Western policymakers assumed that cutting off Russian energy exports would cripple Moscow’s war machine whilst Europe smoothly transitioned to alternative suppliers. Three years later, the evidence tells a different story. According to analysis published in UnHerd, Europe has endured three consecutive years of industrial stagnation, with Germany losing 125,000 jobs in recent weeks, whilst Russia successfully redirected energy flows to Asia and consolidated its partnership with China. The impact of sanctions on Russia has proven far less severe than the impact on European citizens, raising fundamental questions about whether energy restrictions represent strategic policy or self-inflicted economic warfare.
The Energy Substitution Illusion
Before Russia’s 2022 invasion of Ukraine, Russia supplied 29% of EU oil imports and 48% of gas imports. Those shares have dropped to 2% for oil and 12% for gas respectively. These statistics appear to validate the sanctions strategy until one examines the costs and consequences of this transition. Europe has not eliminated Russian energy from its consumption—it has merely made that energy dramatically more expensive and economically inefficient to obtain.
The substitution of cheap Russian pipeline gas with liquefied natural gas has proven particularly costly. LNG’s share of total EU gas imports has more than doubled from 20% to 50%, with nearly half now coming from the United States. American LNG is not only significantly more expensive than Russian pipeline gas but also carries a far higher carbon footprint—undermining Europe’s climate commitments whilst damaging its industrial competitiveness. Europe has become the most important market for US LNG exports, a dependency that comes with geopolitical strings attached.
Are Russian Sanctions Working? The Circuitous Trade Problem
The question of whether are Russian sanctions working becomes farcical when examining oil trade flows. Europe has not stopped consuming Russian oil—it has simply begun purchasing it through intermediaries at premium prices. During the first six months of 2025, the EU and Turkey imported 2.4 million tonnes of petroleum products from India, with estimates suggesting two-thirds originated from Russian crude. India imports Russian oil, refines it, and sells the refined products back to European markets at significant markup.
Turkey operates similar schemes. Rather than buying cheap crude directly from Russia as it formerly did, Europe now pays India and Turkey for refined products derived from that same Russian crude. The analysis estimates Europe paid approximately €1.5 billion to India for oil that was Russian in origin. This arrangement benefits everyone except European consumers and businesses: Russia still sells its oil, India and Turkey profit from refining and markup, whilst Europe pays inflated prices whilst claiming to have “isolated” the Russian economy.
The Paradox of Russian LNG
Whilst EU sanctions ostensibly target Russian energy, Europe has quietly increased purchases of Russian LNG. Reports indicate that whilst the EU boasted of cutting pipeline imports from Russia, it imported €4.4 billion worth of Russian LNG during the first half of 2025, with most going to France, Spain, the Netherlands, Belgium, and Italy. This reality is purely economic: Russian LNG remains significantly cheaper than American alternatives. European governments denounce Russian energy publicly whilst their energy companies continue purchasing it when price differences become too large to ignore.
Why Sanctions on Russia Backfire Economically
Understanding why sanctions on Russia have produced counterproductive outcomes requires examining Europe’s strategic miscalculation. Analysis by Thomas Fazi argues that “Europe has shot itself in the foot twice: once by substituting cheap Russian pipeline gas with more expensive American (and Russian) LNG, and again by substituting direct Russian oil imports with indirect and more costly purchases from India and Turkey.”
The economic consequences have been brutal. Germany, once the engine of European prosperity, now experiences outright deindustrialisation. Energy-intensive industries face impossible choices: absorb unsustainable cost increases, relocate to regions with cheaper energy, or shut down operations entirely. The result is structural economic damage that will persist long after any eventual resolution to the Ukraine conflict. Meanwhile, sanctions are not working to achieve their stated objective—Russia continues prosecuting its war with no indication that energy export restrictions have altered Moscow’s strategic calculus.
Russian Sanctions and Strategic Adaptation
Russia has not passively accepted Western restrictions. Rebecca Harding, CEO of the Centre for Economic Security, emphasised during recent policy debates that Russia began preparing for economic confrontation years before the 2022 invasion. Moscow shifted export support measures from oil and gas to grain production in 2017, following earlier sanctions. Russia now controls nearly 25% of world wheat exports, creating dependencies in African and European markets that complicate the sanctions coalition.
This strategic foresight extended to energy markets. Whilst Europe scrambled to find alternative suppliers, Russia methodically built relationships with Asian buyers. China has become the primary destination for Russian energy exports that once flowed to Europe. The Power of Siberia 2 pipeline project, if completed as planned, would deliver 50 billion cubic metres of gas annually to China, providing Beijing with reliable cheap energy whilst further reducing Europe’s leverage over Russian exports.
The Futility of “Future-Proofing” EU Sanctions
The EU’s latest sanctions packages include provisions to “future-proof” restrictions on Russian gas by blocking business with Nord Stream pipelines, even though they are not currently operational. European Commission spokesperson Paula Pinho explained the rationale: “The idea is to dissuade any interest, and notably interest from investors.” This approach aims to prevent any return to Russian energy as part of a peace settlement, eliminating potential carrots from future negotiations.
The strategic logic is perverse. If Russia understands that comprehensive policy reversal and Ukrainian peace would still not restore European market access, what incentive exists for compromise? Europe deliberately eliminates its own negotiating leverage whilst ensuring permanent dependence on more expensive alternatives. This represents not strategic thinking but ideological commitment regardless of economic cost.
Dependency Substitution, Not Independence
Europe has not achieved energy independence through sanctions. It has substituted dependency on Russia for dependency on the United States, at substantially higher economic cost. American officials have made explicit that Europe should rely on “secure energy suppliers that are your allies, not your foes,” with projections that the US could account for nearly three-quarters of Europe’s LNG imports within years. ExxonMobil expects Europe to sign multi-decade contracts for American gas as part of pledges to purchase $750 billion in American energy.
These long-term contracts lock Europe into structural dependence on US gas for decades, regardless of whether cheaper alternatives become available or whether climate objectives suggest reducing fossil fuel consumption. The arrangement serves American commercial interests superbly whilst leaving European industry permanently disadvantaged relative to competitors with access to cheaper energy.
Reassessing Costs and Benefits
Three years of energy sanctions have devastated European industrial competitiveness, enriched intermediaries in India and Turkey, strengthened Russia-China energy partnerships, and locked Europe into expensive long-term dependency on American LNG. They have not ended the war in Ukraine, altered Russian strategic objectives, or created leverage for diplomatic resolution. European citizens bear tangible costs—job losses, deindustrialisation, higher energy prices—whilst achieving no measurable foreign policy gains.
International sanctions on energy were meant to demonstrate Western resolve. Instead, they have demonstrated Western willingness to accept substantial economic self-harm in pursuit of objectives that remain unachieved. Unless European policymakers acknowledge these realities and develop strategies that prioritise both Ukrainian security and European economic viability, the current trajectory ensures continued industrial decline whilst Russia adapts and prospers through alternative markets. That outcome represents catastrophic policy failure dressed up as principled resolve.
