Collecting a few pointers to how this might play out in the longer term. It seems clear that this will accelerate the move away from petro-kleptocracies towards renewable energy as a national security matter.

Europe can stop buying Russian gas. Russia might have trouble selling it because you can’t build new pipelines overnight. Russian oil will find a home somewhere else by boat, rail, or truck. It turns out a ban isn’t necessary anyway. Oil and natural gas supply and demand curves are inelastic. Small changes in supply or demand move prices dramatically. It costs money to produce oil and gas. Reducing the price by 40% might reduce profits by 80%-90%. And a 2%-3% demand decrease might be enough to do the trick. Focus on lowering the profits. Oil is a global market in a way natural gas is not. Europe has to do the heavy lifting for natural gas. There are many economical options available, especially for substitution. Increasing oil and gas supply requires massive changes in the law for European countries. Europe has to keep investing in new gas supply and reducing demand to prevent future price spikes. Eventually, new technologies that create synthetic gas or shift industrial processes to electricity will pick up the slack. Maybe even a few nuclear power plants will get built.

The optimal end to this war is for Russian leadership — generals, spymasters, oligarchs, and politicians — to simply remove Vladimir Putin from power, form a new government, and withdraw Russian troops from Ukraine. The whole war can be blamed on Putin, and Russia and the West can quickly go back to having good relations.

The current sanctions give them a number of incentives to do this. The fall in the ruble, the crashing of the Russian economy, the cutoff of economic relations with the West, and sanctions against Putin-allied individuals all mean that the globetrotting comfy lifestyle Russian leaders have gotten used to over the past two decades is no longer available. If the war ends, these sanctions will presumably be reversed, and something like the old normal can be restored.

And this needs to be made explicit. EU leaders and Biden need to announce clearly and repeatedly that if Russian troops pull back from Ukraine, the sanctions will all be quickly dropped. The part about removing Putin from power doesn’t need to be stated; it will be implicit.

But in fact, the EU and US need to promise Russia much more than this. The reason is that all the stuff I described in the last section — the long-term replacement of Russia’s economic lifeblood with renewable energy — is going to happen anyway, war or no war. The threat of climate change, and the rapid progress in solar, wind, and storage technology, mean that the world’s days of dependence on oil and gas are numbered. Russia is in big long-term trouble no matter what it does.

This gives the EU and US an additional lever — the promise of a Marshall Plan to help the Russian economy retool. Dropping sanctions will restore Russian oil and gas revenue in the short term, but in the long term Russia needs things like infrastructure investment, FDI in manufacturing industries, trade agreements to facilitate European and American purchases of Russian-made goods, and so on. The EU and the US can provide all this. We can make numerical guarantees and specify sectors — railroads, roads, aerospace, IT, whatever.

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