A major Ukrainian drone
operation dubbed ”Spiderweb”, conducted on Sunday, June 1, damaged strategic bomber assets deep in Russia. The attack, combined with a strike against the multi-billion-dollar Kerch Strait bridge built after Moscow annexed the Crimea in 2014 to connect it to the Russian mainland, was a huge blow, both in image and in substance.
However, it comes at a time when Russia’s economic picture is quietly improving, and the offensive picking up steam, which has allowed Moscow to refuse to make any real progress on ceasefire talks despite U.S. President Donald Trump’s best efforts. Financial improvement is excellent news for Russia’s President Vladimir Putin, who is hellbent on outrunning economic decline at home and attaining victory on the battlefield.
Money from energy sales continues to fill Russia’s war chest, which is why now is the time for Washington and Europe to work together to turn off Moscow’s spigot. Only by depriving the Kremlin of the funds needed to sustain the war can peace be restored at the battlefront. Unfortunately, things have been going in exactly the opposite direction during the first half of 2025. Despite sanctions, Russian gas exports to Europe through the Turkstream pipeline rose more than
10% from April to May, and Russia’s oil and gas giant Gazprom posted an unexpected
$8.4 billion Q1 profit, up from $7 billion in losses in 2023.
On Tuesday, June 10th, the
EU announced that it is working on a package of additional sanctions, lowering the price cap for Russian oil from $45 per barrel from $60, as well as banning the use of Russian banks by third countries and stopping any EU operators from being allowed to use Russia’s Nord Stream pipelines. If the EU members approve these new proposed sanctions, they will certainly have an impact -- but this is by no means guaranteed. Slovakia and Hungary are two of the most pro-Russian regimes in the EU and have actively
opposed sanctions on Russia. It may change, now that Prime Minister Viktor Orban of Hungary
announced that Russia only understands the language of force. However, if Washington and Brussels cooperate to tighten the sanctions regime, this could be a game-changer and eventually force Moscow to negotiate.
On the other side of the Atlantic, leaders in the United States are acting to decisively end Russia’s benefit from its energy industries. The
Sanctioning Russia Act of 2025, introduced by Senator Linsey Graham (R-SC), a Trump ally, contains measures to prohibit American entities from investing in or exporting to the Russian energy sector, impose a 500 percent tariff on Russian goods and services entering the and levy the same tariff on countries that sell, supply, transfer, or purchase oil, uranium, natural gas, petroleum products, or petrochemical products originating in Russia.
These measures would serve the dual purpose of weakening Moscow’s energy trade while putting pressure on states that hesitate to halt their purchases of Russian energy products, including the Europeans, if they fail to step up actively.
Meanwhile … Why Is the Russian Economy Improving?
Russia’s economic turnaround through 2025 can primarily be attributed to surging energy exports. The Trump Administration’s hesitancy to impose sanctions, despite Trump’s willingness to
threaten them, created room for this export surge. Without seeing sanctions ratchet up, and with rumors floating that sanctions might be lifted, more customers became willing to turn to Russia.
Russia’s foreign currency reserves, once under pressure, as Moscow struggled to keep the ruble from imploding, have recovered, moving past their pre-war high of
$630 billion to $680 billion. The Russian ruble made a strong recovery, becoming a
top-performing currency of 2025 so far. The ruble has outperformed the Russian government’s own budgetary projections with a
40% increase in value against the dollar, a jump of almost four times the next best-performing currency. While this can be attributed to increased domestic economic controls, rising oil prices, and continued exports, another factor may be the sustained trade and indirect financial flows from China, which has remained Moscow’s most reliable economic partner.
European Gas Imports on the Rise
It isn’t the entire EU that is importing Russian oil and gas, but a few key countries are more reliant on these imports than others. Hungary, Slovakia, and France were the
largest importers in November 2024 with Austria and Spain rounding out the top five.
Countries with pro-Russian leadership are not the only ones that have continued importing Russian energy. European governments that decry Russia’s aggression continue to throw Moscow an economic lifeline due to their inability to find alternative energy sources. For now, Russian oil and gas are cheaper and more easily accessible despite sanctions, making them the primary solution for the
energy security issues regularly experienced by the EU, like cold temperatures and lackluster wind generation. President Trump has also shaken the Europeans by using
energy as a bargaining chip in trade negotiations, making some European countries realize that their reliance on the U.S. may be a vulnerability. This has, paradoxically, driven EU countries back towards Russia as an energy supplier—it remains to be seen whether they will reverse course and move in unison to stop funding Moscow’s war.
Europe’s stance on Russia is only growing more divided, as the recent Polish election, which narrowly awarded right-wing candidate Karol Nawrocki the presidency, demonstrates, posing a further challenge for the EU. President Nawrocki has supported military aid to Ukraine
but is against allowing it to join NATO, believing it could drag the alliance into conflict with Russia. The new Polish president’s “Eurosceptic” stance may lead to alignment with more pro-Russian leaders in Europe such as Hungary’s Orban and Slovakia’s Fico.
Russian Gas Today, More War Tomorrow
The European Union has been far from united on sanctions regarding oil and gas exports since the invasion of Ukraine by Russia in early 2022. Despite sanctions, Russia’s energy exports have proven more resilient than expected, thanks to strategic rerouting through the
TurkStream pipeline and continued demand from nations unwilling or unable to pivot quickly.
The EU had set a goal of ending all
Russian gas imports by 2027, but the road to that goal has been riddled with a lack of enforcement, exceptions, and relapses of reliance. While this plan sets a roadmap for measures to end energy dependence on Russia, it must be supported by baseload energy generation that will not fluctuate like solar and wind.
The plan includes measures to reduce uranium and other nuclear energy imports from Moscow, but both individual states and the EU as a whole must focus on rebuilding a nuclear supply chain and stimulating domestic growth in nuclear power generation.
Simply declaring long-term goals without follow-up and enforcement is ineffectual and undermines Europe’s geostrategic credibility. Russia’s 2025 economic gains demonstrate the need for sustained pressure and a united front that presses Moscow to the negotiating table. Despite impressive wins like the recent drone strike, allowing Russia to make economic gains, risks a weakening of Ukraine, and heightened Russian ambition looking toward the rest of the continent.
The options seem clear—either the West moves to hit Russia in the pocketbook and press for a ceasefire and peace, or money will flow that allows Moscow to keep grinding on. While care must be taken not to destabilize the world economy and reignite inflation, a window of opportunity for cooperation is open now to help stop the bloodshed. And certainly, the world economy – including America’s – will only suffer if Russia is emboldened to keep advancing aggressively in Ukraine and beyond.
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