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Though Russia’s war machine is slipping, the proposed peace plan by the United States does not take advantage of the economic pressure on Moscow, asking Ukraine to make several concessions. (Photo by Andrew Harnik\/Getty Images)<\/p>\n
Getty Images<\/p>\n
Russia\u2019s war machine is showing unmistakable signs of strain. After nearly four years of fiscal overreach caused by injecting trillions of rubles into the Russian economy, the Kremlin can no longer disguise its distress. American envoys met in Geneva on Sunday, November 23rd with Ukrainian officials to discuss a permanent ceasefire, however, this is no time to go easy on Moscow, as U.S. sanctions seem to be working. <\/p>\n
Abroad, Washington is tightening the sanctions noose, striking at oil revenues that keep Moscow\u2019s war machine running. On the battlefield, Ukrainian drones are systematically attacking Russian refineries and petrochemical plants, which generate the revenues necessary for the war efforts. At home in Russia, widening budget shortfalls will make it harder to incentivize volunteers. As the finances falter, so do Moscow\u2019s strategic options. This reality is what the 28-Point Plan as originally proposed<\/a> completely missed. By making impossible demands on Ukraine, Steve Witkoff and other architects of the plan ignored the hard facts and failed to leverage the current pressure the United States is exerting on Moscow. To compel the Kremlin to finally negotiate in earnest, Washington should keep that pressure on, get the sides talking, and press for real compromises, hopefully arriving at terms both can agree to in the interests of peace. Forcing Ukraine\u2019s surrender, however, is not in U.S. strategic interests.<\/p>\n Global Sanctions Squeeze Moscow\u2019s Oil Lifeline <\/p>\n Earlier this month, President Donald Trump gave the green light<\/a> to a long-delayed Russia sanctions package currently before the House of Representatives. The measure is crafted to squeeze countries that continue to bankroll Moscow. The goal is straightforward: cut off the revenue streams that sustain the Kremlin\u2019s war in Ukraine and hasten the erosion of Russia\u2019s wartime economy.<\/p>\n This marks yet another escalation in Washington\u2019s gradual economic siege of Russia. As recently as October, the Treasury Department blacklisted Rosneft and Lukoil<\/a>, along with dozens of their subsidiaries, and ordered all transactions wound down by November 21. This move targets the heart of Russia\u2019s energy system. Rosneft and Lukoil account for nearly half of Russia\u2019s crude exports and a major share of federal revenue.<\/p>\n The Russian energy sector, despite Vladimir Putin\u2019s wishful thinking<\/a>, is under mounting pressure. By September, total fossil-fuel revenues had fallen 4 percent to about $629 million per day<\/a>, the lowest level since the invasion began, while oil and gas income plunged 26 percent year-on-year. Seaborne crude was the lone outlier, edging up 1 percent in revenue and 3 percent in volume. October erased even that sliver of relief. Total revenues slipped again to roughly $603 million per day<\/a>, and seaborne crude stalled at about $206 million per day, with no deliveries from Rosneft or Lukoil recorded in the final week of the month.<\/p>\n The pillars of Russia\u2019s crude export market, China and India, have become the prime targets of secondary sanctions. In October alone, China paid an estimated $4.2 billion<\/a> (currency converted) for Russian crude, while India purchased roughly $2.9 billion. Yet the ground is shifting. In the final week of October, China\u2019s state oil giants \u2014 Sinopec, PetroChina, Sinochem, and Zhenhua Oil \u2014 canceled spot cargoes and froze new purchases<\/a>. Pipeline deliveries to northern China, however, continue uninterrupted. India is following a similar trajectory. Major refiners \u2014 Reliance Industries, Bharat Petroleum, Hindustan Petroleum, Mangalore Refinery and Petrochemicals, and HPCL-Mittal Energy \u2014 have already halted direct purchases from Rosneft and Lukoil<\/a>.<\/p>\n Budget Deficits Deepen as Mobilization Costs Spiral<\/p>\n To keep the flow of volunteers to fight Ukraine steady, the Kremlin must keep money flowing as well. Lots of money: that is the core of its war model. In the third quarter alone, more than 135,000 Russians signed contracts<\/a> with the Defense Ministry, bringing the year\u2019s total to almost 263,000, with roughly 29,000 recruits each month. <\/p>\n Russia’s continued strategy of sending additional manpower to secure marginal gains in Ukraine is unsustainable, and runs up costs of equipment and enlistment bonuses. (Photo by Chris McGrath\/Getty Images)<\/p>\n Getty Images<\/p>\n The numbers mirror previous years, as Russia continues to fight a war of attrition and treats manpower as expendable. The army\u2019s tactic is similar to World War Two: to push forward endless waves of soldiers, absorbing extreme losses in exchange for marginal advances, and pay families postmortem compensations. Sustaining this strategy depends entirely on a continuous and costly stream of volunteers drawn in by increasingly lavish payments<\/a>.<\/p>\n But that model is becoming impossible to maintain. Enlistment bonuses for new recruits now run about 2 million rubles, or $20,000, straining regional finances. Since October, over two dozen Russian regions have slipped into deficit<\/a>s. Under mounting pressure, governors have begun slashing payments. Wealthier regions like Samara and Tatarstan cut bonuses from 3.6 million rubles and 2.7 million rubles<\/a> down to the federal minimum of RUR 400,000. Less prosperous areas such as Bashkortostan and Mari El have followed suit, reducing payouts from RUR 1.6 million to RUR 600,000 and from 2.6 million to RUR 400,000, respectively.<\/p>\n Russia\u2019s Endurance<\/p>\n The original terms of the peace deal that Secretary of State Marco Rubio brought to the Geneva talks<\/a> missed these calculations entirely. Moscow\u2019s war machine is losing momentum at both the federal and regional levels. Sanctions are biting into Russia\u2019s energy sector, draining the oil revenues that bankroll the Kremlin\u2019s campaign. At the same time, regional budgets can no longer absorb the soaring enlistment bonuses needed to keep the recruitment pipeline open.<\/p>\n The 28-Point peace plan, allegedly drafted by Kirill Dmitriev (Left) and Steve Witkoff (Right), failed to account for Moscow’s position amidst economic difficulties caused by sanctions.<\/p>\n Reuters<\/p>\n