Putin turned energy into a geopolitical weapon: How to deprive the Russian Federation of oil revenues – Ermak

The economic growth and so-called “stability” of Russian leader Vladimir Putin’s regime was a direct result of high energy prices, which the Kremlin leader turned into a geopolitical weapon. This is the opinion of the head of the Presidential Office of Ukraine Andriy Ermak, writing in a column in European Pravda.

He states that the USSR and today’s Russia, which are trying to re-establish the so-called “greatness” of the empire, are united in one thing: the income obtained from the sale of oil and oil products for export purposes. However, Ermak focuses on the fact that the Russian economy can no longer recover, that Russia’s oil revenues may become a trap for itself.

collapse of the USSR

The head of the OP recalls how the USSR became one of the world’s energy exporters in the 1970s, taking advantage of the conflict between Arab countries and the West. The Kremlin then predicted the consequences would be the invasion of Afghanistan, attempts to suppress democratic movements, especially in Poland, etc. began to actively finance the Soviet military-industrial complex.

According to Ermak, the beginning of the end of the communist empire was 1986. Just a day ago, the newspaper of the Soviet government, Izvestia, published statistical data, which noticed the decline in oil production, which, of course, also affects the growth of national income. In fact, according to the author, these were still temporary difficulties, but difficulties in the oil industry were already making themselves felt.

“The problem was that the old fields were being depleted and to increase production the USSR needed Western technologies and Western money,” Ermak notes.

Important

At the same time, the author reminds that 60% of the foreign exchange income of the USSR in the mid-80s of the last century came from oil exports, despite the fact that prices on the world market began to fall.

The alleged power of the USSR was “broken” by two world leaders – US President Ronald Reagan and King Fahd of Saudi Arabia – who found mutual understanding in countering the Soviet threat to world security.

“The plan was simple. An increase in the price of a barrel of oil by just 1 dollar per year brought 1 billion dollars to the USSR, while a decrease of 10 dollars led to a loss of 10 billion dollars in foreign currency,” explains Ermak.

Both major players in the oil market coordinated their actions: Saudi Arabia reduced oil prices by rapidly increasing production; Meanwhile, the United States increased production and imposed an embargo on technology exports.

“The money needed to promote global influence through force and other hybrid methods has run out… What happened next is well known. The 1987 agreement to eliminate medium- and short-range missiles. The withdrawal of Soviet troops from Afghanistan, the fall of the Berlin Wall, The victory of Solidarity in Poland and the Velvet Revolution in Czechoslovakia in 1989. The Treaty on Conventional Armed Forces in Europe in 1990. American humanitarian aid in Moscow – Bush’s chicken legs. And finally, the USSR in 1991. “The collapse of the Soviet Union,” said Ermak, listing all the troubles of the Soviet empire.

And he added that the USSR could not be saved even with the world’s largest nuclear arsenal.

World domination in petrodollars

Recently, energy resources in the Russian Federation account for about 60% of total exports. Moreover, as the OP chairman noted, these exports also accounted for 40% of the federal government’s revenues.

“And if in the USSR budget direct oil and gas revenues did not exceed 10-11%, then in Russia they already exceeded 50% in 2011-2014. And this does not take into account some revenues from energy industry companies” said. adds.

Therefore, Ermak states that it is time to dream of world domination. And it was the incredible revenues from energy exports that convinced the Kremlin’s owner that the world would turn a blind eye to Syria, Georgia and the full-scale invasion of Ukraine, he adds.

“These hundreds of billions of annual oil and gas revenues have fueled the Kremlin’s imperialism and revanchism. Herein lie the roots of Moscow’s official ultimatums for the de facto surrender of NATO and for Russia to regain control over all of Eastern Europe,” the president says. from the OP stating that he still continues to feed the Russian military-industrial complex and Putin’s new aggressive plans.

How can you prevent the threat from the Russian Federation?

According to Ermak, sanctions pressure undoubtedly has an impact, but sanctions “need to be harsh and sudden so that Moscow does not have time to adapt to the pressure.”

The OP chief, who chairs the international sanctions group along with Michael McFaul, director of the Freeman-Spogli Institute for International Studies (FSI), believes that all restrictions from the EU and G7 countries have cost the aggressor country $113 billion in export earnings since February 2022. In 2023, the Russian budget lost almost a quarter of its revenue compared to 2022. However, as Yermak emphasized, they still reached 102 billion dollars, a significant part of which is used to finance Russia’s military budget.

The author notes that ways to solve the problem may be as follows:

• first of all, this is a reduction of the price ceiling to $ 30 per barrel;
• continued restriction of access to technologies, especially through sanctions against intermediaries;
• market pressure increased.

However, according to Ermak, this cannot be achieved without the leadership of Saudi Arabia and the United States.

“Increasing production, as in the 1980s, will help restrain not only Moscow but also Tehran. This is the key to peace not only in Europe but also in the Middle East. And most importantly, cheap fuel will give Iran a new and powerful impetus “It will ensure the economic development and continued global leadership of the United States and its allies. So this is not about lost profits. This is about an investment in security and progress. Isn’t it worth it?” – indicates the OP’s president.

At the same time Focus He wrote that an American oil refinery in Delaware imported 10 thousand barrels of Russian oil by taking advantage of a loophole in the law and bypassing sanctions.

However, it was also reported that: IMF explains how Russian economy is deteriorating. According to IMF Managing Director Kristalina Georgieva, the Russian economy is going through a very difficult period due to the outflow of people from the country and limited access to technology.