While it portends no economic benefits for the U.S., it is an absolute coup for Putin.
While it portends no economic benefits for the U.S., it is an absolute coup for Putin.
P resident Trump’s atrocious oil deal with Vladimir Putin, his friend and America’s foe, is impeachable flim-flam.
It’s a fraud on the American people — a desperate, futile attempt to address Trump’s self-inflicted wound of high diesel prices. We produce around 5 million barrels of diesel per day yet consume less than 4 mb/d. The excess makes us the world’s top diesel exporter, helping ease the energy crunch in Latin America and Europe. Russia, in stark contrast, has collapsed as an exporter. Putting aside the more appalling aspects of this deal — a gift to Putin, requiring no concessions on his part — we are apparently supposed to believe that Russia, whose energy sector is in such disrepair it was importing diesel from South Korea this summer, is going to be our savior exporter.
Putin is a war criminal. In his war of aggression against Ukraine, he has repeatedly scoffed at the peace pleas of Trump’s hapless emissaries — principally, Trump’s son-in-law Jared Kushner and business partner Steve Witkoff. This weekend, Putin blithely persisted in his barbaric attacks on civilians, even as Trump (a) announced the diesel deal, (b) claimed there is a Russia/Ukraine “energy ceasefire” agreement that no one has seen (and that, if it exists, Ukraine says Russia is massively violating), and (c) called for Ukraine to replace its president on pain of losing access to American intelligence (all this atop the administration’s periodic calls for Ukraine to surrender and threats to cut off munitions support). The Kremlin’s strategy for achieving the conquest that has eluded Moscow on the front lines is to freeze civilians during Ukraine’s harsh winter; hence, the continued bombings of the electric grid, fuel production facilities, and even a gas station . . . complementing Putin’s habitual attacks on residential buildings and public buses.
Ukraine has countered with a very effective drone campaign against the oil production facilities that feed Moscow’s war machine. Moreover, sanctions have squeezed Russia’s oil industry — and would continue to do so if the president, by his gift of a diesel deal to Putin, were not signaling to the world that the Trump administration is not serious about sanctions — even as Trump just made a show of signing the Lindsey Graham bill to strengthen sanctions.
The reason diesel prices are high at the pump is not a lack of U.S. supply. Plus, even if Russia, in its depleted state, had the wherewithal to export significant quantities of diesel, the amounts Trump heralded in announcing his deal with Putin are trifling. As Forbes’s Erik Sherman explains, the first shipment Trump spoke of, 300,000 tons, computes to a total of about 2.2 million barrels of diesel. By itself (i.e., setting aside other U.S. diesel consumption), the American transportation sector uses about 3 million barrels of diesel daily. That is, the first shipment wouldn’t get us through a single day.
Now, given the damaged state of its production facilities and its fuel-intensive warmongering, it is unlikely that Russia will any time soon be poised to ship 4.8 million tons of diesel, the total of all shipments contemplated in the Trump/Putin deal (from now through early April 2027). But even if it could, Sherman notes that this would compute to a total of 35.5 million barrels — less than what the U.S. uses in just ten days. And mind you, Trump said the Russian shipments were intended to ease the strain on “the Global Marketplace,” not just the American market. Ergo, the deal (in the unlikely event Russia could produce the amount Trump has floated) would not reduce prices — not before the midterms and probably not ever.
While the Trump/Putin deal portends no economic benefits for the United States (and is profoundly counterproductive overall — more on that momentarily), it is an absolute coup for Putin. It will provide billions of dollars in revenue for the anti-American dictator’s coffers. Even worse, as Trump well knows, Putin uses the military and intelligence assets acquired from revenue to commit war crimes in Ukraine and abet Iranian attacks on the United States. And another bonus for the Kremlin: In one fell swoop, Trump is both dismantling the American sanction weapon that has wounded Putin and conveying to other nations that they should be doing business with Moscow, not sanctioning and isolating it.
Since there’s nothing but downside for the U.S. in this deal, why is the president doing it? Two reasons, I suspect.
First, it might suggest to voters that Trump is taking real steps to reduce the prices his unilaterally imposed policies have caused. Any resulting misimpression on this score will prove fleeting because the prices will not decrease. Indeed, the probability is higher prices because the war Trump started against Iran without seeking congressional authorization or public buy-in is heating up again. Putin’s ally Iran has stepped up attacks in the Strait of Hormuz; that increases shipment costs exorbitantly even when crude oil gets through. Moreover, Iran’s allies, the Houthis, are now in a full-fledged war with Saudi Arabia, terrorizing Red Sea shipments (formerly the Saudis’ alternative to transit in Hormuz) and pummeling Saudi production and transportation infrastructure. In sum, the war Trump started without thinking through the consequences is the cause of high energy prices; the war Putin started in Europe is irrelevant on that score — notwithstanding Trump’s malevolent efforts to blame Ukraine for both Putin’s aggression and high diesel prices.
As a number of commentators have pointed out, if Trump were really concerned about the price burden on Americans (and the midterm prospects of Republicans), he could simply end his imbecilic trade war with Canada, our ally and neighbor. Because of the complexities of the global diesel market, as well as such inane American policies as the Jones Act and the discouragement of new refining capacity, we do import some diesel despite being a net exporter. The vast majority of those imports come from Canada — from which we could easily import more if necessary without violating sanctions laws and lending comfort to our Russian enemy. But Trump being Trump, he’d rather appease Putin than admit that his trade policies antagonize our allies while crushing Americans.
The second reason for doing the diesel deal with Putin is, as ever, corruption. In early October, the New York Times reported that Trump is working on an even more execrable multibillion-dollar oil deal with Putin: The U.S. would waive sanctions so that an investor group could buy up oil fields, refineries, and gas stations around the world that are owned by Lukoil, the Russian energy giant. The deal has been negotiated by Trump’s aforementioned emissaries, Kushner and Witkoff. Among the major beneficiaries are said to be one of Trump’s major donors (Todd Boehly, who has donated $2 million to Trump political causes) and Middle Eastern executives who have business ties to Trump, Kushner, and Witkoff. These include Sheikh Tahnoon bin Zayed al Nahyan, the top security official of the United Arab Emirates — who, as I detailed in a series earlier this year, is a part owner of the Trump and Witkoff families’ crypto enterprise, into which Tahnoon has poured $2.5 billion. (That enterprise is the main explanation for the jaw-dropping increase in Trump’s net worth during his second term in “public service” — well over $2 billion in just 20 months.)
Obviously, Trump has an abiding interest in eroding the U.S. sanctions regime against Putin. The wheeling and dealing he and his business associates are trying to pull off would be far more lucrative if Russian assets Putin is poised to peddle are out from under sanctions. The Trump/Putin diesel deal erodes the sanctions.
It is also illegal . . . probably.
By overwhelming margins in 2022 — 100–0 in the Senate, 413–9 in the House — Congress enacted the Ending Importation of Russian Oil Act. The legislation bans U.S. imports of Russian diesel unless the president certifies that Russia has reached an agreement to withdraw its forces from Ukraine, that Ukraine has accepted such an agreement, and that Russia no longer poses a threat to either NATO countries or Ukraine’s self-determination. Even for Trump, such a certification would be impossible (including the NATO component, with Putin increasing his provocations on that score, too).
Alas, as usual, Congress was allergic to taking an accountable position: The 2022 act includes weasel language that says the ban on diesel imports is to work in conjunction with existing executive procedures for implementing sanctions. (This is to allow lawmakers to claim both that they punished Russia and that they have not tied the president’s hands in dealing with Russia.) Despite the ban, then, the administration will undoubtedly argue that the enabling license the Trump Treasury Department has issued to waive restrictions on Russian diesel is consistent with those existing executive procedures. Plainly, the license is not consistent with an import ban, but Trump officials will counter that they are just temporarily waiving sanctions not nullifying them — a statutory ban cannot be repealed by a license, regulation, or executive order.
There are other statutory provisions that apply, including one Trump grudgingly signed into law in his first term — the 2017 Countering America’s Adversaries Through Sanctions Act, which requires prior notification to Congress before major changes in Russia policy. And the above-described 2022 ban on diesel imports mandates that the president consult with Congress 45 days prior to submitting any certification that waives the ban. As is his wont, Trump acted unilaterally and did not consult Congress, much less submit a certification. Still, the legislative waters are muddy; despite the insistence of some lawmakers from both parties that Trump has violated the law, that will not be easy to establish.
What is straightforward, though, statute or no statute, is that the president of the United States is empowering and emboldening a murderous anti-American regime even as it persists in a war of aggression, savage war crimes, provocations of America’s allies that verge on acts of war, and the provision of intelligence and assets to Iran that the latter uses in its warfare against the United States. Regardless of whether statutes have been transgressed, President Trump is grossly abusing the executive power entrusted in him.