As Russia continues its aggression in Ukraine, its ability to finance war through energy exports remains a central challenge for policymakers in the EU and the U.S. Despite the steep decline in Europe’s dependence on Russian oil and gas, Central and Eastern Europe’s reliance on Moscow’s energy imports has undermined EU sanctions and strengthened Russia's economic and military power. In a similar way, Türkiye has become indispensable in the Kremlin’s strategy to circumvent sanctions and remain part of the global trade and financial supply chains.
These are some of the key findings of two publications by the Center for the Study of Democracy (CSD) and the Centre for Research on Energy and Clean Air (CREA) on phasing out Russian oil and gas in Central Europe, and on the Kremlin Playbook in Türkiye, launched during a panel discussion, hosted by the Hudson Institute on 15 May in Washington D.C. The panel, moderated by Matthew Boyse, Senior Fellow at Hudson’s Center on Europe and Eurasia, featured CSD and CREA’s leading analysts, Ruslan Stefanov, Program Director of CSD, Martin Vladimirov, Director of the Geoeconomics Program at CSD, and Isaac Levi, Europe-Russia Policy & Energy Analysis Team Lead at CREA.
The speakers focused on how Europe can end its dependence on Russian fossil fuels, close enforcement gaps in the Russia sanctions regimes, and prevent the transfer of Western technologies to hostile regimes. The speakers revealed how Russian fossil fuel revenues remain alarmingly resilient, with oil and gas sales abroad still accounting for one-third of the Kremlin’s export earnings.
Despite the ban on the imports of Russian oil, glaring loopholes persist including the exemption for Hungary, Slovakia and Czechia to buy Russian crude via the Druzhba pipeline transiting Ukraine and the refining loophole allowing refineries in third countries such as India and Türkiye to maximize their Russian crude imports and then export large amount of petroleum products to the EU and U.S. markets. The different exemptions from the Russian oil ban have generated close to 10 billion euros worth of additional tax revenues for the Kremlin in 2024.
In addition, the panel emphasized that Europe must not revert to Russian gas, even amid short-term price volatility, as there are other, more secure, options available for Europe’s long term future. Both Russian LNG and pipeline gas imports have surged by around 25-30% in 2024, and the trend is accelerating in Central and Eastern Europe where the TurkStream pipeline has turned into a strategic hub for maximizing the reexport of Russian gas from Türkiye, effectively rerouting the Ukrainian transit. The increase in Russian gas sales in Europe weakens the demand for U.S. LNG imports. Speakers agreed that there will be enough new LNG export capacity coming online in the U.S. to replace the Russian gas supply entirely.
Speakers warned also about Türkiye’s evolving role as a crucial player in laundering Russian oil and gas on the global market. Turkish companies have also enabled the expansion of dual-use goods exports to Russia, which are key for the Kremlin’s military campaign.
The growing economic interdependence between Russia and Türkiye has significant regional and strategic implications, posing risks to NATO unity, European sanctions enforcement, and the broader international system. Panelists united behind the thesis that the EU and the U.S. need to impose secondary sanctions, ramp up the financial pressure on Russian intermediaries, and present a strategy for more economic cooperation that will counter the growing Russian and Chinese footprint.
