Working paper

Cutting Putin’s energy rent: ‘smart sanctioning’ Russian oil and gas

Infrastructure bottlenecks prevent Russia from selling all the oil it wants to bring to market, even at lower prices.

Publishing date
28 April 2022

In the wake of the Russian aggression against Ukraine, major sanctions have been imposed by Western countries, most notably with the aim of limiting Russia’s access to hard international currency. However, Russia remains the world’s first exporter of oil and gas, and at current energy prices this provides large hard currency revenues. As the war continues, European governments are under increased pressure to scale-up their energy sanctions, following measures taken by the United States, the United Kingdom, Canada and Australia. Given the inelasticity of Russia’s oil and gas supply, the most efficient way for Europe to sanction Russian energy would not be an embargo, but the introduction of an import tariff that can be used flexibly to control the degree of economic pressure on Russia.

Recommended citation:
Hausmann, R., A. Łoskot-Strachota, A. Ockenfels, U. Schetter, S. Tagliapietra, G.B. Wolff and G.Zachmann (2022) ‘Cutting Putin’s energy rent: ‘smart sanctioning’ Russian oil and gas', Working Paper 05/2022, Bruegel

About the authors

  • Georg Zachmann

    Georg Zachmann is a Senior Fellow at Bruegel, where he has worked since 2009 on energy and climate policy. His work focuses on regional and distributional impacts of decarbonisation, the analysis and design of carbon, gas and electricity markets, and EU energy and climate policies. Previously, he worked at the German Ministry of Finance, the German Institute for Economic Research in Berlin, the energy think tank LARSEN in Paris, and the policy consultancy Berlin Economics.

  • Guntram B. Wolff

    Guntram Wolff is a Senior fellow at Bruegel. He is also a Professor of Public Policy and Economics at the Willy Brandt School of Public Policy. From 2022-2024, he was the Director and CEO of the German Council on Foreign Relations (DGAP) and from 2013-22 the director of Bruegel. Over his career, he has contributed to research on European political economy, climate policy, geoeconomics, macroeconomics and foreign affairs. His work was published in academic journals such as Nature, Science, Research Policy, Energy Policy, Climate Policy, Journal of European Public Policy, Journal of Banking and Finance. His co-authored book “The macroeconomics of decarbonization” is published in Cambridge University Press.

    An experienced public adviser, he has been testifying twice a year since 2013 to the informal European finance ministers’ and central bank governors’ ECOFIN Council meeting on a large variety of topics. He also regularly testifies to the European Parliament, the Bundestag and speaks to corporate boards. In 2020, Business Insider ranked him one of the 28 most influential “power players” in Europe. From 2012-16, he was a member of the French prime minister’s Conseil d’Analyse Economique. In 2018, then IMF managing director Christine Lagarde appointed him to the external advisory group on surveillance to review the Fund’s priorities. In 2021, he was appointed member and co-director to the G20 High level independent panel on pandemic prevention, preparedness and response under the co-chairs Tharman Shanmugaratnam, Lawrence H. Summers and Ngozi Okonjo-Iweala. From 2013-22, he was an advisor to the Mastercard Centre for Inclusive Growth. He is a member of the Bulgarian Council of Economic Analysis, the European Council on Foreign Affairs and  advisory board of Elcano.

    Guntram joined Bruegel from the European Commission, where he worked on the macroeconomics of the euro area and the reform of euro area governance. Prior to joining the Commission, he worked in the research department at the Bundesbank, which he joined after completing his PhD in economics at the University of Bonn. He also worked as an external adviser to the International Monetary Fund. He is fluent in German, English, and French. His work is regularly published and cited in leading media. 

  • Agata Łoskot-Strachota

    Agata Łoskot-Strachota is a Visiting fellow at Bruegel. She is also a Senior fellow at the Centre for Eastern Studies (OSW) focusing on energy policy. For the past number of years, Agata has coordinated OSW’s research work on the European gas market and acted as a senior analyst for European Union energy policy. Her areas of expertise include the oil and gas sectors of Russia and countries of the Caspian region, Central, Eastern and Southern Europe and the Balkans; the energy dimension of international relations and energy policy in the EU and the post-Soviet area.

  • Simone Tagliapietra

    Simone Tagliapietra is a Senior fellow at Bruegel. He is also a Professor of Energy, Climate and Environmental Policy at the Catholic University of Milan and at The Johns Hopkins University - School of Advanced International Studies (SAIS) Europe.

    His research focuses on the European Union climate and energy policy and on the political economy of global decarbonisation. With a record of numerous policy and scientific publications, also in leading journals such as Nature and Science, he is the author of Global Energy Fundamentals (Cambridge University Press, 2020).

    His columns and policy work are published and cited in leading international media such as the BBC, CNN, Financial Times, The New York Times, The Economist, The Guardian, The Wall Street Journal, Le Monde, Die Zeit, Corriere della Sera, and others.

    Simone also is a Member of the Board of Directors of the Clean Air Task Force (CATF). He holds a PhD in Institutions and Policies from Università Cattolica del Sacro Cuore. Born in the Dolomites in 1988, he speaks Italian, English and French.

  • Axel Ockenfels

    Axel Ockenfels is a Professor of Economics, at the University of Cologne.

  • Ricardo Hausmann

    Ricardo Hausmann is the founder and Director of Harvard’s Growth Lab and the Rafik Hariri Professor of the Practice of International Political Economy at Harvard Kennedy School. Under his leadership, the Growth Lab has grown into one of the most well regarded and influential hubs for research on international development.

    His scholarly contributions have had a significant impact on the study and practice of development. These include the development of the Growth Diagnostics and Economic Complexity methodologies, as well as several widely used economic concepts, such as Dark Matter, Original Sin, and Self-discovery. His work has been published in some of the top journals in the world, including ScienceJournal of Development EconomicsJournal of International EconomicsProceedings of the National Academy of SciencesJournal of International Money and FinanceEconomic Policy and the Journal of Economic Growth, among many others. These publications have been cited more than 42,000 times, and their main findings have been highlighted in mass media outlets such as The New York TimesThe Financial TimesThe EconomistThe Wall Street Journal, and The Washington Post.

    Since launching the Growth Lab in 2006, Hausmann has served as principal investigator for more than 50 research initiatives in nearly 30 countries, informing development policy, growth strategies and diversification agendas at the national and sub-national levels.

    Before joining Harvard University, he served as the first Chief Economist of the Inter-American Development Bank (1994-2000), where he created the Research Department. He has served as Minister of Planning of Venezuela (1992-1993) and as a member of the Board of the Central Bank of Venezuela. He also served as Chair of the IMF-World Bank Development Committee. He was Professor of Economics at the Instituto de Estudios Superiores de Administracion (IESA) (1985-1991) in Caracas, where he founded the Center for Public Policy. He holds a Ph.D. in economics from Cornell University.

  • Ulrich Schetter

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