Moscow is coming under direct drone attack, the Russian economy is creaking, patriotic bloggers are ever more apocalyptic in their predictions of military disaster and evidence is piling up that Russia’s elites are becoming seriously disillusioned with the war and Vladimir Putin himself. Is this the moment for Britain to desert Ukraine by easing sanctions and refusing to commit more money to Kyiv’s military?
Last week, the British government issued licences for the import of gasoline products from Russia refined in a third country. No. 10 also approved licences for British companies to continue to service tankers carrying Russian liquefied natural gas (LNG). And Britain, in common with other major European states, refused to sign up to a plan drafted by Nato Secretary General Mark Rutte to commit 0.25 per cent of GDP to funding Ukraine’s war effort. These, on the face of it, appear to be serious betrayals of Sir Keir Starmer’s promise earlier this year to his partners in the Coalition of the Willing to ‘keep up the pressure on Russia’.
The fear of crashing our economies by sanctioning Russia too harshly has been the Kremlin’s biggest enabler
The truth is more complicated. Downing Street points out that, unlike most European countries, Britain banned the import of all Russian oil products regardless of where they’re refined last October, and the import licences are temporary measures to prevent a supply crunch on aviation fuel. And, again unlike Europe, Britain banned the import of Russian LNG in 2023 – though British ports and tankers still handle major shipments destined for the continent. As for the funding, Britain remains more generous with financial and military aid than many European countries. Now the US has stopped such aid, the UK is Ukraine’s fourth-leading bilateral donor in absolute terms, and has committed £3 billion annually through to 2030.
Yet Britain’s support for Kyiv’s war effort is still constrained by three major fears that have hampered western sanctions since Putin’s invasion in 2022. One is of endangering world energy supplies, and political and economic upheaval in the West as a result. Another is that direct western involvement in the conflict could mean serious escalation and even a nuclear exchange. The third is of precipitating a catastrophic collapse of Russia that could lead to an even more dangerous and unpredictable regime than Putin’s.
In practical terms, it’s the fear of crashing our own economies by sanctioning Russia too harshly that has been the biggest enabler of the Kremlin’s war machine. Since the beginning of the war, the EU has paid at least $280 billion for Russian energy, far more than Europe has given Ukraine in military and economic aid. In the first months of the war Europe claimed to be piling on sanctions pressure. Yet Russian gas flowed freely (apart from various stoppages from the Russian side) through the Nord Stream pipeline before it was blown up in September 2022 in a brilliant Ukrainian special operation. To this day, despite 20 sanctions packages, there is no restriction on Russian LNG – and indeed the closure of the Strait of Hormuz has led to a 16 per cent increase in imports by European countries despite a nominal EU pledge to ban the trade from the end of 2027.
Britain is a standout in refusing Russian gas – but that’s only because we never imported much anyway, and have alternative supplies from Norway. In any case Britain remains integral to the trade as much Russian LNG is docked and re-gasified in Milford Haven and the Isle of Grain for re-export to Europe, while a UK-based shipping company, Seapeak, transported 37.3 per cent of all cargo from Russia’s Yamal LNG project in 2025, making it the single largest carrier for the Kremlin’s flagship Arctic export terminal.
But even if the UK and EU were to attempt to truly crack down on Russian energy exports, there’s a more fundamental practical problem than finding alternative supplies. Just as with carbon emissions, there’s little point in attempting restrictions if most of the world doesn’t follow suit. Oil, like any liquid, will find a way through all but the most watertight barrier – whether through tanker-to-tanker transfers or attestation fraud with shipping or refinery paperwork. Russian gas also finds its way to Europe via Turkey mixed with (and effectively laundered as) gas from Azerbaijan. China, India and much of the Global South are happy to ignore western sanctions and take Putin’s hydrocarbons, especially at a discount. And the West’s only economic supergun – the threat of secondary sanctions by the US on countries importing Russian oil and gas – would spark a global trade war.
On the military side, Britain has taken the lead in supplying cruise missiles such as the 250km-range Storm Shadow, but has largely restricted Ukraine to using them against targets in occupied territory, not those on Russian soil. Removing this restriction would allow Ukraine to strike airfields, logistics hubs and command centres from which attacks are launched against Ukrainian cities. But the fear is that Putin would interpret deep strikes on his territory as direct western co-belligerence and respond with asymmetric attacks on UK infrastructure, cyber operations and nuclear signalling. There is also sustained US pressure on London not to act unilaterally on this – despite a period at the end of the Biden administration when Washington briefly lifted limits on attacking Russia with US hardware.
In the event, Ukraine seems to have solved this capacity deadlock on its own, and in triumphant style. Over recent months Ukrainian domestically produced drones and cruise missiles like the Flamingo have started hitting targets up to 2,000km inside Russia almost daily. The vital ‘land bridge’ between Russia and Crimea has also been brought under Ukrainian fire control, with footage emerging of a highway littered with burned-out trucks. The Russian-occupied port of Sevastopol has long been unusable by its Black Sea fleet, and border areas of Russia from Rostov to Kursk are essentially as much of a war zone as western Ukraine. US, UK and European missiles – effective but wildly expensive – have been superseded by Ukraine’s much better and cheaper versions.
Can London’s role as a global financial hub be used to put further pressure on the Kremlin? To a large extent, that already happened when most Russian companies were excluded from listing on the London stock exchange as early as 2014, when Putin annexed Crimea. Similarly, access to London’s capital markets was severely curtailed for Russian companies a decade ago, while BP walked away from its stake in Rosneft in February 2022, taking a $24 billion haircut as a result. And unlike Austria’s Raiffeisen bank or Italy’s Unicredit, British retail banks have not had much exposure to the Russian market.
What about the Kremlin’s cash? More than €289.5 billion in Russian assets has been frozen by western countries since the invasion, with the EU holding €209 billion. But Europe has refused to formally confiscate them for fear of sparking a run to the exits by other sovereign assets holders such as Saudi Arabia and China. The UK, by contrast, holds just £2.26 billion in Russian Central Bank sovereign assets – a sum Britain had already de facto confiscated by contributing that cash as its share of the G7 loan to Ukraine backed by frozen asset proceeds.
That leaves some £28.7 billion in ‘Russia-connected’ assets registered by the Treasury’s Office of Financial Sanctions Implementation. This doesn’t belong to the Kremlin but to sanctioned Russian companies and businessmen habitually referred to as ‘oligarchs’. The term is a throwback to the 1990s when wealthy tycoons really did have influence over the Kremlin. But that hasn’t been the case for over 20 years. In the event, successive UK governments have trumpeted getting tough on individual Russians as a substitute for getting tough on Russia.
Starmer is no exception, announcing in December that he was going to force Roman Abramovich to donate the frozen proceeds of his sale of Chelsea FC to Ukraine. Earlier this month the former Everton director Sarvar Ismailov lost his High Court challenge against the Foreign Office’s decision to keep up sanctions against him due to his billionaire uncle’s supposed ties with Putin. The uncle, Uzbek-born Alisher Usmanov, owns shares in major metals and telecom companies in Russia, and has ties to Beechwood House in Highgate (estimated at £48 million) and the 16th-century Sutton Place estate in Surrey, both currently frozen by sanctions. But Mr Justice Pushpinder Saini’s ruling that it was ‘reasonable to assume’ Ismailov could ‘exert pressure’ on his uncle and the decision to continue sanctioning him was ‘plainly connected’ with the objectives of the sanctions regime is based on a false assumption. The idea that punishing Russian businesspeople will somehow dissuade Putin from pursuing his war on Ukraine has long been disproved.
The idea that punishing Russian businesspeople will dissuade Putin from war has long been disproved
Indeed, in some ways the personal sanctions policy has been doing Putin’s work for him, forcing wealthy Russians who’d tried to escape to Europe back to their home country. It’s also reinforced the Kremlin narrative that the West’s claim to stand for the rule of law is a sham, and that British justice will penalise people for their nationality or even the sins of their relatives if the state so commands.
What, then, is left to do that will genuinely punish the Kremlin and help Ukraine? Reducing our oil and gas dependency by reopening shuttered nuclear power stations, building new ones and scrapping net-zero targets would be transformative, though politically improbable. More aggressive enforcement of sanctions-evading tankers in UK waters would at least increase the cost to the Kremlin of exporting its oil. Putting British and European boots on the ground would likely give Putin an excuse to escalate against ‘foreign aggression’. But major investment in Ukrainian miltech companies would be of greater practical use than sending more overpriced western-produced kit. And sending more cash to prop up Ukraine’s devastated finances would be the greatest help of all. The problem is that neither the UK nor the rest of Europe can afford to do so.
Comments