvind Mahajan. Do you see the sanctions from the US and the UK affecting Russia's economy both in the short term and the long term?

Mahajan:
Well the jury is still out, primarily because we have a new administration coming in, in a couple of weeks, and it really will depend upon the attitude which the new administration takes against Russia in particular regarding the enforcement of these actions. If the enforcement is serious, I think it can have a meaningful impact on the cash flows generated by these oil exports to Russia. And in that case, there might be some meaningful marginal effect on the stance which Russia takes vis-a-vis Ukraine. But it's unclear what the new administration's attitude will be towards it.

NewsX: 2:20
Professor Gunaratna, I wanted to come to you next. How do these sanctions compare to the previous ones that were imposed on Russia?

Gunaratna:
Russia was able to overcome the impact of those sanctions. During a visit that I made to Russia, I did see the impact, But it did not in any way affect their capacity to sustain their military campaign in Ukraine. What is so important today is that with a new administration coming to office, they must try to resolve this conflict through dialogue and discussion. Even India can play a very important role, because India has very good relations with Russia and also with the United States. So we should look beyond the continuity of this conflict and try to resolve it because through, by sanctions and by war, this conflict is not going to end. It's going to affect the entire world

NewsX: 3:34
Daniel Wagner, Professor Gunaratna was talking about resolution to this war, but do you think that these sanctions will make the situation harder to negotiate a peace deal?

Wagner:
No, to the contrary, I think these sanctions are going to make it easier to negotiate a peace deal, because the pressure that's being put on Putin and the Russian government right now as a result of these sanctions is truly significant. And I think what in essence is happening is that the Biden administration is giving a gift to the Trump administration for its future negotiations to try to end this war. And I think it won't take long for Putin to feel the pressure, because these sanctions are truly significant. You might ask why they weren't done sooner and the reason is, of course, politics.

4:27
They didn't, the Biden administration didn't want to have a spike in oil and gas prices in America as a result of these sanctions during the election cycle, which basically means for the past two years, that was not going to be in the cards. So I think there's every reason to believe that this will make a difference.

NewsX: 4:48
Professor Nalapat, Trump has spoken about a possible meeting with Putin. What can we expect from this and what actions do we expect President Trump to take within his first few days of office in regard to this conflict?

Nalapat:
Let me tell you quite clearly that in my view these sanctions are not going to make any impact on Russia's war capacity. Ukraine is supposed to have been winning the war right from February 2022 onwards and it has lost people, it has lost territory continuously since then.

5:24
The small incursions that are made into Russia can be mopped up at any time. The reality of the situation is that if oil prices go up, it's a gift to Putin. Putin is very dependent on oil and gas for a lot of the money that he is making and he would be delighted by it. And quite frankly, this war is creating a rift between the West and the rest of the world to the benefit of China. Again, this is-- this war is because of an obsessive focus on Europe on the part of the Biden administration and I'm sorry to say by too many scholars in the United States and in other parts of North America.

6:05
The reality of the situation is, if Ukraine were that important to European security, during all the decades it was part of the USSR, was there an impact on European security? Nothing at all. The fact is, this is a Eurocentric approach to the world, and that approach could have been wonderful in the 17th and 18th, 19th century, but in the second half of 20th century the winds began shifting, and now it is firmly in the Indo-Pacific and firmly the main adversary is no longer Russia but China. By keeping on sounding the war drums against Russia, you are diverting the attention away from China to the benefit of China. So very frankly-- and supposing let's say that Trump comes in, and supposing some people say all right they're going to increase. I mean, Britain and the US are gas exporters; other countries in Europe are importers. They will suffer. The German economy is already significantly weakened. Other European economies have been significantly weakened.

And every single political leader in the West, as Keir Starmer is going to find out in the next election, has been weakened if he has supported the Ukraine war, where you talk about Biden, you talk about Sunak, you talk about Johnson, you talk about Macron, you talk about Trudeau, you talk about any of these people. They've all been weakened, because the people of these countries have more common sense than some of the leaders have to have.

7:40
My point is, this is a trap laid for Donald Trump. This is a very clever trap laid for Donald Trump, a minefield that if he steps on, it will blow to bits any chance of a detente with Russia. And in the view of some of us, the fact is, Russian neutrality during this new ongoing Cold War 2.0 with China is essential. If you don't get Russian support, just as the West got Chinese support during Cold War 1.0, if you don't get Russian support, at least Russian neutrality. And by making it much more difficult to do so because of this obsession with the European country, Ukraine, which frankly makes very little strategic difference to either Europe or Asia or the United States, wherever it goes. I think quite frankly, the Biden, whoever in the Biden administration is behind this. And so far the UK is concerned. Kier Starmer is marching in lockstep with Boris Johnson and Sunak. And if he's going to continue, he'll go the same way.

8:45
Already the Reform Party is gathering speed in Britain. What I understand is, it's got more people than the Conservatives. But the Conservatives also jumped on the Ukrainian bandwagon. And Labour is going to pay a price for it. So I just want to say this war has to be ended now. And if it's not ended, the West is in danger of losing the rest to China, and that is to the benefit of only one country, the present biggest threat to the West, which is China.

NewsX: 9:17
Thank you. Gilbert Doctorow, Russian affairs expert, also joins us. How would you respond to Madame Nalepat's statement there calling this a minefield for the upcoming Donald Trump administration?

Doctorow:
I don't agree. In war, in politics, timing is everything. The timing is based, is useful when you have good intelligence and understand the world around you. The administration of Washington has bad intelligence. It has a defective CIA, defective other intelligence agencies within Washington, and they have been feeding the president and the Congress completely misleading information or disinformation about the conduct of the war. If this measure had been introduced two years ago, it might have had an impact on Russia's ability to conduct the war. However, it is being introduced at a time when Russia is close to dealing a knockout blow to Ukraine.

10:21
We are at the war's end, in terms of Ukraine's ability to defend itself. We are close to a capitulation of the Ukrainian forces. The only possible practical effect of these new sanctions, should they be implemented by the Trump administration, which is questionable, the only possible impact would be to hasten the Russian move for the knockout blow and to motivate Mr. Putin to hasten the war and to finish it up. And it means that these measures have an escalatory impact.

Wars are fought not only on the ground, but by economics. And this economic approach is wrongly timed because of the misinformation, as I said, and because of the cowardice of the Biden administration, which is the other side of the viciousness of this administration. These people, Blinken, Sullivan, and Biden are hateful people, and they think that they are giving a poison chalice to Mr. Trump. But it's only because they're misled. You can fool the other party, but you should not fool yourself with propaganda. And regrettably for them, the Biden administration is subject to its own propaganda.

NewsX: 11:46
Gilbert, I wanted to track back a little bit on this, and I was wondering how ordinary Russians will respond to these sanctions and the feeling in Russia about the war currently.

Doctorow:
To give a certain response to that question, because Russia has been on vacation for two weeks. The Russian news agencies, the Russian prime talk shows, the indications of what the elites around the Kremlin think, are only coming back on air on Monday and Tuesday, after the Russian New Year.

12:21
But I can tell you from the latest news bulletins, it is evident that the Russians appreciate the seriousness of these sanctions, but they expect to muddle through and to continue to prosecute the war. No one in Russia has been enthusiastic for this war. Let us be clear, it is a major war. Anyone who thinks that the fighting forces of Ukraine have not been valiant and have not given it their best effort is mistaken. This is a serious war, the largest in Europe since World War II.

And yet [Russia], acting on their own with minor logistical support from their allies, has beaten back everything that the United States and NATO have been able to throw at it. Ukraine is simply the space in which this war between NATO and Russia is being fought. So the Russians have, in the last several weeks, have increased confidence that they are winning this war and the end is near.

NewsX: 13:33
Professor Arvind Mahajan, I wanted to ask you, Russia currently faces around 13,000 international sanctions. With all these sanctions, how might Russia redirect its exports?

Mahajan:
Well, I think-- I'm not a huge fan of sanctions, because as a generality, I have not seen them work very effectively in most of the cases. And it's unclear to me really how effective these sanctions might be, even though the Department of Treasury has certainly ratcheted up what it has been doing over the last couple of years. So, I mean, frankly, from my viewpoint, our view of this war, to a large extent, is dictated by where we are situated. Clearly, the American view is slightly different than the Russian view, slightly different than the Indian view, slightly different than the Ukrainian view. And we are subject to our own biases and perspectives.

14:38
Unfortunately, we don't really get a clear, unbiased information. None of us get them clearly because it's kind of colored by where we are located and the echo chamber in which we exist. So I think our views on the war accordingly are determined by our position. As a generality, like I said earlier, I don't think sanctions are usually a very effective tool. In this case, a negotiated settlement really is the only solution here. I am not sure, as I said earlier, I'm not sure how vigorously the Trump administration is going to implement and enforce the changes proposed by the Department of Treasury.

15:26
It's also unclear to me how the OPEC countries are going to respond, in as far as changing the supply of oil in the markets is concerned. As was mentioned by someone else, there is enough oil in the market that this was an opportune time to put the sanctions on without the fear that the prices will spike up in a significant way, although we did see some increase in the price of oil yesterday. But it's not going to be impactful as it would have been a couple of years ago when the global supplies were somewhat limited. So the long-winded answer to your clear question really is, one, the jury is out, and two, I don't think these sanctions are going to be the determinant of how the war ends and on what terms it ends. I think these sanctions are a small part of the larger issues which the countries are dealing with to determine how it will be resolved. I just don't see them as breaking the back of Russia, so that it will come running to the negotiating table.

NewsX: 16:33
Professor Gunaratna, I wanted to ask, as the UK and the US and Europe wean themselves off of Russian gas, how might Ukraine benefit from new energy deals or pipelines?

Gunaratna:
Ukraine certainly is challenged at this point. So my personal view is that it is so important for there to be a resolution to this conflict, because the threats are going to spread. Already Europe is witnessing so much of threats coming from Russia. And of course, Ukraine itself is mounting attacks deep into Russia.

So this escalation is going to cripple the economy of Europe, Ukraine and Russia. It's going to create a big conflict and eventually the threat is going to spread beyond Ukraine. That is why I said that it is a great opportunity for the new administration to pursue a different path.

NewsX: 17:44
Daniel Wagner, I want to come to you on this next one. Let's say this war does end after Trump takes office. How can the US and the UK assure that Ukraine won't be threatened again?

Wagner:
Right, well, of course, we have to get to that point before we can have such a discussion. And a lot of people are very skeptical that this is actually going to be resolved quickly. It may take quite a few months to do so if all the parties are willing to go to the table. But at the end of the day, NATO is in a much better position than it was to protect itself.

It's much better funded. It's much better armed. And Ukraine itself, should it ever become a member of NATO, ultimately would be the best-experienced and best-armed country of NATO among them. So I think part of it will be to keep NATO armed, somehow keep it well funded in the recovery process, and for the NATO countries to step up to the plate and devote even a greater percentage of their GDP to NATO going forward. Two percent isn't going to do it any more.

And as we know, Trump has talked about ramping that up to 5%. I don't even think the US is gonna reach that point. So it all remains to be seen, but I do think Europe is in a much better position than it was previously.

NewsX: 19:19
Professor Nalapat, did these sanctions strengthen Russia's push to build closer ties with countries like China and India?

Nalapat:
Well, I'm afraid the Russians have been pushed completely into the Chinese camp, thanks to these sanctions and thanks to this Ukraine war. And may I point out very, very, very respectfully that NATO has lost every single war it has fought. Frankly it has hardly fought a war in the European continent. There was no kinetic war between the USSR and the US and European countries. You take Libya, you take Iraq, you take Syria, you take Afghanistan, the NATO went in there and created a royal mess, a complete royal mess. So very frankly in Asia we are not very, what do I say, admiring of the great capabilities of NATO in conducting operations in actuality rather than computer simulations or battlefield simulations.

20:31
I think we're very frankly, the record in Libya, the record in Afghanistan, the record in Syria, the record in Iraq, that all these records speak for themselves. I don't know who is going to argue with these records. I want to say very clearly, we need to shift the focus back to the Indo-Pacific. We need to shift from Europe, we need to shift the focus back from Ukraine, I mean from Russia to China. And that is the reality that we are confronting today. So quite frankly we can do chest thumping about the immense strength of NATO. But try telling that to the people of Libya, to the people of Iraq, the people of Syria, to the people of Afghanistan and you may hear a bit of polite dissonance coming from them. Thank you.

NewsX: 21:23
Gilbert Doctorow, if Russia is shut out of Western markets, how might this reshape the global economic order, especially with Chinese involvement?

Doctorow:
Western markets, since shortly after the start of this special military operation in February 2022, that's not a new development. They have found various ways of circumventing the sanctions and finding new markets. That took them perhaps four to six months from the start of the war till they found their feet and resolved the challenges that the United States was posing.

22:07
Those solutions are what are now being attacked by the latest sanctions that Yellen and others in the Biden administration have cooked up. I have in mind the question of the black fleet, the 150 ships or whatever that are being used by Russians to evade the sanctions concerning insurance requirements and other requirements on vessels carrying Russian oil around the world. They have succeeded, and I think they will be equally inventive in finding new solutions to counter the sanctions that are being produced. But the more important thing is not Russian evasion of the sanctions. They will be, as your first speaker mentioned, it will be the readiness and the ability of the incoming Trump administration to implement and to execute the intentions of these sanctions. And I don't believe that the interest in Mr. Trump is to do that.

23:12
On the contrary, as I said a moment ago, full implementation of these sanctions, if they were to have the impact, the negative consequences for Russian exports of petroleum, would be, would push us in an escalatory direction. One has to remember that when countries are pressed in an existential way, as Japan was before World War II, what starts out economic becomes kinetic. And therefore the ultimate result, if Mr. Biden's measures were to be successful, which they will not be, would be to escalate this war in the direction of a nuclear war. For that reason, I think we all should condemn what Biden has done. It is, as I said, a poison chalice and it comes from people who know no better.

NewsX:24:12
We have run out of time. That is all we have time for, unfortunately. Thank you very much [to] all our guests for joining us today in this discussion. We will continue to bring more news updates from the war and the rest of the world. Thank you for watching NewsX,