The grim truth is that Putin is winning the economic war

The grim truth is that sanctions are not working the way we hoped. Putin is progressively losing his Western markets, but at this stage it doesn’t matter much, as soaring prices provide compensatory rewards. At the same time, sanctions have contributed significantly to the politically destabilizing decline in the cost of living in the Western world. Putin can rightly claim that he is winning the economic war, even if the physical one is in a stalemate.

The G7’s intention is simple enough – to reduce the amount of money going to Russia, while counteracting one of the main causes of rising inflation. But even if it were possible to impose such controls internationally, the long-term consequences for supplies would still be deeply negative.

A number of developers have already threatened to stop promised new investments in North Sea oil and gas due to the imposition of unforeseen profits on Britain. Limiting the price would have almost the same effect, but on a larger scale, which further undermines the drive for greater energy security.

Even before the pandemic, politically motivated net zero targets caused a growing disruption in oil and gas investment.

The collapse in demand for hydrocarbons during the pandemic has further reduced the investment needed to keep things going, not to mention meeting the additional demands that are now being placed on the industry to provide alternatives to Russian energy.

A few weeks ago, Biden’s White House called on refineries to fulfill their “patriotic duty” by expanding their capacity and reducing their prices. The obvious contradiction here remained completely unrecognized. You are unlikely to increase supply if you try to control the price as well.

Russia, of course, can accept that a limited price would be acceptable if it means that Europe and other international markets remain open to its exports. But that would just get us back to where we were, as sponsors of an illegal war that we also condemn. Either way you look at it, the idea of ​​a price cap just doesn’t match.