President Biden’s announcement that he was cutting off all US imports of Russian oil signaled that the last three weeks of western sanctions on Moscow were but the opening salvo of a totalizing economic war. The move, which will fuel inflation at home, makes more likely a general European embargo of all Russian energy imports, including natural gas as well as coal. This of course assumes that President Putin doesn’t return fire by turning off the spigot to Europe first.  

Russia is by no means the first country to be subjected to economic siege as a substitute for direct war, but it is so far the largest and most systemically significant to the global economy. Indicative of its importance, its expulsion from the financial system is already rippling out into crises thus far unrelated to Europe’s latest war.  

In Vienna, the negotiations on the United States’ return to the Iran nuclear deal may now have been scuttled at the last minute, with Russia demanding that the newly imposed sanctions should have no impact on Moscow’s budding economic relationship with Iran. With both countries now exiled from the global economy, Iran and Russia will play a mutually reinforcing role for each other in evading the west’s sanctions and in substituting now banned technological imports. 

While Tehran would no doubt wish to see the JCPOA reinstated and Trump’s “maximum pressure” sanctions removed, its oil exports to China have already surpassed levels from before the US withdrawal. Even if Iranian oil and gas were allowed to return to the open market, there is little reason to assume Tehran is of a mind to ease the Europeans’ economic pain. Rather than helping to fill the gap left by Russia, Iran could simply accelerate sales to Beijing, further incentivizing it to economically decouple from North America and Europe. 

Closer to home, Biden’s economic war on Russia is already forcing a walk-back of the attempted strangulation of another official enemy, Venezuela. It was in fact Washington’s escalating attempts to throttle the energy sector of Venezuela that led to it turning to Russian oil imports in the first place. In 2021 Russia served as the second-largest source of oil-based imports to the United States, with its grade being like that of Venezuela, making it particularly suited to the needs of American refineries. 

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The South American oil producer under President Maduro has turned to both Moscow and Tehran for assistance in the face of sanctions that have cut off one of its only earners of foreign currency. Since 2019, not only has the West not had direct relations with Venezuela, but it has also recognized opposition figure Juan Guaido as the legitimate president, going as far as to allow him to sue for custody of Caracas’ sovereign gold reserves. 

President Maduro has acknowledged that American officials have approached him to discuss “energy security” in recent days. Given Russia’s support in the past and American negotiators conditioning a review of their sanctions policy on talks with the Venezuelan opposition, it seems unlikely that Caracas is in any mood to salve Washington’s largely self-inflicted difficulties without sweeping concessions in return. 

None other than former Secretary of State John Kerry pointed out in 2015 while promoting the Iran nuclear deal, that imposing its foreign policy on the world through sanctions will ultimately see the US lose its position as guarantor of the world-reserve currency. It now seems that the truth of that prediction is starting to be felt not just in Europe but the United States itself. 

The longer the list grows of economically untouchable countries, the more limited will be US options for stemming the blowback from its weaponization of global finance. This reality is starting to bite while Washington’s hitlist is still short. 

Ultimately the Biden administration will find a work-around for this crisis. Iraq is now likely the country with the largest room for growth in its energy sector, while gas producers in the Caspian basin, the Mediterranean, and West Africa will bring more production online to meet increasingly desperate European demand. But what will it do if in the future it adds Nigeria, Algeria, Iraq, or even China to the economic blacklist? With time, the threat of sanctions will become more of an incentive to cut economic ties to the dollar rather than to maintain them.  

For now, the true costs of American economic warfare are to be borne by its allies. Without a wholesale reconsideration of its sanctions policy, Washington may find itself in the not-too-distant future, ruling a hermit kingdom of its own.