'Resetting' Russia-US relations

This opens up prospects for the US to ease and lift sanctions against Russia.

The West creates suffocating pressure

After Russia launched a special military operation in February 2022, sanctions against Russia were tightened, affecting thousands of individuals and entities. The sanctions included a ban on investment, trading in Russian bonds, a ban on deposits by Russians, and aimed at cutting off banks from financial services. The supply of most dual-use goods, many industrial goods, and even “luxury goods” to Russia was prohibited.

In an effort to reduce Russia's revenue from oil supplies to third countries, Western countries have introduced price ceilings on oil, banning the transportation of oil by sea within their jurisdiction if the price of oil exceeds $60 per barrel.

Transport sanctions (restrictions on access to airspace and sea, airports and ports), visa restrictions (generally applicable to all persons subject to financial sanctions) and broad secondary sanctions (i.e. restrictions on persons from third countries who cooperate with sanctioned Russians or are involved in circumventing the restrictions) have been widely used.

Russia is not easy to collapse

Russia has shown resilience to Western sanctions. One of the key factors is that Russia had created its own financial infrastructure even before launching a special military operation in Ukraine.

There has been a large-scale reorientation of Russian raw material supplies, primarily oil. Parallel imports have helped to fill the Russian market with banned consumer goods. Third countries and intermediary companies have helped to circumvent sanctions on industrial equipment and dual-use goods. Transport sanctions have complicated logistics but have not had serious consequences. Western companies that have left the Russian market have been quickly replaced by local companies or those from China and other countries.

However, it is undeniable that the sanctions have caused significant damage to Russia. The value of frozen assets abroad alone exceeds $200 billion...

Since the conflict in Ukraine broke out, the volume of trade between the US and Russia has decreased more than tenfold. In 2021, the total trade turnover between the two countries reached 34.4 billion USD (up 44% compared to 2020). However, in 2022, after the conflict broke out in Ukraine and the wave of sanctions, trade between the US and Russia fell sharply. US imports from Russia reached only 14.4 billion USD, down 51.3%. US exports to Russia reached 1.7 billion USD, down 74%. The decline continued the following year.

In 2024, the Office of the US Trade Representative estimates that total US trade with Russia will reach only $3.5 billion. US imports of goods from Russia in 2024 will be $3 billion, down 34.2% (more than $1.7 billion) from 2023. US exports to Russia will fall to $526 million (down 12.3%, or $73.5 million, from 2023).

Bargaining chips and political signals

Analysts believe that if the peace process for Ukraine is promoted, some sanctions against Russia may be eased (exceptions and exemptions). Given the recent developments at the Russian-American negotiating table, the first step is to restore normal operations of embassies. There may be easing in the transport sector, exemptions for specific new investments and allowing US companies to participate in pre-agreed projects.

On the contrary, export controls on dual-use goods will remain in place for a long time for national security reasons. There may also be exceptions to the ban on imports of Russian goods, such as those related to Russian heavy oil. It is likely that transactions will be allowed for individual Russian banks, but there will be no exclusion from the list of blocked individuals.

However, the normalization of Russia-US relations or the lifting of sanctions against Russia by the Trump administration will face many difficulties and challenges. First, the easing and lifting of sanctions is not equivalent to reaching political agreements or normalizing relations.

Second, sanctions are sensitive to changes in presidential administrations in the United States. President Obama and President Trump’s policies toward Iran are completely opposite. Congress also plays a role in the United States, creating a “legislative web” to limit the power of the president.

Third, US sanctions are more important than those imposed by the European Union and other countries because the US is at the center of the global financial system. Therefore, the US easing and lifting of sanctions against Russia will depend largely on the progress of the Ukraine peace process or the current trend of competition for influence between Russia and the West.

Fourth, the easing of US sanctions on Russia can be slow and uneven, with some cases lasting decades and even without tangible results.

HUNG ANH