As a new U.S. president steps into office, they often express a desire to engage with adversaries, aiming to resolve long-standing issues through diplomacy, despite doubts about its feasibility. When initial efforts falter, Congress, including members of the president’s own party, may push for comprehensive sanctions to break the deadlock. European allies might also express their discontent by imposing additional penalties.

This scenario mirrors the early months of President Donald Trump’s second term concerning Russia. After Vladimir Putin’s refusal to agree to a cease-fire and the escalation of attacks on Ukraine, it became clear that he was not seeking peace. in response, Republican Senator Lindsey Graham has garnered significant support for a bill imposing severe sanctions on Russia. The EU is also considering new sanctions.

Similarly, this narrative reflects President Barack Obama‘s initial year in office regarding Iran. During President George W. Bush’s second term, the U.S. gradually increased sanctions on Iran.Upon assuming office, President Obama shifted towards diplomacy, proposing an arrangement where Iran would relinquish its enriched uranium stockpile in exchange for nuclear fuel. Though, in late 2009, Iran rejected the proposal, leading Congress to respond with a series of sanctions that considerably impacted Iran’s oil revenues. European countries also intensified their efforts by imposing an oil embargo. The combined pressure caused Iran’s economy to decline, ultimately leading Iran to the negotiating table.

Given the current stalemate in President Trump’s Russia policy, his management could benefit from examining President Obama’s approach to Iran. One crucial lesson is that congressional initiatives, while often opposed by the executive branch, can play a vital role in a successful economic pressure strategy.If President Trump is committed to ending the war in ukraine, his administration should collaborate with Senator Graham and other members of Congress, rather then opposing them.

Another key takeaway is that oil sanctions can be effective, even against major exporters. As the Trump administration explores options to increase pressure on Russian oil, it should analyze the strategies that proved successful against Iran.

Europe possesses more influence than it often recognizes. While the EU typically aligns with Washington’s sanctions policies, the reverse can also occur: decisive European action can encourage the U.S. to follow suit. As President Trump repeatedly threatens sanctions and then hesitates, Europe’s best course of action is to take the lead and trust that the U.S. will soon follow.

Learning from the “Good Cop, Bad Cop” Strategy

Upon assuming office in 2009, President Obama inherited an Iran sanctions regime that, in some ways, resembled the sanctions currently imposed on Russia. The bush administration had penalized Iran’s largest banks and worked to restrict its access to the global financial system and sensitive nuclear technologies. Though, it stopped short of implementing secondary sanctions or aggressively curbing Iran’s oil sales.

The outcome was underwhelming. Although Iran faced increasing financial isolation and its economy was sluggish, it did not experience a recession. The sanctions were not achieving their intended effect.

It was against this backdrop that President Obama made his initial diplomatic overture. In the fall of 2009,his administration proposed a deal: Iran would ship the majority of its enriched uranium to Russia in exchange for enough nuclear fuel to power the Tehran Research Reactor,which produced medical isotopes,for over a decade. While Iranian negotiators initially accepted the deal, they soon reversed their decision, and it collapsed within weeks.

Having long been skeptical of President Obama’s Iran diplomacy, Congress intervened. In the summer of 2010, it passed the Comprehensive Iran Sanctions, Accountability, and Divestment Act, which mandated the Treasury Department to impose secondary sanctions on foreign financial institutions that engaged with Iranian banks. president Obama signed the bill, and it proved effective: even banks in Dubai and istanbul, which were typically more risk-tolerant, distanced themselves from iran, completing the country’s financial isolation.

Oil sanctions can work, even against major exporters.

The following year, Congress targeted iran’s primary connection to the global economy: oil exports. Democratic Senator Bob Menendez, of New Jersey, and Republican Senator Mark Kirk, of illinois, proposed an amendment to the National Defense Authorization Act, requiring secondary sanctions on any foreign bank that processed payments with the Central Bank of Iran, the repository for all of the country’s oil revenues. At the time, Iran exported approximately 2.5 million barrels of oil per day to over 20 countries. When Obama administration officials analyzed Congress’s plans, they became alarmed.Their projections indicated that the sanctions could cause oil prices to surge above $200 per barrel and trigger a “nuclear winter recession,” as a senior Treasury official recalled. The Obama administration strongly opposed the amendment, arguing that it risked fracturing the transatlantic alliance, as many European countries still purchased oil from Iran.

However, in late 2011, Iranian militiamen stormed the British Embassy in Tehran, briefly holding staff members hostage. In response,the EU prepared its own oil embargo against Iran,undermining President Obama’s primary argument against Congress’s plans. Senators Menendez and Kirk proceeded with the amendment. Days before a vote, Obama officials reached a compromise with the senators: countries that significantly reduced their oil purchases from Iran every six months would receive a sanctions waiver. They would be permitted to continue importing Iranian oil without facing secondary sanctions, but only if they gradually decreased their purchases over time. Despite this revision, President Obama urged the Democratic-controlled Senate to reject the amendment, still concerned about the potential impact on oil prices. Nevertheless, it passed 100-0, and President Obama reluctantly signed it.

To the administration’s surprise, the sanctions were successful.Over the subsequent 18 months, Iran’s oil sales decreased by 60 percent, to approximately one million barrels per day. U.S. shale producers increased production, maintaining balance in the oil market and preventing the price spike that President Obama had feared.

Congress continued its efforts. Lawmakers then pushed for legislation aimed at reducing Iran’s oil sales to zero. Again, Obama officials were cautious. By that point, only six countries were buying oil from Iran, and only China was purchasing a ample amount.Forcing China to completely cease importing iranian oil was unlikely to succeed, and if Beijing challenged Washington’s threat, the credibility of American sanctions could be permanently damaged.

Obama officials reached another agreement with Congress: foreign banks could continue processing payments for Iranian oil, but the funds had to remain in the buyer’s country and be used solely for non-sanctioned trade. If a Chinese refinery bought Iranian oil, it would deposit the funds in a central Bank of Iran account based in China. Tehran could use that money to buy goods from China or medicine and food globally, but it could not bring it back to Iran. Consequently, Tehran could not use the money to fund its nuclear program or support its terrorist proxies. Essentially, the scheme would mandate the creation of escrow accounts, keeping Iran’s oil money overseas.

The strategy proved even more effective than the Menendez-Kirk amendment. It allowed Iran to continue selling some oil, but tens of billions of its petrodollars accumulated abroad. Deprived of hard currency, Iran’s economy deteriorated. This pressure contributed to Hassan Rouhani’s election as Iran’s president in 2013 and led to the negotiations that froze Iran’s nuclear program, culminating in the 2015 nuclear deal. during those negotiations, the ability to repatriate Iran’s escrowed oil funds was Washington’s most valuable bargaining chip.

Throughout this period, Congress was a constant source of frustration for President Obama. However, Obama administration officials sometimes grudgingly acknowledged the benefits of pressure from Capitol Hill. In 2015, while cautioning Congress against “playing the spoiler” in negotiations with Iran, National Security Adviser Susan Rice admitted that Congress had played a “hugely critically important role in helping to build our sanctions on Iran.” Later that year, when announcing that negotiations with Iran had resulted in an agreement, President Obama thanked Congress for its role in developing the sanctions. Congress had acted as the “bad cop,” pushing the Obama administration beyond its comfort zone and lending credibility to the threat of secondary sanctions. Meanwhile, President Obama had played the “good cop,” using congressional pressure to facilitate diplomacy.

A Balancing Act Gone Wrong

Since Russia launched its full-scale invasion of Ukraine in February 2022, U.S. sanctions policy has been trying to strike a delicate balance: maximizing pressure on Russia without disrupting the world oil market. this has been tough, as Russia accounts for just over ten percent of global oil production, while hydrocarbon revenues contribute roughly a third of Russia’s federal budget. Russia plays a major role in the world oil market, and oil plays an essential role in funding the russian government-including Putin’s war machine.

Initially, the United States attempted to balance these competing objectives by focusing sanctions on Russia’s banking and defense industries, leaving energy relatively untouched. On the very first day of the invasion, Joe Biden affirmed publicly that the sanctions were “specifically designed to allow energy payments to continue”-and his administration maintained a broad sanctions exemption for all energy-related transactions with Russia. In an economy already struggling with inflation, the prospect of skyrocketing gasoline prices was to frightening to hazard.

Over the next three years, Biden tiptoed toward oil sanctions but remained wary of anything that risked decreasing Russian supply. In December 2022, the United States and its G-7 partners imposed a price cap that aimed to reduce the revenue that Russia earned on each barrel of oil that it sold. Specifically, the policy barred western tankers from carrying russian oil-and Western firms from insuring such shipments-if the oil was priced above $60 per barrel.But the price cap was not backed by the threat of secondary sanctions, which had been so critical to the measures against Iran. When they bought russian oil, emirati traders and Chinese refineries faced no threat of U.S. penalties-even if they bought the oil at a price exceeding the cap. Russia exploited the built-in weaknesses of the policy, reducing its reliance on Western maritime insurance and amassing a large shadow fleet of oil tankers.

In his final weeks in office, Biden finally began dialing up the pressure on Russian oil, sanctioning Russia’s third- and fourth-largest oil producers, but it was too little, too late. As of today, despite frequent claims that Russia is the most sanctioned country on earth, it’s nowhere close: its top two energy companies, Rosneft and Gazprom, are not even subject to primary sanctions, to say nothing of Iran-style secondary sanctions.

Although Russia’s economy has struggled under sanctions,oil revenues have kept it afloat. it turned out there are hard limits to how much pressure Washington could apply to Moscow without targeting its most lucrative export.

A Familiar Pattern

Since returning to office, President Trump has not imposed any new sanctions on Russia, focusing instead on diplomacy, urging Ukrainian president Volodymyr Zelensky to negotiate, and asserting that Putin desires a deal. However, he has not achieved any progress with Putin.

While congressional Republicans have generally deferred to president Trump, their patience appears to be waning. Senator Graham has introduced legislation in the Senate that would require the Trump administration to regularly assess whether Russia is refusing to negotiate a peace agreement. If the administration determines that Russia is obstructing negotiations, a series of new penalties would automatically take effect, including secondary tariffs of 500 percent on any country that imports Russian oil, gas, petroleum products, or uranium. This would effectively impose embargo-level tariffs on numerous countries unless they completely halt Russian energy imports, including China and India (Russia’s primary oil customers), Turkey and Brazil (major buyers of Russian diesel), and the EU and Japan (significant consumers of Russian liquefied natural gas).

Though, this threat lacks credibility.the world has already witnessed President Trump’s difficulty in maintaining 145 percent tariffs on China for more than a few weeks, and most countries would likely dismiss a tariff threat that is several times higher. furthermore, Russian energy exports cannot be reduced to zero overnight without causing significant market disruption. Consequently, if the bill were enacted as written, President Trump would likely invoke a national security waiver and decline to enforce it.

Instead of opposing the bill, President Trump should view it as an possibility to revive the “good cop, bad cop” dynamic with Congress that helped President Obama secure the Iran nuclear deal.His administration should negotiate a compromise with Senator Graham to replace the extreme tariff proposal with a more targeted oil sanctions regime, modeled after the successful approach used against Iran. Under such a system, buyers of Russian oil would face secondary sanctions unless they meet two conditions: their countries reduce total purchases every six months, and payments are made into escrow accounts that Russia can only use for humanitarian imports.

instead of waiting for Trump, brussels should advance new penalties on Russia’s energy sector.

There is reason to believe this approach could be effective. With global oil supplies exceeding demand, there is room to reduce Russian exports without disrupting markets. while eliminating all of Russia’s crude exports from the market, totaling approximately five million barrels per day, is unrealistic, a 20 to 40 percent reduction over the next year is achievable and could even create opportunities for U.S.shale producers to increase their market share, furthering President Trump’s goal of American energy dominance.

Moreover, Chinese, Indian, and Turkish banks would likely comply with the escrow account arrangement. They have all been cautious about U.S. secondary sanctions, and this system might even benefit them by increasing exports to Russia. For example, if indian banks can only release Russian oil funds to finance bilateral trade, India’s sales of pharmaceuticals and agricultural products to Russia would likely increase, giving the country a reason to comply beyond the threat of punishment. If the system were successful, it would quickly provide the Trump administration with a substantial amount of escrowed Russian oil funds to incentivize Putin to take concrete steps toward peace, such as accepting an unconditional cease-fire.

Just as the EU oil embargo on Iran spurred action in Washington a decade and a half ago,significant new EU sanctions on Russia could have the same effect today.Rather of waiting for President Trump,Brussels should implement new penalties on Russia’s energy sector. Even unilateral EU measures would increase pressure on Moscow and could encourage Washington to follow suit.

Most importantly, the EU should seize the more than $200 billion in Russian sovereign assets that are currently frozen in Europe and use them to support Ukraine. Combined with strong oil sanctions, this action would force Putin to reconsider his long-held belief that time is on his side and that Western resolve will eventually weaken.

America Needs More Leverage

Over the past four months,President Trump has threatened to impose sanctions against Russia on at least six occasions. However, each time, Putin has called his bluff, and President Trump has backed down. As Secretary of State Marco Rubio recently acknowledged, “the president’s belief is … right now, [if] you start threatening sanctions, the Russians will stop talking.”

President Trump’s approach to Russia differs significantly from his approach to other countries. He has not hesitated to impose substantial tariffs on China while pursuing a trade agreement or to implement new sanctions on Iran during nuclear negotiations.In most cases, he views coercion as compatible with diplomacy. though, with Russia, he seems to believe that the two are mutually exclusive.

It is indeed time for president Trump to reconsider this strategy. As President Obama learned during his efforts to secure a nuclear deal with Iran, diplomatic breakthroughs with hard-line adversaries require leverage. The most effective way to gain that leverage, while maintaining negotiating credibility, is to coordinate with Congress.

Of course, it will be even more challenging for President Trump to persuade Putin to agree to a just peace in Ukraine than it was for President Obama to reach a nuclear deal with Iran. Putin has transformed Russia’s economy into a war machine and desires a decisive military victory more than sanctions relief. Though, this only emphasizes the need for increased pressure. without it, diplomacy is merely wishful thinking.

The timing is favorable.Congress is losing patience, Europe is growing frustrated, and the global oil market is better positioned to absorb disruptions than it has been in years. The conditions are aligning for President Trump to acquire the leverage he needs to alter Putin’s calculations. The question is whether he is prepared to use it.