While President Donald Trump's surprise diesel deal with Russia quickly whipped up anger from Democrats and some Republicans, it may not offer the financial boost for Moscow's limping economy that Ukraine's supporters initially feared. Trump announced last week that Russia would immediately release an initial 300,000 tonnes of diesel to the global market, including American consumers, followed by 500,000 tonnes in November, amid sky-high prices at the pump in the U.S. Another 1 million tonnes would later become available, Trump said.
The news was met with outrage from both sides of the aisle and was heavily criticized by Ukrainian President Volodymyr Zelensky, who called the agreement "absolutely terrible" and a gift to Russian President Vladimir Putin. The move came less than a month after Trump signed into law a broad sanctions package designed to hack at Russia's ability to fund its war with Kyiv. Meanwhile, persistent Ukrainian drone strikes have targeted Russian oil and gas sites in the hope of cutting off oil revenue, and Moscow, in turn, have carried out its own attacks on Ukraine's power plants, grain-exporting southern ports and its factories to cripple Kyiv's economy.
The diesel deal was quickly condemned by seven Democrat and Republican senators who said that the Trump administration should "immediately reverse course" after handing Putin a "financial lifeline." Russia's economy has been warped by ballooning defense spending, pushing social funding further down the priority list as the Ukraine war, which began with the Russian invasion on February 24, 2022, becomes ever more unpopular with households who have lost family members or partners on the battlefield. Russia's draft budget for 2027 allocates more than $202 billion to defense, meaning that more than one-third of all government spending will be funneled into the military. Some initial estimates indicated that the U.S. diesel deal could inject roughly $4 billion into Russia's economy.
Others pitch the number far lower. Moscow could acquire an additional $400 million to $1 billion in the six months after the deal comes into force, said Eric Golson, a professor of economics specializing in economic warfare at the University of Surrey, U.K. "This new oil money will go towards Putin’s ability to prop-up his ailing economy and purchasing weapons which will be used in Ukraine," Golson told Newsweek.
But some say the agreement will bring far more political benefit to Russia, rather than economic relief. The Kremlin could stand to gain roughly $100 million of cold, hard currency in the first six months, said Alexander Kolyandr, Europe director for the Eurasia Group consultancy. But this is "very, very little," when compared with Moscow's overall defense spending, Kolyandr said.
"It's peanuts," he told Newsweek. "It's too small to make a difference." The U.S. transportation sector uses an estimated 2.94 million tonnes of diesel each day, according to government statistics. That means the first installment of Russian oil, totaling 300,000 tonnes, will barely cover a single day's use for this sector alone.
Extract — continue reading at the source.
