Why is the UK easing Russian oil sanctions?

0:02Sky News. The full story first.

0:11Sanctions on Russia have just been increased. But if you're hoping this alone will end the war with Ukraine, you might be disappointed. And this is why.

0:25I'm Sam Coates from Sky News. And I'm Anne McElvoy from Politico. Downing Street drama, leadership battles and policy U-turns. We're on it before it breaks. We take you straight into the rooms where the real political conversations are happening. Smart Insight, clear analysis in your feeds by 7.45am. So you start your morning fully brief for the day ahead in British politics. Hit follow and listen to politics at Sam & Anne's wherever you get your podcasts.

0:55Hi everyone, Neil here. And look, we're always asking you for your ideas for future episodes, why at sky.uk. And today we had this ping into our inbox from Sean. Hi, this is why. I was wondering if you could do an episode on sanctions. How do they actually work? I thought it especially relevant now with China saying Italy ignores sanctions by the US on Iran and also aware of the UK and the EU having done 20 rounds of sanctions now on Russia since the start of the Ukraine invasion. So do they really work? Are they even effective? Thank you. Thanks, Sean. Great suggestion. And actually, very timely, because yesterday the government announced it was toughening sanctions on Russia, whilst also admitting we were going to keep buying their oil for a wee bit longer.

1:42Now, that led to cries of betrayal, not least from the Ukrainians themselves. But it did get me thinking. We've all become rather used to the government announcing sanctions, usually, in inverted commas, crippling ones, every time someone does something that we don't like. But do we actually understand what sanctions are, what they're for, never mind whether or not they actually work? Tom Keating was for years a banker himself. Now he's the founding director of the Centre for Finance and Security at Roussi. Since the time of the ancient Greeks, countries have tried to exert pressure on each other through trade, through blockades, through incentivising countries to trade with each other.

2:25And at times, countries decide that they want to use those connections not for positive matters like economic growth and national income, but actually to pressure other countries into making decisions that country A wants to enforce on country B. And sanctions are in a way the kind of short term, shorthand term for exerting economic pressure on another country. It's as simple as that. So what different types of sanctions are there? How do we exert that economic pressure? So the most common form of sanction is what people refer to as financial sanctions. That means freezing people's assets. So basically saying, you know, anyone with anyone called Vladimir Putin who has money in a bank account in London, that bank account is frozen.

3:12The money isn't taken from Vladimir Putin. It's frozen. He cannot access it. Or we might say that different Russian companies or Chinese companies cannot access the financial markets in the UK or in the EU. You've then got other measures, which are things like banning people from entering a country. You know, we're not going to give you a visa. That's a form of sanction. I myself am banned now from entering Russia because I've been sanctioned by the Russians. You might have embargoes on trading weapons with the country because you don't approve of their human rights record. But ultimately, underpinning these sanctions, what is the strategy?

3:52At times it feels that it's characterised by our politicians as bad person over here does bad thing. We impose sanctions on them. Bad person stops doing bad thing. Is that right? I think you have to look at the use of sanctions around the world with two different eyes. The first one is to look at the way the United States has used sanctions over the years. A critical thing to bear in mind is that global trade is generally undertaken using the US dollar. So even if China trades with Thailand, historically, they would have used the US dollar as the payment mechanism for that trade. What that means is that the United States has really since the Second World War had incredible ability to control what countries do and basically say, you know, I don't want you to use the US dollar.

4:43I'm going to put sanctions on you from using the US dollar as the UK or the EU. We don't have quite the same influence. In contrast to your point, in Europe, we've tended to use sanctions as a signalling tool. It's a political messaging tool. We don't like what you're doing in XYZ country in Africa. We're going to put your name on a sanctions list. Does it make any difference to the person in Africa on the sanctions list? No. Does it make us feel better that we are signalling our strong values, yada, yada, yada? Yeah, it does. But importantly, in February 2022, at the beginning of Russia's full-scale invasion of Ukraine, in Europe, we had to shift gear.

5:25And we had to shift gear for a simple reason, which is that for the first time, we were using sanctions against a country where we actually had some economic interdependence. We really could exert pressure on Russia. And it took politicians and civil servants quite some time, I think, to grasp that change from we want to look tough and sanction everybody to we want to influence your thinking in a material way by pressuring your economy. And that's where we are today. Well, let's fast forward from ancient Greece all the way up to that which we were hearing from the government yesterday, in fact.

6:01And of course, there are a package of sanctions that are in place. Can we just be clear? What exactly did the government change yesterday as regards Russia? The UK has regularly announced sanctions against Russia since February 2022. One such notable occasion was in October 2025, when it announced a series of sanctions against the Russian oil industry. Important sidebar, the main way that Russia is funding its war in Ukraine is by selling oil. And amongst the package of sanctions, the UK sanctioned Lukol and Rosneft, two of the biggest Russian oil producers. Think of like BP or Shell being sanctioned.

6:44The other thing they did, and this is the important point, they made a commitment that the UK would stop buying oil derivative products, so basically products made from oil, where the oil had been sold by Russia to a third country, most commonly India, and India had processed that oil and then sold the derivative products to the UK. So you could say, oh, we're buying jet oil from India. Well, it's true, but the jet oil originally came from Russia. So the UK committed to stop buying those derivative products. And that commitment should have come into force around about now. Now, what the government has said is, well, we made the commitment.

7:28We still intend to stop buying these derivative products that have come from third countries. But in two cases, diesel and jet fuel, we're going to postpone the date, date uncertain, when we stop buying. So the kind of noise in the last 24 hours has been on the one hand, people saying, oh, you know, the government, you are funding Russia's war in Ukraine. true because we are still buying products that originated from Russia and therefore we are still indirectly funding the war but at the same time the government's saying but we have introduced all these other sanctions so give us a break you know it's not like we're doing nothing.

8:09Just to try and be absolutely clear here on the one hand those who suggest that we are essentially contributing to Russia's war fund for Ukraine they are accurate the government is also accurate in saying that we are sanctioning Russia more than we ever have. Is this just one of those occasions where the highfalutin diplomatic talk collides with economic reality and, you know, we need jet fuel, we've got to get it from somewhere, this is the best worst-case scenario? Yes, the UK is an extremely vulnerable country when it comes to energy security. We import a huge amount. But the point is that at some point, and this is the issue with sanctions, they are a political instrument, they are a tool of foreign policy.

8:51And so it is a political decision to impose sanctions. And the Labour government has obviously decided that on the political balance, actually keeping stocks of jet fuel and diesel up is more important than sending a message to the Ukrainian people that we support you. And that's why, of course, the prime minister was immediately on the telephone to President Zelensky saying, do not read this as anything other than just a minor issue, technical issue. And by the way, the United States has granted licenses for the sale of Russian oil. The EU still buys a huge amount of liquefied natural gas from Russia.

9:32So we are not the only villain in this play. I am just wondering if there are any clear examples of where sanctions have worked towards that ultimate purpose, changing an individual, a nation, a company's actions by cutting them off financially. Well, I'm not going to Russia anymore, so clearly sanctions have worked on me. But putting the personal issue aside, like everything with sanctions, two things can be right at the same time. I think there are some cases that people point to where sanctions clearly did not work and in fact were debilitating and cases where they did work. Back in the 1990s, the West put sanctions on Iraq after the Iraqi invasion of Kuwait.

10:15And it is widely accepted that those sanctions basically made the entirely innocent Iraqi people suffer enormously. Going further back, arguably the kind of economic blockades, form of sanctions, that the UK put on Germany before the Second World War encouraged the Germans to mount the Second World War. Where sanctions have worked, a recent example, is the Obama administration used economic pressure on Iran very actively in the early 2000s. And undoubtedly, that economic pressure brought Iran to the negotiating table to negotiate the so-called nuclear deal to, if not denuclearize, then reduce its nuclear ambition.

10:59That pressure on the Iranian economy definitely, definitely worked. But the examples of them working in a clear-cut fashion are few and far between. Sanctions are, just by their very nature, a blunt tool, aren't they? A means of trying to change direction through fairly broad brushstrokes. Take North Korea, for example, a country that had sanctions on it for donkeys years. Hasn't the ultimate effect of those sanctions been not to change the regime, not to get their nuclear weapons off them, but to bring poverty to large swathes of the population? North Korea is an interesting case because North Korea is an example of, in a way, how not to implement sanctions.

11:35So the UN has sanctions on North Korea, but critically, those UN-level sanctions were not equally enforced by the global community. The Chinese clearly did not enforce the sanctions as firmly as they should have done, and others also helped out North Korea. we haven't achieved the mission we want to achieve in north korea because they're still testing their rockets you know flying over japan on a regular basis and this is the crux this is the question i always ask the officials in brussels and in london is what is your theory of change what are you trying to achieve because you can't tell me that sanctions are working if you sort of say oh well you know there's friction in the russian economy okay well the poor ukrainian people are still being bombed every night.

12:20So if you're trying to force Russia to stop its war in Ukraine, they demonstrably have not worked. Is perhaps the ultimate aim when it comes to the Ukraine war not to force the Russians to immediately end the violence, but to just make it really, really difficult for them to fight in the medium to long term, to make it cost ineffective, in essence? Well, ministers of successive governments have in a way sort of shifted the goalposts. And when the full-scale invasion happened, there was a lot of, as you would imagine, bombastic rhetoric from Boris Johnson's prime minister and Liz Truss about decimating the Russian economy and this, that and the other.

12:56Over time, I think a more kind of nuanced ambition has been articulated, which is, what are we trying to do? We're trying to restrict the funding and the resourcing of the Russian military. And to be fair to policymakers, that has clearly happened. There is no doubt that they've got less money and they've got less resources than they had. But they haven't got so much less that they have taken their troops and their tanks back to barracks and returned to Russian soil. Two things can be right at the same time when it comes to sanctions. And, you know, this is why people like me spend so much time pontificating on the topic.

13:35Well, since 2022, obviously, there have been a range of sanctions in place. You know, they start by calling them sanctions, then they become crippling sanctions, then they become unprecedented sanctions. I mean, is it just that we we fail to predict how resilient the Russian economy would be? It's worth going back to 2014, because that's when the initial sanctions on Russia were issued following the initial invasion of eastern Ukraine and the annexation of Crimea by Russia. and an absolutely critical error that Ukraine's allies made at that time was they issued the sanctions and then kind of went home and patted themselves on the back.

14:12There was no follow through. There was no maintenance of pressure on Russia. And so the Kremlin would have been forgiven in thinking in late 2021, early 2022, all this talk of sanctions, you know, that they're just going to issue a few sanctions and then not maintain focus. So Ukraine's allies did learn that lesson. And in fact, the sanctions pressure was very intense from day one. The challenge has been that there's a great quote from an official from the Biden administration who said, look, the sanctions on Russia need to start high and stay high. And the news in the last 24 hours demonstrates why that is so difficult, because if you want to start high, in other words, you know, sanction everything that moves and then keep sanctioning everything that moves, you are going to have to take some pain on your own economy.

15:01So we have played that balancing act for the last four years. Now, would it make a massive difference if we followed through on that intention today? No. But from a messaging perspective, it shows, it gives the Kremlin an opportunity to go, ha, you know, these guys don't have the stomach for the fight. Tom, been an absolute pleasure talking to you. Thanks so much for your time. Thank you. Pleasure for me too. Big thanks to Sean for his excellent suggestion of sanctions. Remember, you can get in touch with your thoughts on today's episode and give us your suggestions for the future. The email address why at sky.uk.

15:35We're back to more.

15:52We take you straight into the rooms where the real political conversations are happening. Smart Insight, clear analysis in your feeds by 7.45am. So you start your morning fully brief for the day ahead in British politics. Hit follow and listen to Politics at Sam & Anne's wherever you get your podcasts.