An extraordinary feature of the Ukraine crisis is the way it has imperiled three other “global goods”: efforts to address climate change, energy security, and poverty. Under the impetus of the total economic and financial war against Russia, as the French foreign minister described it, the West is now committing to a set of measures that threaten these other objectives, making them secondary or tertiary before the all-commanding need to do harm to the Russian economy. The global food crisis was precipitated by Russia’s war against Ukraine, as it has disrupted food and fertilizer shipments from the Black Sea, but the total economic war against Russia (TEWAR) looks set to deepen these multiple crises, converting temporary disruptions into near-permanent handicaps.

Energy security and climate change pose a set of quandaries that are very different from traditional geopolitics, and yet for which traditional geopolitics have been of vital importance. Vast interdependencies populate the subject. Energy production is thirsty, often intensely reliant on scarce freshwater. Climate change will make some areas far more susceptible to drought or harsh storms, imperiling food supplies. Then, too, the price of oil and natural gas is closely linked with food prices. Historically, crisis in the one domain has meant crisis in the other.

There has been no political consensus in the United States on how to approach this daunting array of problems. The Right became more and more convinced that climate science was a hoax. The Left, by contrast, concluded that oil companies were evil. Let us begin by casting a plague on both their houses and stipulating the following: the danger of climate change is real and needs zealous attention, but attempts to decarbonize the economy also need to focus closely on energy security, which is important for both national security and the well-being of the world’s billions. A sensible policy must address both; the TEWAR threatens to derail both.

Embargoing Oil

The grave potential of the TEWAR to imperil both energy security and the climate change agenda has as its centerpiece today the ongoing standoff over imports of Russian gas and oil in Europe. Hawkish voices in Europe and America, such as the International Working Group on Russian Sanctions at Stanford University, want to enact “a complete ban and embargo of Russian crude oil, oil products, gas, and coal, banning both import and export flows to and from the democratic world, while minimizing the leakage through secondary sanctions.” Germany is now committed to supporting an embargo on Russian oil imports if the EU members agree; its new energy report says that “the end of dependence on Russian crude oil imports by late summer is realistic.” German chancellor Olaf Scholz has been far more guarded in his willingness to move at forced march speed to reduce Russian imports but appears to be on board with the general objective.

How far the West will proceed with its announced plans remains in question. While the United States appeared fully supportive of harsh measures in the beginning stages of the embargo, Secretary of Treasury Janet Yellen noted on April 21 that “we need to be careful when we think about a complete European ban on, say, oil imports." Such a ban would raise global oil prices "and, counterintuitively, it could actually have very little negative impact on Russia, because although Russia might export less, its price it gets for its exports would go up."

Yellen’s remarks nicely encapsulate what has become the fundamental purpose of Western policy, which is to find a way of reducing Russia’s revenues “without harming the entire globe through higher energy prices.” That ideal, however, is very unlikely to be accomplished. Just about every initiative on which the administration embarked in its oil diplomacy has met with failure. Russian production, to be sure, is estimated to have fallen from 11.1 million barrels a day in February to 9.76 mbd in April. The International Energy Agency (IEA) projects that it will fall by a quarter. The sought-for increases in global supply, however, have not been forthcoming. The U.S. approach to Venezuela, Saudi Arabia, Qatar, the UAE, and Iran has varied according to circumstance, but the outcome has been pretty much the same: frustration. No deal with Venezuela, which specializes in Subprime Carbon Assets, has yet been achieved. Crown Prince Mohammad bin Salman won’t take a phone call from President Joe Biden and prefers to coordinate OPEC+ policy with Russia. Qatar reminded bright-eyed U.S. negotiators, eager to send LNG to Europe, that it had LNG contracts with Asia that are long-term and inviolable. The hoped-for revival of the nuclear deal with Iran, which would bring an extra 1 to 1.5 mbd on the global market, appears caught in the crossfire between what is necessary to close with the Iranians and what can pass muster at home.

In the days after the Russian invasion, the oil price exploded by 35 percent, but on April 29 was only 14 percent above the level reached on February 23, the day before the war. Two factors—the virus-induced sudden lockdown of 400 million people in China and the promised release of a million barrels a day from America’s Strategic Petroleum Reserve (SPR)—have quelled the beast thus far, but the danger remains. The prospect of an oil shock clearly rises the more the United States and the West are successful in their primary aim of reducing Russian revenues. In effect, the left hand is trying to offset what the right hand has done and is doing. In this contest, the right hand appears to be winning.

The short-term fix of releasing 180 million barrels of oil from the SPR will definitely help out in 2022. What about 2023, when the SPR is depleted by half? It was the danger of disruptions in the Persian Gulf that provoked the creation of the SPR in the first place. With the prospects for reviving the Iran nuclear deal dimming quickly, that danger has increased, not diminished. A failure to revive the Joint Comprehensive Plan of Action inevitably puts force back in play for the United States, a collateral effect of which is a heightened threat of tit-for-tat retaliations in the oil sector. This year’s release of oil increases energy security in the short run but decreases energy security once the SPR is depleted.

The oil price resulting from a shutdown of Russian energy exports, such as has been called for by the Stanford experts, has been variously estimated by observers. One philanthropist, the head of the largest U.S. shale oil company, told the Financial Times shortly after the outbreak of war that oil would be $200 a barrel if Russian exports were cut off. He was all for it, out of moral principle. In the stipulated circumstance, of course, his company’s stock price would fly like a Tesla on a SpaceX rocket. Others have pegged the likely oil price, in the event Russia were put out of the oil market, at more like $300 a barrel. No one can say for sure what gyrations would follow, but commodity markets are capable of spectacular moonshots if faced with a 5 percent reduction in supplies. When Arab states reduced oil exports by 5 percent in 1973 and 1974, the result was a nearly four-fold increase in prices.

Do the interests of the Global South figure in the moral accounting of the advocates for harsh sanctions? It would not seem so. Consider, for example, the position of India. The United States scowled when India did a rubles to rupees settlement for Russian oil at a 20 percent discount to world prices, but thus far Indian imports of Russian energy only constitute 1 to 2 percent of its total. The price of oil is a big deal to India. As Mihir Sharma noted in India’s Business Standard, “If oil remains above $70 a barrel for months, the rupee will collapse, the government will run out of spending money, inflation will skyrocket and the country will have to start worrying about a balance of payments crisis.” By seeking to drive Russian exports from the markets, U.S. policy strongly encourages oil shortages and price hikes; in a nation of 1.4 billion people, that might prove a more pressing concern than getting on “the right side of history,” as India’s leaders were urged to do by White House spokesperson Jen Psaki.

The United States has leverage with India and might bend Delhi to its will in certain respects, but it’s easy to understand the resentment simmering beneath the surface. Under almost any circumstances in the next several years, Europe will import far more energy from Russia than India; why then should India live under the threat of U.S. sanctions? For decades, the United States has pressured India from developing close economic ties with Iran, the cheapest source of natural gas for its growing consumption. As Sharma points out, “The U.S. spent most of the last decade trying to convince India not to buy Iranian oil, only to try to get Iranian shipments back on the market as soon as the focus shifted to Russia.” In the game of pipeline geopolitics over the last thirty years, the key U.S. objective has been to thwart, first, anything that would benefit Iran, and second, anything that would benefit Russia. The only constant in U.S. policy is that India’s energy interests have been sacrificed for America’s geopolitical objectives, though Russia has now surprisingly outrun Iran as the nation to be most sanctioned.

On any accounting, one point seems clear: the more Western policy approaches the cutoff of Russian oil exports pushed by the hawks, the more perilous the outcome for most developing countries.

Gas Pains

The way that geopolitics trumps both energy security and the climate agenda is especially on display in the controversy over German imports of natural gas from Russia. Germany faces a choice between a brutal blow to its basic industries and the subsidy of the Russian war machine, estimated at approximately a billion euros per day. The drama of whether Europe will comply with Russian president Vladimir Putin’s terms, requiring payment in rubles, has been brought to a new stage by Russia’s decision on April 27 to stop gas exports to Poland and Bulgaria. The game of chicken is likely to go on. Even if a temporary resolution is reached, a collision disastrous to both Russia and EU will remain a standing possibility. Seldom noted in the discussion is that Russian gas obviously makes the most sense for Europe from the standpoint of both the climate agenda and energy security. All the alternatives are far more costly and, if reductions in consumption are implemented suddenly, pose a mortal threat to German industry.

Russia shut down gas exports to Poland and Bulgaria because both countries did not comply with the payment terms that Putin set down earlier in April. The technical details are complicated, but the basic issue is simple. Does Europe intend to pay for the gas it receives from Russia in a way that actually puts the proceeds into Russian hands? Once the West froze Russia’s central bank assets—which represented, in effect, the money that had been paid to Russia for energy exports in the past decade—there was and remains no prospect that Russia would accept an escrow-like arrangement, as that would subject present and future payments to seizure. While some companies have opened the requisite accounts, the European Commission (EC) announced on April 28 that “complying with [Putin’s] decree is a breach of sanctions.”

The European Union is not taking these steps for the purpose of ensuring energy security. It is sacrificing energy security for the purpose of inflicting harm on the Russian economy and war machine. This is a case not of the producer refusing to sell, but of the consumer unwilling to pay—a strange inversion of the ways in which Germany and Europe’s dependency on Russian gas were previously considered. In the past, the fear was always that the exporter would cut off exports, not that the importer would cut off imports. It strains belief that Germany would actually go forward on a path that would “massively damage” its domestic industry and have grievous effects on the rest of the world (what replaces the fertilizer made from natural gas by German firms?), but the German government faces a lot of pressure to do just that.

There are larger implications brewing for both the climate agenda and U.S. energy security. Russia in the recent past exported 155 billion cubic meters (bcm) a year of gas to the EU, with Germany by far the largest customer. The United States has promised to add 15 bcm this year, but the source of the gas and what counts as a benchmark are unclear. Analysts at Goldman Sachs warn that there’s little ability to increase U.S. LNG exports between now and 2025. Longer term, the EC promised to ensure, “until at least 2030, demand for approximately 50 bcm/year of additional U.S. LNG.” Such a commitment would require massive investments in new LNG facilities, floating and fixed, and would tie America’s domestic gas market to Europe, at the expense of U.S. consumers. That could be a very big deal—a hidden cost totally obscured in the sanctions debate—as Europe’s natural gas prices today (at $30 per mcf, or 1,000 cubic feet) are four times higher than average U.S. prices (at $7.50 mcf). However, the European promise to ensure demand of 50 bcm/year only until 2030 calls into question the economic rationality of such huge investments, which require long-term contracts of at least twenty years to be viable.

Germany’s stark dependency on Russian gas, at 55 percent of gas imports in 2021, is partly owing to the premature closure of its nuclear plants—also an unwise decision from a climate perspective—but mostly to geographical propinquity and the need for base power. Natural gas works better than coal or nuclear power to solve the intermittency problem posed by wind and solar, but the less gas there is, the more coal will be burned, especially if the energy transition is forced by supply shocks of the sort now impending. Because Russia’s gas infrastructure is leaky, substituting LNG from the United States may be a wash from an emissions standpoint, but addressing the former problem while diminishing dependency on Russia over time would be far less expensive and more climate-friendly than building a new LNG infrastructure in Europe. That’s what EU leaders thought back in 2018 when the Trump administration hounded them to buy more U.S. gas; apparently, they’re now all-in.

From a planetary perspective, the idea that fog-ridden Germany should cover itself with solar panels, and that equatorial regions should burn coal, does not compute, but the effect of the U.S-EC plan would be to encourage precisely that outcome. If Europe enters the LNG market in a big way, it would price developing countries out of that market; their logical alternative is to burn more coal in the long run, as Europe is doing in the short run. Notice, too, that in order to build solar at anything other than ruinous prices, Germany would have to rely on suppliers from China, which makes more than 60 percent of the world’s solar panels.

In the real world, neither energy security nor climate goals can be achieved unless regimes that are considered despotic or odious in certain respects are part of the solution. That is an unwelcome reality, but it is the reality. For the last decade, the main focus of the U.S. national security state has been Iran, Russia, and China; each, as it were, successively became for a time the biggest threat or was subject to the largest moral panic. For Iran, it was the threat its putative nuclear weapons program posed to Israel, Saudi Arabia, and the United States; for China, because of slave-labor camps in Xinjiang; for Russia, because of its aggression against Ukraine. Along the way was the moral revulsion felt toward Saudi Arabia after the murder of Jamal Khashoggi (its activities in Yemen generally arousing far less attention). Each of these episodes produced a demand for outcasting, a form of geopolitical shunning via sanctions. But it turns out that outcasting everybody is impracticable because it leads to self-harm, so the moral indignation that was on the front burner in years past has to be placed on the backburner now. In effect, the new hard-line against enemy number one means in practice a soft line toward enemies two, three, and four. What tangled webs we weave in seeking to reorder the world economy via comprehensive economic sanctions.

Dead Ends

The TEWAR looks toward a large-scale reorientation of the global trade in energy in order to punish Russia. It appears increasingly evident that it holds peril to a range of other global goods. The economic war is most unlikely to affect the outcome of the Ukraine War, but it does seem likely to produce outcomes that will prejudice energy security and the climate agenda, while falling hardest on the world’s poor. In pursuit of weakening the Russian economy, it in effect imposes a stagflationary tax on the entire world. Unlike normal taxes, the West doesn’t collect any cash from its suborned subjects, but, unlike taxes in the West, these are regressive, not progressive. The more successful Western policy is in restricting Russian supply, the more the tax will mount.

Advocates of harsh sanctions against Russia model their proposals on the U.S. sanctions imposed on Iran. But those sanctions played out in the 2010s against the backdrop of prolonged weakness in oil markets, a situation that produced the sharp cutbacks in investment that have contributed to today’s shortages. To apply the same methods against one of the top three oil producers in the world, when energy markets overall are extremely tight, is a dangerous gambit. What worked in the bust is unlikely to work in the boom.

Much of the disruption in food supplies is directly attributable to the Russian invasion of Ukraine, responsibility for which falls on Putin. But the blockade imposed by the West in response promises to aggravate these effects, increasing the dangers posed by badly elevated and unaffordable prices for food and energy, with potential for serious unemployment arising from the further disruption of supply chains. The longer the standoff runs, the larger these consequences will be, yet the prospect of a peace settlement in Ukraine that leads to the lifting of the sanctions appears utterly remote at this time. The Biden administration dislikes these consequences and wants to steer away from them, but it can only do so by reconsidering its total economic war against Russia. And there is little sign that it is willing to do so.

David C. Hendrickson is President of the John Quincy Adams Society and the author of Republic in Peril: American Empire and the Liberal Tradition (Oxford, 2018). His website is davidhendrickson.org.

Image: Reuters.