Russia-Ukraine war: Europe tries to cope with Moscow’s blackmail with gas

The European summit on Thursday and Friday focuses on granting Ukraine and Moldova (Georgia will have to wait) the status of candidate countries.

A door ajar for two countries under invasion or threat from Russia is a signal to Moscow that the European Union has no intention of respecting the zones of influence and the free decision of each country to choose its own alliances and its own. future.

This will be the main issue and the one that will take center stage at the Summit, but that decision has already been agreed and there will be hardly any debate. The elephant in the summit room on 27 will be another one, also linked to Russia: power.

contingency plans

The German government decided this Thursday to activate the second phase (of three) of its contingency plan in case of a possible cut in the Russian gas supply.

If, as Berlin fears, the Kremlin decides to turn off the taps, next winter Germany could face an energy crisis that it could resist only by rationing the consumption of natural gas, essential in much of its industry and for heating homes.

The threat is real since early June Russia has already cut 60% of the gas sent to Germany through the Nord Stream 1 pipeline. Gazprom has announced that it will close for two weeks in mid-July, presumably for maintenance work.

This reduction is not noticeable in Europe in the summer because consumption is up to four or five times lower, but it prevents stocking up to spend the winter if the Kremlin does not resume supplies to normal.

Moscow has completely suspended gas shipments to Bulgaria, Denmark, Finland, Poland and the Netherlands. And in the last few weeks it has started to do so reduce supplies to other countries, such as Austria, Italy, France and Belgium.

For now they have been replaced with imports of liquefied gas from other destinations and to go back to burning coal in some places (Germany, Austria), but a total closure would be impossible to replace and would touch the heart of two key policies of the European Union: climate and economic.

Political and economic risks

This impact could alter the political stability of the bloc, threatened by rising inflation with the pace of energy prices, starting to have second-round effects and causing the European Central Bank to raise interest rates in July and probably in September or October.

ECB data shows that if Russia closes the gas tap completely, the European Union will go to recession in 2023 and inflation will increase: the stagflation scenario that governments fear and can cause polling reversals. The ECB assures that the GDP of the Eurozone would fall by 1.7% in 2023 if the gas taps were completely closed.

The ECB report also points to rationing: “The interruptions in energy supplies and the limited possibility of immediately replacing gas supplies from Russia will probably require rationing and reallocating resources, resulting in a cut in production in the Eurozone, particularly in energy-intensive sectors.

European sources believe that the gradual reduction of gas supplies to Europe does not reduce Russia’s revenue from its gas exports because it sells less but is driving up the price, so it receives more per cubic meter exported.

The International Energy Agency this week warned Europe to speed up its preparations for the eventuality of Russia cutting off all energy supplies.

The European Commission and the governments of the 27 agreed in April that by 1 November they would fill the gas tanks to 90% of their capacity.

The Kremlin’s bet seems clear. European diplomatic sources assure that President Vladimir Putin wants to twist the arm of the Europeans, for lift sanctions and stop sending weapons to Ukraine, aggravating the energy crisis, which also causes an increase in inflation. This is what is already called “the Kremlin’s energy blackmail” in Brussels.

Brussels, special

CB