Toomey: We Must Impose Secondary Sanctions on Russian Oil to Shut Down Funding of Putin’s War on Ukraine
Washington, D.C. – In his opening statement at today’s U.S. Senate Banking Committee hearing, Ranking Member Pat Toomey (R-Pa.) said that the sanctions imposed on Russia have failed to deprive the Kremlin of the funds it is using to continue its war on Ukraine. While the Biden administration’s plan for a novel sanctions regime that imposes price caps on the purchase of Russian oil could significantly curtail Russia’s energy revenue, its effectiveness will depend on how widely the cap is adopted by buyers of Russian oil.
Earlier today, Ranking Member Toomey
and Senator Chris Van Hollen (D-Md.) released
a framework outlining new sanctions legislation to provide the
administration with the tools it needs to set and enforce a widely-adopted
price cap on Russian oil. The Senators’ framework would impose secondary
sanctions on foreign financial institutions that engage in transactions
exceeding the price cap.
Ranking Member Toomey’s opening
remarks, as prepared for delivery:
Mr. Chairman, thank you.
Last week, Ukrainian forces
recaptured the town of Iziyum in eastern Ukraine. It had been occupied by
Russian soldiers for six months.
In the streets, overjoyed and tearful
residents celebrated their liberation. But in a forest just outside town, the
horrors of Russia’s invasion were once again revealed.
Ukrainian soldiers discovered a mass
grave filled with hundreds of civilians. Many of these victims are believed to
have been tortured, bound, assaulted, and murdered—not unlike the horrors that
occurred in Bucha in April.
Our government has rightly said such
atrocities committed by the Russians are war crimes. Identifying and
prosecuting these war crimes are crucial to bringing justice to the Ukrainian
people, but let’s be clear: These crimes will continue unless we can force
Vladimir Putin and those around him to conclude that abandoning the invasion is
better than continuing it.
Ending this war—on terms acceptable
to Ukraine’s democratic government—is not just a morally righteous undertaking
for the United States. It is also in the vital interests of our allies and
ourselves.
The outcome will have ramifications
far beyond Ukraine. We cannot allow revisionist autocrats to feel free to
redraw international borders and fundamentally challenge global stability.
The principles of sovereignty and
freedom must mean something—even when facing down the barrel of a gun. The
stakes are sky high in Europe, where the United States has deep and
longstanding security commitments, and they reach as far as Asia, where the
Chinese government is taking note of how the U.S. and its allies respond to
Russia’s invasion of its smaller neighbor.
Today, this committee will examine
the existing and future sanctions that the U.S. and its allies will bring to
bear on the Kremlin for its invasion of Ukraine. While the outcome of the war
will be determined on the battlefield, sanctions have the potential to
dramatically hasten an end to the conflict by depriving the Kremlin of the
funds it needs to continue this war.
And let’s be honest: the sanctions
imposed on Russia have not yet come remotely close to achieving this objective.
Roughly $1 billion in hard currency continues to flow into the Kremlin’s war
chest every day from energy sales.
Even Treasury Deputy Secretary Adeyemo
recently acknowledged: “There is one part of the Russian economy doing even
better than when the war began: their oil industry.” Russia’s gas industry is
doing equally well: Gazprom recently announced record profits of over $40
billion from the first part of this year.
Today’s hearing will focus on the
administration’s plan for a novel sanctions regime that imposes price caps on
the purchase of Russian oil. This is an intriguing idea that I hope will be
considered for Russian gas as well.
The premise of the scheme is simple:
service providers, such as financiers and insurers, within the G7 will only be
permitted to facilitate the purchase of Russian oil below the set cap. Given
that the vast majority of such service providers are domiciled in G7 countries,
I think this plan has the potential to significantly curtail Russian oil
revenue.
But several questions remain about
this program, including: How will the price cap be set? What will enforcement
of the cap look like? And how will the administration ensure that buyers in
countries like China and India do not skirt the price cap for their own gain?
This last question is arguably the
most important to determining the effectiveness of the price cap regime. And
because the G7 agreement does not address this question, I have joined with
Senator Chris Van Hollen to introduce sanctions legislation that will
complement the administration’s price cap scheme and impose mandatory sanctions
on any foreign financial institution, worldwide, involved with any transaction
in Russian oil above the price cap.
This legislation is the first major
bipartisan sanctions legislation that has been introduced on Russia since
February. And I promise to work with Senator Van Hollen to get this bill
enacted as soon as possible so that Russia can no longer profit from the oil
sales funding its war in Ukraine.
Seven months after Putin began his
“special operation” in Ukraine, the Ukrainians have conducted a successful
campaign to liberate portions of the country from Russian control, concerns
harbored by China and India about Putin’s war have been aired publicly, and gas
prices in Europe are actually falling—down 45% since late August.
The war is not going as planned for
Putin. But I say this to my colleagues: now is not the time for half-measures
or complacency. It is time to crush the Kremlin’s will to continue this war.
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