The U.S. holds immense leverage over Russia\u2019s economy and ability to continue waging war on Ukraine, but President Donald Trump has backed off from earlier warnings that lack of progress on a ceasefire would result in harsh penalties for Moscow.<\/p>\n
Trump and Russian President Vladimir Putin ended their highly anticipated meeting in Alaska on Friday without a deal<\/a>. On Saturday, Trump shifted his stance toward reaching a more comprehensive peace agreement<\/a> between Russia and Ukraine, mirroring Putin\u2019s position, rather than a ceasefire. <\/p>\n He also reportedly backed Putin\u2019s idea<\/a> for Ukraine to give up territory it holds in exchange for a Russian promise that it won\u2019t attack again.<\/p>\n That marked a big swing from his rhetoric leading up to the Alaska meeting, as he threatened \u201cvery severe consequences<\/a>\u201d for Russia if Putin didn\u2019t agree to a ceasefire. <\/p>\n When asked why he didn\u2019t follow through, Trump said he would hold off on any new penalties and suggested the threat remains on the table as diplomacy plays out.<\/p>\n \u201cBecause of what happened today, I think I don\u2019t have to think about that now,\u201d he told Fox<\/a> News. \u201cI may have to think about it in two weeks or three weeks or something, but we don\u2019t have to think about that right now.\u201d<\/p>\n Trump had previously warned Russia\u2019s oil sector could face secondary sanctions. Oil and gas generate the bulk of the Kremlin\u2019s revenue, and the U.S. could exploit this critical vulnerability.<\/p>\n In particular, cutting off the \u201cshadow fleet\u201d of tankers that deliver Russia\u2019s oil under the radar would send the war economy into a \u201cdeep financial crisis,\u201d according to Robin Brooks, a senior fellow at the Brookings Institution and former chief economist at the Institute of International Finance.<\/p>\n After the Biden administration sanctioned nearly 200 ships in January, just before Trump returned to office, their activity collapsed, he pointed out in a Substack post on Saturday.<\/a> <\/p>\n But there are 359 more ships that have already been sanctioned by the European Union or United Kingdom, but haven\u2019t been targeted yet by the U.S.<\/p>\n \u201cSanctioning these ships would be a hammer blow to the Russian war machine,\u201d Brooks wrote. \u201cThere would undoubtedly be a sharp fall in the Urals oil price, reducing the flow of hard currency to the Russian state, and the Ruble would most likely depreciate significantly.\u201d<\/p>\n Meanwhile, foreign policy expects have called the Alaska meeting a success for Putin as he was able to avoid severe consequences from Trump while also buying time for his military to make more battlefield gains in Ukraine.<\/p>\n But Melinda Haring, a nonresident senior fellow at the Atlantic Council\u2019s\u00a0Eurasia Center, also noted that Trump has significant leverage over Russia.<\/p>\n \u201cLet\u2019s hope that Trump sees through Putin\u2019s endless appetite to talk and tires of the Russian dictator\u2019s pseudo-historical lectures,\u201d she wrote in a blog post<\/a>. \u201cTrump can squeeze the Russians; he seems to forget that the United States holds the cards, not Moscow.\u201d<\/p>\n Oil and gas revenue tumbled 27% in July from a year ago, and Russia is\u00a0running out of financial resources<\/a>\u00a0as war-related spending deepens its budget deficit.<\/p>\n The National Wealth Fund, a key source of reserves, has dwindled\u00a0from $135 billion in January 2022 to just $35 billion this past May and is expected to run out later this year.<\/p>\n \u201cRussia\u2019s economy is fast approaching a fiscal crunch that will encumber its war effort,\u201d economist and Russia expert Anders \u00c5slund wrote in a\u00a0Project Syndicate\u00a0op-ed<\/a>\u00a0last week. \u201cThough that may not be enough to compel Putin to seek peace, it does suggest that the walls are closing in on him.\u201d\n<\/p>\n